Warning About Oil and Gas Investment Fraud

There are legitimate oil and gas investments, but there are also deals that are riddled with problems. Scammers prey on hot trends and opportunities. Unfortunately, it is often difficult to identify the scams from the genuine investments.

The North American Securities Administrators Association (NASAA) released a warning about oil and gas investment fraud. Investment scam artists have been using the fluctuating oil prices to their benefit. According to the NASAA, when there is opportunity for money to be made, scamers follow in the shadows to take advantage of the situation.


There are various types of oil and gas investments, which the NASAA lists as follows:

• Limited partnership interests
• Ownership of fractional undivided lease interests
• General partnerships

How do you know if it’s fraud?

Scam artists know how to structure deals in such a way that it is very difficult to identify that they are actually investment schemes. A typical oil and gas scam might have a limited partnership in one state and a physical location in another. These unscrupulous individuals will then offer the investments to people in states other than where the limited partnership was created and where the operation is located. This type of setup discourages investors from ever visiting the oil field or company headquarters.

Do your research first.

If someone has approached you to invest in an oil and gas venture, be cautious. You need to do your homework before investing any money. You should look into the following:

1. Research the background of the investment representative and the company offering the deal. You can check with the state securities commission to see if any claims have been filed.
2. Find out if the security is registered. You can contact the state securities commission to confirm registration information and to obtain additional details about the offering. If the security is supposedly exempt, confirm that information too.
3. Review the details of the lease. The NASAA recommends that you find out when the property was acquired, the name of the person selling the lease, the cost of the lease and any relationship between the lessor and operator. You should also find out if the lease is in default.

For more tips on oil and gas investment fraud, view the NASAA's investor alert.

We’re currently investigating oil and gas investments.

At Meyer Wilson, we regularly investigate potential investment fraud. If you have been the victim of investment fraud, contact one of our experienced investment fraud lawyers. You can reach us by calling 866-827-6537 or filling out our online form.

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