DALLAS, Nov. 7 (UPI) -- A Dallas energy deal that apparently satisfied some investors was tainted by Bernard Madoff, an investigator alleges.
The deal was put together in New Orleans in 2007 by four investors who planned to lease Dallas County gas rights with New York money and flip the leases at a profit, the Dallas Morning News reported.
Natural gas prices, and the prices for drilling rights, were soaring at the time, the report said.
Millions of dollars skimmed from other clients' accounts by Madoff were channeled into the risky gas-leasing business around Joe Pool Lake, Madoff case trustee Irving Picard alleges, the newspaper said.
Madoff's sons and niece formed the energy company that funded the Dallas County deal, but have denied wrongdoing, the Morning News said.
Court records show the leases were legitimate, the report said, and landowners got their money either from the Madoff enterprise or from a producer who bought the leases. However, few wells were drilled because of a gas price crash in mid-2008.
"I was pretty well pleased with what we got," Jerrell A. Holveck told the Morning News. Holveck signed a lease in September 2007 with Conglomerate Gas Resources LLC, a Madoff family company.
However, the financing was investigated by Picard, who was trying to recover as much of the Madoff stolen money as possible.
Picard is suing Madoff family members and their businesses that he says received nearly $200 million diverted from clients' accounts to the energy deal.
The targets include Madoff Energy, related companies and Madoff relatives themselves. The newspaper said Picard is demanding nearly $5.2 million back from the Madoffs for the Dallas County deal and much more for other enterprises by the family.
Picard is not seeking money from from dozens of Dallas County landowners who received lease payments in 2007 and 2008, the Morning News reported, nor is he alleging any wrongdoing by other people or businesses that took part in the venture.
Bernard Madoff pleaded guilty in 2009 to 11 federal crimes involving fraud that cost investors billions of dollars. He was sentenced to 150 years in prison.
