KANSAS CITY, Mo. (AP) -- A jury on Wednesday convicted the founder of a Kansas City company and four associates of cheating investors by selling them millions of dollars of worthless stock and spending the money on themselves.
Petro America Corp. founder Isreal Owen Hawkins and his associates were accused of illegally selling unregistered stock in Petro America from 2008 through 2010, much of it to poor investors. Prosecutors said investors were told the company had $284 billion in assets and that they'd be rich once it went public.
Hawkins was convicted of conspiracy, securities fraud, aggravated currency structuring, money laundering and two counts of wire fraud. He could be sentenced to up to 20 years in prison for the most serious charge, wire fraud.
Hawkins, who had been out of jail on bond, was taken into custody immediately after the hearing and the government moved to have his bond revoked. The court set a bond hearing for next week to rule on the government's motion.
Hawkins' co-defendants — Teresa Brown, Johnny Heurung, William Miller and Martin Roper — each were convicted of conspiracy to commit fraud, which carries a maximum sentence of five years in prison. All were released pending sentencing.
The five were accused of selling $7.2 million worth of unregistered stock and targeting poor investors who weren't qualified to purchase shares. Under federal securities law, a person must have a net worth of at least $1 million or an annual income of $200,000 for the last two years to qualify as an accredited investor and be allowed to take part in high risk investments such as Petro America.
Hawkins called Petro America "The People's Company," and told investors his goal was to win a Nobel Prize for creating massive wealth.
Prosecutors said much of the stock was sold through a group of pastors called the Minister's Alliance, or "White Hat Guys" because of the white fedoras Hawkins gave them. They say the ministers also served as Hawkins' personal security force.
Hawkins, who represented himself at the trial, told jurors the company was legitimate and had real assets, and the only reason it didn't go public was because the federal government wanted to destroy it.
Attorneys for some of his co-defendants expressed disappointment Wednesday in the verdicts and vowed to appeal the decision to the 8th Circuit U.S. Court of Appeals.
"We have strong issues for an appeal to the 8th Circuit, but at this time it's really not about Miss Brown and the results," one of Brown's attorneys, Willie Epps Jr., told The Associated Press. "It's about the thousands of Petro America victims who lost significant resources. For that, Miss Brown is sorry and we hope in time she will be seen as another Petro America victim and not a Petro America leader."
Lance Sandage, who represented Heurung, said his client also plans to appeal.
"We're disappointed in the jury's verdict, but we respect the process," Sandage said.
Attorneys for Miller and Roper didn't immediately return calls for comment.
Attorneys for all of the co-defendants told jurors Hawkins had duped their clients. They said the four didn't know that the stock sale was a scam because they said Hawkins was the primary source of information about the company. With no real corporate structure, the co-defendants said they relied on what they were told by Hawkins — including that the Missouri cease and desist order had been resolved — when promoting and selling the stock.
Prosecutors, however, said all five defendants knew that Kansas and Missouri regulators had sent cease-and-desist orders barring the sale of Petro America stock, but that they chose to ignore them.
On Wednesday, Brown also was convicted of securities fraud and six counts of wire fraud, Miller was convicted of money laundering and wire fraud, and Heurung was convicted of one count of wire fraud. Nine others who were charged in the case pleaded guilty to conspiracy and are awaiting sentencing.