Mail Fraud Counts Filed Against Brea Man

A Brea man defrauded investors of $2 million through a bogus oil and gas exploration scheme, federal prosecutors charged Monday.

Assistant U.S. Atty. Terree A. Bowers said the two counts of mail fraud filed in U.S. District Court in Los Angeles against Thomas J. Neavitt Sr. are part of an extensive investigation by the U.S. attorney’s office and the U.S. Postal Inspection Service into gas and oil investment fraud through telemarketing.

Neavitt, who used several phone marketing companies to sell his investment program between August, 1984, and April, 1986, “failed to disclose to investors that as much as 50% of their investment went to pay commission at the telemarketing firms,” Bowers said.

By not telling investors about the telemarketing commissions, Neavitt, 59, was “concealing relevant information” that the investors had a right to know, Bowers said.

Hundreds of investors from throughout the nation each gave Neavitt’s company, Red Bird Petroleum Corp., which had offices in Anaheim and Placentia, about $3,500 to finance drilling in Kentucky, Bowers said. The investors were then asked to give an additional $1,100 for each well that produced marketable amounts of oil.

“Most investors were told that at least one of their wells had ‘hit,’ and most paid the additional completion costs,” according to a press release by the U.S. attorney’s office. “In truth and fact, however, some of the wells were never drilled as promised, and some of those that were did not produce oil in commercially salable amounts,” the release says.

Bowers declined to comment on whether charges will be filed against the telemarketing firms used to sell Neavitt’s investment program.

Neavitt could not be reached for comment Monday.