Last month, a popular former Cincinnati radio show host and two employees of Texas-based oil company North Shore Energy LLC were found guilty of investment fraud after selling promissory notes to 18 victims in the midwest on the premise of drilling two oil wells on land already owned by North Shore Energy. In this post, we will discuss the details of this case.
A False Promise of Prosperity
In 2010 and 2011, ex-host of the then-popular Cincinnati radio show “Safe Money America” Robert McManus began raising capital for an oil-rich investment in Texas. After striking a deal with North Shore Energy LLC, McManus appealed to potential investors on his show. 18 people took the bait — 16 of which were residents of Ohio; the others were from Kentucky and Indiana. In total, McManus raised over $2 million from the victims by selling them promissory notes issued by North Shore and with the promise that they would receive between 15 and 20 percent in ROI.
A Scam from the Beginning
Though McManus maintains that he did not know that the other two defendants, William Troy West and Catherine Schaper, intended to commit fraud, presiding Butler County Common Pleas Judge Charles Pater was unconvinced. It has been discovered that one of the two proposed oil wells was already capped when McManus began shilling for investments and that North Shore Energy was also engaged in litigation regarding the rights to the land where the wells were to be located. McManus admitted that he did not consult an attorney at any point.
A Costly Error in Judgment
Many of the victims invested the majority of their life’s savings due to their trust in a familiar radio show host who they say gave solid financial advice for many years. One retired couple lost $140,000 that was to support them for many years to come. Another victim, Gary Gruber, invested $250,000, money that he had been planning on using for his children’s college education. He said, “I trusted Bob. He swore to me this money was safe.”
The True Cost of Dishonesty
McManus was convicted on two felony counts; one for the sale of unregistered securities and the other for the sale of securities without a license. He was sentenced to five years in prison. West pled guilty to the fraud and sale of unregistered securities and will serve six years in prison. Schaper has taken a plea deal for her involvement and will be sentenced later this summer.