Wyoming Man Sentenced For Embezzling More Than $1 Million From Energy Company

From the Sheridan Press on 1/16/15:

Judge William Edelman of 4th Judicial District Court heard testimony from investigators, victims and character witnesses Thursday before sentencing Ronald Barnes for felony fraud and larceny. Barnes, 55, had been charged with five counts of felony fraud and two counts of felony larceny in a case in which he embezzled more than $1 million in royalties from local company Summit Gas Resources between 2004 and 2012. Barnes received six to 10 years in prison for one count of obtaining property under false pretenses. Edelman sentenced Barnes to eight to 10 years in prison for each of the other six counts against him — another four counts of obtaining property under false pretenses and two counts of larceny — but those sentences were suspended, and Barnes was given eight to 10 years of supervised probation instead, set to run consecutively to his prison sentence. In addition to about $2,500 in court costs and fees, Barnes must pay restitution of the $1 million stolen from Summit Gas Resources, Inc., during the nine years that he was employed with the company. Barnes had originally pled not guilty to all charges but then changed his plea several months ago to guilty. Fake companies used Summit was operating as Pinnacle Gas Resources, Inc., when it hired Barnes in January 2004. He became the chief financial officer in April 2004 and was also named senior vice president. The company was preparing to go public, and Barnes’ duties involved setting up an accounting department in preparation for that move. Investigators found, though, that within 90 days of being hired, Barnes began stealing from the company using both his position and the accounting software with which he had trained. He set up fake companies or, in some cases, used companies that already had accounts in the software, and submitted false evidence that Summit owed these companies royalty money. He presented this evidence to Summit CEO Pete Schoonmaker, who signed checks believing he was making payments his company owed. Forrest Williams, from the Wyoming Division of Criminal Investigation, said the checks would be addressed to fake addresses, but Barnes would intercept them before they were sent out and deposit them in a bank in Montana. Barnes and his now ex-wife Jayne owned a company called Bellcamp, and royalty checks stolen from Summit were deposited into that account. Barnes said he hid the money from his wife and never claimed it on his taxes. State’s attorney Christopher LaRosa told the court that Barnes adjusted his patterns of stealing to account for problems that arose over the course of his time with Summit. In 2011, when the bank in Montana would no longer take checks that were not made out to Bellcamp, Barnes created a limited liability corporation called BK Energy, LLC, and set up a bank account and post office box in Denver. He, again, produced evidence that Summit owed this company royalties money and that he had negotiated payments. Despite a fiduciary contract with Summit, he never revealed that he was the sole proprietor and member of BK Energy in any of the five reports he filed with the U.S. Securities and Exchange Commission. LaRosa also told the court that Barnes did not stop stealing money from Summit when gas prices dropped and the company began to struggle in 2009. “The company was buffeted by forces beyond control,” LaRosa said. “There was less money to steal, but Mr. Barnes did not cease.” Summit CEO asks for restitution Barnes’ attorney, John Robinson, told the court that, while what Barnes was doing was wrong, the money stolen came from suspense accounts used for royalties and not accounts used for the operation of the company, suggesting that Barnes’ activities had not resulted in harm to the company. He asked Williams, of the Wyoming Division of Criminal Investigation, if the falling gas prices and not Barnes had done more harm to the company. Williams said it was apparent to investigators that Barnes spent more time trying to get away with his crime than working to offset problems due to those falling gas prices, which, in turn, caused harm to Summit. Schoonmaker gave a victim’s impact statement, telling the court how proud he had been to be CEO of the only NASDAQ listed company in Sheridan, but how Barnes’ actions had caused Summit to lose the support of investors. Schoonmaker called Barnes the “Bernie Madoff of Sheridan” and said Summit had to lay off half of its employees because Barnes failed to do his job properly. Summit is no longer a publicly traded company. “I want pay back,” Schoonmaker said. “But it is equally important that (Barnes) is made an example of.” Schoonmaker asked the court to sentence Barnes to at least eight to 10 years in prison.

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