Kentucky oil and gas company drew $15.8 million from investors and returned $1.19 million; five sentenced
Between 2003 and 2008, officials and employees of Target Oil and Gas of Albany, Kentucky lured about $15.8 million from investors in Kentucky, Arizona, California, New Jersey and other states through false statements about the company's drilling programs, returning only about $1.19 million in royalty payments. WAVE reported in July 2011 that five people were sentenced in U.S. District Court in Lexington on June 27 to 30, the company's president, Michael Smith, to 10 years and forfeiture of $3.2 million.
- Year
- 2011
- Where
- United States
- Outcome
- Sentenced
- Reported loss
- $15.8 million
- Victims
- Not stated in the sources
- Schemes
- Oil and gas investment fraud
- Last reviewed
- 2026-10-28
The facts, as recorded
- The five defendants were sentenced by U.S. District Judge Joseph M. Hood: Michael Smith, 55, president of Target Oil and Gas, to 10 years and forfeiture of $3.2 million; his brother Christopher Smith, 51, the vice president, to five years and forfeiture of $3 million; salesman Joshua Harris, 25, to a year and a day; Shaun Smith, 29, Michael Smith's son, to two and a half years; and the geologist Ray Garton, 60, to five years of probation, six months of community confinement and six months of home incarceration.
- They were indicted in December 2008. A sixth defendant, Mark Irwin, was scheduled to be sentenced on July 14, and restitution was to be decided within 90 days.
- According to evidence at trial, Michael Smith had Garton prepare or direct others to prepare drilling program brochures with misrepresentations. The brochures contained geological reports claiming Garton had individually assessed proposed drilling sites and deemed them adequate. Shaun Smith mailed the brochures to potential investors.
- Harris supervised and instructed Target Oil employees on what to say, told salesmen to make false claims about past successes and about specific wells that had hit oil or gas, and made similar calls himself.
- After the initial contact and the mailed brochures, Christopher Smith followed up to finalize the sales, telling investors the drilling programs had hit oil and gas when they had not.
- Several states, including Kentucky, issued a cease and desist order against Target Oil and Gas, but the Smith brothers concealed this from potential investors.
- The Kentucky Department of Financial Institutions assisted the U.S. Attorney's Office and the U.S. Postal Inspection Service in the investigation.
Why this case matters
It shows the whole sales chain at one company: a geologist’s name on reports, brochures mailed by the president’s son, a salesman who coached the callers on what to say, and a vice president who closed the sale. According to the evidence at trial reported by WAVE, the claims that wells had hit oil or gas were false, and the company returned about $1.19 million of the $15.8 million raised, in royalty payments.
The caveat
The sentences are those reported by WAVE 3 News in July 2011, which carries a publication date of July 6, 2011. The article gives the sentencing dates as June 27 to 30 without a year; this page gives the year as 2011 on the basis of the page metadata. Restitution was still to be decided, so this page does not give a final restitution figure, and it does not know what happened to the sixth defendant. The report does not say whether any defendant appealed.
Sources
- Five sentenced in Target Oil and Gas investment fraud scheme. WAVE 3 News. Accessed 2026-10-28. Supports: Every fact above: the five sentences, the indictment, the sixth defendant, the $15.8 million and $1.19 million, the brochures, the sales calls, the follow-up calls and the cease and desist order.