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Petro securities fraud trial nears end of 3rd week

Bill Draper, Associated Press

KANSAS CITY, Mo. (AP) -- A federal securities fraud trial involving a Kansas City company that claimed to have $284 billion in assets crawled toward the end of its third week Thursday amid a flurry of objections and a judge's admonition to the lead defendant that unnecessary delays would no longer be tolerated.

Isreal Owen Hawkins founded Petro America Corp. in 2007 and started selling stock a year later. He and four others are accused of conspiracy and other crimes in connection with the sale of more than $7 million in unregistered Petro stock to unqualified investors.

Nine other defendants already have pleaded guilty to conspiracy and are awaiting sentencing.

Hawkins, 57, of Kansas City, Kan., has no formal legal training but has been defending himself throughout the trial. On Thursday, U.S. District Judge Brian Wimes scolded Hawkins for filing a list of 32 new witnesses earlier this week and taking other actions that have bogged down the trial.

"You've done things that delay or hold up this court," Wimes said before jurors were brought into the courtroom. "I don't need to know, and the jury doesn't need to know, what high school (witnesses) went to.

"I'm not going to revisit this," the judge said. "I've talked to you the last two weeks about this. We're moving forward."

Despite Wimes' warning, progress was slow Thursday morning as prosecutors and defense attorneys voiced at least 20 objections to Hawkins' questions in the first hour. Wimes sustained most of them.

Attorneys for co-defendants Teresa Brown, Johnny Heurung, William Miller and Martin Roper are trying to convince jurors that their clients did not intend to defraud anyone when they sold Petro stock. All four have pointed to Hawkins as the primary source of information regarding the company, which he founded in Kansas and later moved to a "virtual office" in a high-rise near Crown Center in Kansas City, Mo.

The government claims all five defendants knowingly sold unregistered shares of Petro stock, were not licensed to sell stock, and ignored cease and desist letters issued in Missouri and Kansas. Prosecutors said instead of putting money from investors back into the company, Hawkins and his co-conspirators spent the money lavishly on such things as a house, luxury cars and other expensive items for themselves.

Many of the investors who bought Petro stock were poor, elderly churchgoers who were persuaded by their pastors to buy the company's stock, prosecutors said in opening statements last month. The pastors belonged to a group called the Minister's Alliance.

Some investors cashed in retirement funds or took out loans to buy the stock after being promised shares they were purchasing for one-tenth of a cent had a book value of $2 or more apiece.

The stock is as worthless as the company's purported gold mine claims and oil leases, prosecutors have said.

The first three witnesses Hawkins called to the stand Thursday are Petro shareholders who said they still believe in the company despite its legal troubles. One witness, Robert Anderson, told defense attorney Willie Epps Jr. that he hasn't lost faith in the company and he doesn't believe everything the government tells him.

Patricia Albi, an Overland Park, Kan., woman who is Miller's aunt, described Hawkins as someone who was often "fashionably late" in showing up for shareholder meetings she attended at a catfish buffet restaurant. When Hawkins did arrive, she said, "the room exploded with excitement when he entered the room."

Hawkins called Petro America "The People's Company," and told investors his goal was to win a Nobel Prize for creating massive wealth.

Though Petro stock initially was sold at the rate of 100,000 shares per $100 invested, or one-tenth of a cent each, Hawkins told them it would open at $24 per share, once it went public.

That day never came, despite promises every week — for more than two years — that a public offering was imminent, prosecutors have said.

Closing arguments are expected Monday. The trial is not being conducted on Fridays because federal defense attorneys are being forced to take furloughs on those days as part of federal budget-cutting measures.