Man Pleads Guilty to Mail Fraud in Oil Well Scheme

An Encino man who operated a company that sold hundreds of investment shares in wells it falsely claimed were actively producing oil pleaded guilty Tuesday to mail fraud, authorities said.

Peter Gaston Stanford, 42, pleaded guilty to three counts of mail fraud in U.S. District Court in Los Angeles and faces up to 15 years in prison and $750,000 in fines, Assistant U.S. Atty. Terree Bowers said. Stanford is scheduled to be sentenced Aug. 28.

Stanford and Anthony Colagreco, 32, also of Encino, ran a telemarketing firm called American Southwest Petroleum Ltd. in West Los Angeles, which solicited oil investors from across the country, Bowers said.

Bowers called ASP a “boiler room” operation and said that in the summer of 1985 about 350 people paid $2,400 to $3,000 each for shares in two oil leases in Kansas and two in Oklahoma.

“Most of the wells on the leases were not producing oil at all,” Bowers said. “They actually purchased some producing wells at the start, but then they started drilling their own wells and got into problems.”

Bowers said that although the wells on three of the leases were producing only water and no wells had been drilled on the fourth, potential investors were told that the leases were producing oil.

Some investors received some money back on their investments along with fictitious oil production reports, Bowers said. The money they received, however, was actually from new investors in the scheme.

ASP collapsed in late 1985 and was investigated by a task force of prosecutors and investigators from the U.S. Attorney and Los Angeles County district attorney’s offices. The investigators learned that some of the money taken in the scam was allegedly used by Stanford to make speculative investments in the commodities market, Bowers said.

Stanford and Colagreco were indicted in May of this year on 19 counts of mail fraud. Colagreco has pleaded not guilty and is scheduled for trial next week.