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Texas jury awards $60 million in oil and gas royalty fraud case

A jury in Roby, Texas has awarded a group of oil and gas investors $60 million, making it the largest verdict ever in Fisher County. The case stemmed from a fraudulent scheme concocted by two men to cut other partners out of profits from the sale of oil and gas leases, thus keeping the profits for themselves. The fraud was allegedly planned and performed by attorney Kerwin Stephens and oilman Chester Carroll.

The issue began when Richard Roughton and Lowry Hunt, along with other investors, acquired mineral and property rights to 25,000 acres in the Three Finger/Black Shale region of the Cline Shale in West Texas. Roughton then brought in as additional investors his attorney, Stephens, and Roughton’s best friend, Carroll. They created a partnership called the Alpine Group. The leases were then transferred from Roughton and Hunt to the Alpine Group. It was then that Stephens and Carroll allegedly conspired to cut the other partners out of any profits obtained from subsequently selling the leases.

Stephens and Carroll were accused of fraudulently convincing Roughton and Hunt to lower their percentages of ownership in the leases, indicating to the two that Stephens and Carroll were also lowering their interests, but they actually did not. This was done by allegedly convincing Roughton and Hunt that there was no buyer for any of the leases, but actually there was a buyer lined up by Stephens and Carroll. Instead of lowering their ownership interest, Stephens and Carroll purportedly increased their ownership interest in the leases. Then, unbeknownst to Roughton and Hunt, Stephens and Carroll allegedly sold an additional 17,000 acres of leases to a buyer, splitting the money for themselves.

The verdict on behalf of Hunt and Raughton includes $3 million in actual damages plus more than $7 million in returned profits and $18 million in punitive damages. Two additional plaintiffs in the trial, Tiburon Land and Cattle and Trek Resources, both of Dallas, were awarded $33.1 million, including $24 million in actual damages and $9 million in exemplary damages.

Attorney Gregory D. Jordan is an oil and gas litigation attorney with offices in the Austin area. To learn more, visit http://www.theaustintriallawyer.com/

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