What’s the Difference Between Pray and Prey? Pastor Crime Ring Involved In Petro Stock Fraud. 3

Opening statements are expected today in the trial of five people, including alleged ringleader Isreal Owen Hawkins, accused of selling unregistered worthless shares to more than 9,000 investors.

Petro America Corp, a Kansas-based oil company, had no oil, no evident plans for buying, transporting or storing large amounts of oil, no assets to speak of, and no employees beyond president and CEO Hawkins (photo).

Isreal: is fake

Petro America did have revenue, however. Lots of it. Not from oil-market transactions, but from the thousands of people who were persuaded by their pastors to sink their savings into the shadowy company.

According to the U.S. Justice Department,

Investors lost from $100 to $100,000 each. Initially, many of the investors were drawn into the scheme with the promise that $100 would buy 100,000 shares of Petro America stock, the affidavit says, which Hawkins claimed was “book valued” at $2 per share. As the scheme progressed, conspirators raised the price to invest and claimed an ever-higher “book value” for the shares. The affidavit alleges that this allowed conspirators to unload shares to new investors at an increasing profit.

Which makes it a classic Ponzi scheme.

Hawkins allegedly promised “meteoric returns” on investments. At the height of the scheme, the affidavit says, up to $700,000 flooded into the company each month.

In the end, more than 9,000 gullible victims invested more than $7.2 million.

Where’d the money go? Hawkins and his co-conspirators went to pimp town and spent wads of cash on luxuries such as fancy cars, expensive jewelry, a $5,700 fur coat, a $37,000 boat, and a $5,200 piece of Louis Vuitton luggage.

The scheme probably wouldn’t have been nearly as successful if it hadn’t been for two holy men: the Rev. Edward D. Halliburton of Kansas City, Kan., and his colleague Joseph Harrell, of Waco, Texas.

Harrell, acting as the CFO of Petro America, told anyone who would listen that the company was worth as much as $284 billion (which would have made it bigger than Wal-Mart and the Coca-Cola Co.). When touting the “once-in-a-lifetime investment opportunities” to his eager marks, the good reverend often wrapped those sales pitches in Bible talk, stressing that Petro was a blessing from God.

Oh, and while he was bilking believers out of their nest eggs and living the high life, Harrell also enjoyed the comfort of having a little revenue stream on the side: government handouts, including food stamps.

Meanwhile, Halliburton, a pastor of more than 20 years, was the president of the Ministers Alliance, a group of about 15 ministers (mostly from the Kansas City area) who aggressively sold the worthless Petro shares to their congregants and others. The faux-pious hoodlums informally called themselves the White Hat Guys, as each of the ministers received a white fedora. All participated in regular Thursday night conference calls with hundreds of investors in dozens of states. Following the calls, many of the White Hat Guys went to the Epicurean Lounge, a local night club for people looking to get it on.

Like Hawkins, the men of God spent investors’ money with abandon. The Reverend Halliburton paid off his mortgage and purchased a Mercedes S500. Through it all, educating himself about the word of God™ was never far from his mind: for the low low price of $1,794, he also bought a doctorate degree from Tabernacle Bible College, for which he did no actual course work.

In separate appearances before a magistrate judge, both Harrell and Halliburton pleaded guilty to conspiracy to commit securities fraud and wire fraud.

The trial that’s scheduled to start today involves Hawkins (by all accounts the chief crook) and four other accused scammers charged in connection with Petro America. All have pleaded not guilty.

According to the Kansas City Star, whose early reporting on Hawkins and Petro America tipped off investors that something was amiss, among those expected to testify are:

• A 79-year-old California man who still hasn’t told his wife about investing in Petro for fear it would worsen her already serious health problems.

• A Louisiana lawyer who grilled Hawkins in Petro’s rented Kansas City office on behalf of a Petro investor and then had to chip in $20 for gas money when Hawkins and a secretary gave him a ride back to the airport.

• A legally blind Texas investor whom Hawkins took to fancy Kansas City restaurants, often sticking him with the bill, and who was hit up for bail money when Hawkins was arrested.

[Hawkins image via COGIC Abuse Watch]