Federal investigation of Basalt gas firm concludes with no charges
An oil and gas investment firm that had its Basalt office raided in July 2013 by federal agents has been informed it won’t face criminal charges or any other enforcement action, according to multiple sources familiar with the case.
Crystal River Oil and Gas and its two principal executives were investigated for four alleged practices, according to an affidavit filed in federal court in 2013 in support of a search warrant request. The affidavit said the investigation was launched into alleged fraudulent interstate transactions, wire fraud, mail fraud and bank fraud. The firm as well as managing principal Reiner Klawiter and executive Gary Schelling were targeted in the investigation.
No charges have been filed against any of the parties, according to Jeff Dorschner, public affairs officer for the U.S. Department of Justice. He said it is the department’s policy to decline comment on whether an investigation is pending against any party.
Crystal River Oil and Gas said via a statement released by its law firm, Holland and Harts, of Denver, that it was informed that no charges will be filed and the investigation is over.
The statement in its entirety said: “Following the government’s 2013 searches of the company’s offices in Colorado and California, the U.S. Department of Justice (DOJ) conducted an investigation into the company and its operations. Following its investigation, DOJ has decided to conclude its investigation without criminal charges or other enforcement action against the company or any of its personnel.
“Notwithstanding the disruption and cost this has imposed on the company, the company applauds the DOJ’s ultimate conclusion and looks forward to being able to focus on its core business,” the statement concluded.
Agents with the IRS Criminal Investigation Division, FBI and Bureau of Land Management raided Crystal River’s second-floor office July 29, 2013, and confiscated scores of boxes of records and computers. The operation attracted a lot of attention in Basalt because the business is in a highly visible spot across from Town Hall at 110 Midland Ave., the town’s main street.
Crystal River Oil and Gas also has an office in Cardiff, California.
In August 2014, the oil and gas investment company released a statement that said the raid had a detrimental effect on its business. Employee turnover was high in the year since the raid and all efforts to attract investors were on halt at that time.
Crystal River Oil and Gas operates wells in Colorado, California, Kansas, New Mexico, Oklahoma and Texas, according to the affidavit for the search warrant. It attracts investors to acquire interests in oil and gas wells that it drills or “recompletes” in the case of older wells that get a second look with advanced technology.
The investigation examined the methods used to acquire investors’ funds and information provided to prospective investors. Nothing was discovered that led to charges.
The federal government launched its investigation based, on part, from information from a former employee convicted of embezzling from Crystal River Oil and Gas. That employee, identified only as “Employee 2” in the affidavit, wrote a letter to the Colorado Division of Securities outlining many of the allegations against the Basalt company.
Federal agents undertook what was called “trash runs” in the affidavit to look through the company’s garbage to learn about the business. A male undercover officer also attended a seminar for prospective investors at the St. Regis Hotel in December 2012, then met with company executives in Basalt while posing as an investor.
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