3 Men Indicted in Oil, Gas Investment Scam

A California man and two others who allegedly bilked $9 million from Southern Californian investors--mainly Orange County residents--in an oil and gas investment scam were indicted on felony mail fraud charges Thursday by a federal grand jury.

Douglas DiLaura, 42, of Big Bear Lake was arrested and is being held on $300,000 bail, according to the assistant U. S. attorney prosecuting the case.

Also indicted by the grand jury in Los Angeles were Laban Donald Hock, 39, of Louisville, Ky., said to be the mastermind of the scheme, and Robert Wayne Keller, 45, of Phoenix.

Keller was arraigned on Thursday and later released on $50,000 bail, Assistant U.S. Atty. Harriet Beegun Leva said. Hock was reportedly in custody in Kentucky.

The indictment, the result of an extensive FBI investigation, charges that at various times from 1982 through 1985 the three men operated Melinworth Financial Securities, a fraudulent oil and gas investment service based in Los Angeles with a branch office in Orange County.

Risk-Free Investment

Investors, lured by the promise of a risk-free, high-yielding investment, purchased $9 million in oil and gas limited partnerships on promises that all of the funds would be used for oil and gas investments and that the funds were underwritten by an oil and gas production insurance policy. according to the indictment.

The service also operated under the names Shenandoah Management Corp. and Heston Energy Development Corp.

Of the $9 million at issue, $2 million was used to acquire oil properties in Kentucky which failed to produce any oil, the indictment said.

The company spent $4 million on operating expenses, including rent on the firm’s posh Los Angeles office.

The indictment charges that Hock diverted $1.3 million into a personal account and invested about half in an Alabama real estate project.