For centuries oil has meant wealth, and for most countries in the Middle East were it not for oil, their sheiks would be pounding sand, and instead of driving a Bugatti, would be driving dune buggies…
By Egon E. Mosum
Not all boiler rooms are heated by oil, although some may be funded by it.
For centuries oil has meant wealth, and for most countries in the Middle East were it not for oil, their sheiks would be pounding sand, and instead of driving a Bugatti, would be driving dune buggies.
Like Jimmy Durante once said, ‘Everybody wants to get into the act,’ and that fact is what makes oil exploration scams so potentially lucrative.
Developers and scammers push the promise of a gusher to would be investors who see themselves with a bank account that gushes with profits while they develop a new taste for cowboy boots and hats.
But it isn’t always liquid gold and Texas Tea. Sometimes it’s more like a product that one steps in on a ranch left by an older form of wealth — cattle.
So, let’s do some drilling and see what we can find under the rock…
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The North American Securities Administrators Association, NASAA has some interesting details about oil exploration fraudsters.
‘In order to attract the interest of potential investors, unprincipled promoters frequently use the Internet and “boiler room” offices with banks of phones manned by salespeople with little or no background in energy exploration, but plenty of experience in high-pressure sales.’
NASAA advises that the would-be investor ask some questions, like ‘Ask the name of the person offering you the security, where he is calling from and his background, particularly in other oil or gas ventures. Ask what commission and/or other compensation the salesperson will receive.’[1]
If after those questions are asked, the salesperson is something other than legitimate, one might experience a pregnant pause in the flow of conversation, although if he is as slick as the supposed oil he’s promoting, he could also supply a gusher of lies.
The United States Securities and Exchange Commission offers some solid advice before one turns their assets into liquid gold based upon representations made by investment salesmen who are more reptile than representative, more fraudster than fiduciary.
The SEC offered the real-life example of Henry (name changed to protect the gullible) who with respect to an oil well investment ‘was contacted 12 times and invested, essentially, his life savings in 4 different gas wells, each time thinking that he had to invest or lose his original investment... He ultimately lost over $500,000 to this oil and gas scam investing in wells that always seemed promising at first...’
Tell-tale signs of a scam are unsolicited contact, promises of can’t miss wells, limited time opportunities, and other cheap sales tactics.[2]
Sometimes, news headlines can cause a ‘gusher’ of boiler room oil investment scams as when ‘a widely reported economic crisis creates opportunities for money to be earned through oil and gas investments, unscrupulous promoters employ news items about the crisis to prey on naive investors seeking to make a quick fortune.’
The Council of Petroleum Accountant Societies, report about the likely signs and surrounding events (like the one above mentioned), indicating that the offeror of oil riches on the other end of the phone is lubricating the truth in search of fat commissions from the unwary.
‘Scam artists often claim to have closely guarded information obtained from an insider in the organization, such as a geologist or another expert related to oil and gas exploration.’[3]
The good news is sometimes these scammers get caught, and wind up behind bars instead of the boardroom conference table.
In 2025, Charles Eli Colburn III, (what a name for an oil magnate) received a six-year jail term.
It seems the United States Attorney’s office in the Eastern District of Virginia, said ‘Sorry Charlie’ but wire fraud is a no-no.
Good time Charlie represented to investors that he was the Chief Executive Officer of an entity called GEO Reserve, and that GEO ‘had a current partnership with Ralph E. Davis Associates, a long-standing oil and gas engineering and consulting firm; and that GEO RESERVE had already acquired leases to hundreds of thousands, or even millions, of acres of land in Montana, New Mexico, Texas, and Wyoming. They also represented that GEO RESERVE was an active, ongoing concern with revenue from oil production…’
Now, while Charlie kinda fibbed about that, what was true was that he ‘swindled more than 45 investors out of more than $1.6 million. The Court ordered Colburn to pay full restitution and to forfeit nearly $1.56 million.’[4]
Then, in 2025, there was the Jensen family operation in Utah. They were indicted for money laundering in the U.S. District Court of Southern Texas. They are accused of running a $300-million money-laundering scheme, allegedly smuggling crude oil from Mexico.’
(Now is a pretty good time for the lawyer in me, [as that’s what I am in real life] to counsel the reader that an indictment is merely an accusation and that an individual is presumed innocent as a right under the United States constitution.)
This wasn’t a scam where individual investors were conned, this involved the alleged mislabeling of crude oil as waste oil and petroleum distillates to avoid the pesky little detail that ‘the government of Mexico, through its oil company, PEMEX, will not allow for crude oil to enter into the United States, except through very limited agreements with oil and gas companies.’
The money made, allegedly went to criminal organizations in Mexico.
However, on May 27, 2025 the charges against Kelly, the wife and one of the sons, Zachary were dismissed in the interests of justice. There wasn’t any explanation forthcoming from the government as to why — we’ll leave that to your imagination, gentle reader.
The family was arrested back in April in their ‘modest’ twenty-seven thousand square foot estate, which indicates that the Jensens were doing well in some sort of a business.
As of this writing, there haven’t been any convictions. However, as to the remaining defendants, ‘Prosecutors are pursuing a $300 million judgment against James and Maxwell Jensen.’[5]
WHY YOU SHOULD CARE
The old saying ‘investigate before you invest’ has stood the test of time, and still is great advice.
The oil industry has made many men wealthy, and all men greedy, whether they are scamming would be investors in wells as dry as an Englishman’s sense of humor, or in the mislabeling of imports to fund criminal organizations.
The reader may one day receive a glossy brochure or an unsolicited phone call from some boiler room denizen trying to get him to trade his cold cash for an imaginary hot oil investment.
While not all offers of investment in oil exploration and production are scams, some are, and it pays to be on guard when that ‘limited time opportunity’ phone call goes to you.
There are many stocks that deal with oil exploration, transport, and storage, listed on legitimate stock exchanges — many paying impressive quarterly dividends.
You don’t need to invest your money in some over the phone solicitation from a boy in a boiler room that can’t tell the difference between West Texas Intermediate and Salad Oil.
[1] OIL AND GAS INVESTMENT FRAUD NASAA https://www.nasaa.org/6782/oil-gas-investment-fraud/
[2] OIL AND GAS SCAMS COMMON RED FLAGS, 7/31/07 SEC https://www.sec.gov/about/reports-publications/investorpubsoilgasscams
[3] HOW TO PREPARE YOURSELF FOR OIL AND GAS INVESTMENT FRAUD 6/24/21 COPAS https://copas.org/how-to-prepare-yourself-for-oil-and-gas-investment-fraud/
[4] Recidivist investment fraudster sentenced to six years in prison for oil-and-gas scam 5/28/25 Press Release USA for Eastern District of Virginia https://www.justice.gov/usao-edva/pr/recidivist-investment-fraudster-sentenced-six-years-prison-oil-and-gas-scam
[5] UTAH FATHER AND SON AT CENTER OF $300 MILLION OIL SMUGGLING CASE Backman, 6/26/25 AP MONEYWISE https://moneywise.com/news/jensen-family-oil-smuggling-case
*Mode Mobile recently received their ticker reservation with Nasdaq ($MODE), indicating an intent to IPO in the next 24 months. An intent to IPO is no guarantee that an actual IPO will occur.
The Deloitte rankings are based on submitted applications and public company database research, with winners selected based on their fiscal-year revenue growth percentage over a three-year period.
In making an investment decision, investors must rely on their own examination of the issuer and the terms of the offering, including the merits and risks involved. Mode Mobile has filed a Form C with the Securities and Exchange Commission in connection with its offering, a copy of which may be obtained here: https://www.sec.gov/Archives/edgar/data/1748441/000164117225025402/ex99.pdf