Ex-Chief of Melinworth Gets 16 Years in Oil and Gas Fraud

A convicted swindler has been sentenced to 16 years in federal prison for perpetrating what prosecutors called one of “the largest and most complex oil-and-gas frauds ever prosecuted” in Southern California.

U.S. District Judge William D. Keller sentenced Laban D. Hock, 41, former chairman of Los Angeles-based Melinworth Financial Securities Inc., to the lengthy sentence Thursday night after an extensive hearing in Los Angeles.

Hock was convicted by a federal jury last September of 29 counts of mail fraud and one count of property obtained by fraud. Two of his confederates, Douglas DiLaura, 43, and Robert W. Keller (no relation to the judge) were convicted last April of related offenses stemming out of the same swindle.

Judge Keller sentenced DiLaura to nine years in prison and Robert Keller to two years in prison.

Also, Judge Keller ordered Hock and DiLaura to pay $5.1 million each in restitution to the victims of the fraud. Robert Keller was ordered to repay the victims $26,000.

David A. Slansky, the assistant U.S. attorney who prosecuted the cases, said the three men defrauded hundreds of investors of about $9 million in 1983 and 1984 by misrepresenting oil and gas investments offered by Melinworth and by other companies Hock controlled.

Investors, Slansky said, typically were guaranteed high rates of return and were told that their money would be invested in income-producing oil and gas wells that were insured against production shortfalls. However, in reality, only about 25% of investors’ money was spent on acquiring and operating oil and gas wells, the wells were uninsured and most investors lost all or most of the money they invested, according to court records.

“The scheme was notable not only for its scale but also for its thoroughgoing mendacity,” Slansky wrote in a legal brief urging that the defendants be given long sentences. He said Hock and his accomplices told their victims “an elaborate set of lies” and then repeatedly misled them about where their money had gone.