Texas Jury Awards $60M in Oil & Gas Fraud Case

A Fisher County, Texas, jury has awarded over $60 million to two groups of oil and gas investors who claimed they were defrauded of profits from oil and gas production leases in West Texas.

The case involved four partners in the Alpine Group, formed by Lowry Hunt of L.W. Hunt Resources, Richard Raughton, attorney Kerwin Stephens and Chester Carroll of Alpine Petroleum.

Hunt and Raughton purchased mineral and property rights on more than 25,000 acres in the Cline Shale region of West Texas in 2011. They invited Stephens and Carroll to participate as partners and formed the Alpine Group. When Alpine needed additional capital, they entered into an agreement with Paradigm Petroleum Corp. Stephens drafted the agreement and then arranged for the leases provided by Hunt and Raughton to be transferred and controlled by Stephens and Carroll.

Subsequently, Stephens and Carroll allegedly conspired with the owner of Paradigm Petroleum, Tom Taylor, to eliminate Hunt and Raughton from the agreement and split the profits between themselves.

According to trial testimony, Stephens and Carroll convinced Hunt and Raughton to reduce their ownership percentages in the Alpine Group based on misrepresentations that there was no buyer for the additional leased acreage. However, Stephens and Carroll had already procured a buyer and concealed that fact from Hunt and Raughton.

In addition, Stephens and Carroll allegedly fraudulently misrepresented Carroll’s ownership percentage, leading Hunt and Raughton to believe Carroll had reduced his ownership percentage in order to convince them to reduce theirs while secretly increasing Carroll’s ownership by almost 30 percent.

Stephens, Carroll and Taylor then proceeded to sell the additional 17,000 acres of leases and split the profits between themselves.

The award for Hunt and Raughton included $3 million in actual damages, $7 million in returned profits and $18 million in punitive damages.

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