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United States of America v. Clay Shelton
Western District of Kentucky Federal Courthouse - Bowling Green, Kentucky
Case Number: 1:15-cr-00023-GNS
Judge: Greg N. Stivers
Court: United States District Court for the Western District of Kentucky (Warren County)
Plaintiff's Attorney: Nute A. Bonner and Bryan R. Calhoun
Defendant's Attorney: Bryce L. Caldwell
Description: Bowling Green, KY - Owner Of U.S. Energy Partners, Inc. Of Bowling Green, Kentucky, Sentenced To Prison For Wire Fraud, Securities Fraud, And Money Laundering
Fraudulent Investment scam resulted in loss exceeding $1,000,000 for eleven partners
The owner of U.S. Energy Partners, Inc. of Bowling Green, Kentucky, was sentenced in United States District Court on April 9, 2018, by District Judge Greg N. Stivers, to 50 months in prison following a jury conviction for wire fraud, securities fraud, and money laundering as part of a scheme that defrauded investors of $1,175,000.
“This office will aggressively seek restitution for the victims of Clay Shelton’s scheme,” stated United States Attorney Russell M. Coleman. “The 50 month sentence should serve to warn others who seek to profit off of innocent investors – you will be caught and you will go to federal prison.”
The jury deliberated less than two hours before convicting Clay Shelton, 48, of Bowling Green, on January 11, 2018, on all submitted counts, for devising a scheme that fraudulently obtained money from eleven investors. Shelton has remained in federal custody since his conviction.
According to testimony presented during the four day trial, between March 2011 and September 2012, Shelton created Monterey Pipeline Partners, LLC, purportedly to purchase the Monterey Pipeline in Tennessee. Shelton also operated Escrow 2011 LP, an investment partnership he created to fund an escrow account to purchase and operate the Monterey (gas) Pipeline. Further, Shelton operated Brakaw Energy Management LLC, which was created by Shelton to manage and operate the Monterey Pipeline once he completed the purchase.
From March 2011 through September 2012, Shelton solicited in excess of $1,000,000 from eleven investors for the purchase of the Monterey Pipeline. He fraudulently represented to the investors that their funds would be held in escrow as a down payment until he was able to complete financing to purchase the Monterey Pipeline (about 60 days). Once the loan closed, investors would receive either a 25 percent return on their investment or Monterey Pipeline would buy their interest in any Tennessee well program they previously purchased through U.S. Energy Partners. Investors were, therefore, assured they would receive their investment back in at least 60 days and that their investment would be held in escrow.
Shelton misappropriated $1,000,000 of investor funds, which were wired into Escrow 2011, by investing the majority in collateralized mortgage obligations. Additional funds from investors were used to pay operating and business expenses, including his own salary.
This case was prosecuted by Assistant United States Attorneys Bryan Calhoun and Nute Bonner, with paralegal assistance from Jane Bauer and Mary Kennedy. This case was investigated by the IRS Criminal Investigation Division and the Kentucky Department of Financial Institutions.
Outcome: Defendant was sentenced to 50 month's in prison.