The Fraudfather: Tony Rand's Second Criminal Fraud Bust Coincides With The First For His Five Sons

by George Waldon  on Monday, Aug. 29, 2011 12:00 am  

Ex-theater owner Tony Rand and his five sons have been convicted of scams totalling $110 million.

Twenty years ago, W.A. "Tony" Rand was convicted in Little Rock federal court of defrauding lenders who bought into his aspirations of building a 400-screen movie theater chain.

The North Little Rock businessman churned $17 million through his Rand Theatres operation to feed his family's taste for the good life.

At the time, his crimes were described as the largest fraud committed by an individual convicted in the Eastern District Court of Arkansas.

A nearly seven-year stretch in prison apparently served only to inspire a vastly larger interstate scheme from Texas. This gambit involved Rand, now 70, and his five sons swindling hundreds of oil and gas investors of more than $110 million. Some suspect their schemes at times resembled a plot line in a zany 1968 movie "The Producers."

The family members, some of whom were estranged from each other, operated several sophisticated scams to rake in the necessary cash to enjoy the trappings of multimillion-dollar success.

Investors from Laguna Niguel, Calif., to Janesville, Wis., to Longboat Key, Fla., unwittingly supported the Rands in lavish style.

Rand and his youngest sons, Mark, Greg and Bill, accomplished their fraud through Aspen Exploration Inc. of Plano, Texas.

While it's hard to pinpoint the exact date the criminal enterprise began, the indictment of Tony, Greg, Mark and Bill handed down in May 2009 indicates that it was in full swing by December 2005.

Mark Rand, 45, who will be sentenced later his month, signed a plea agreement a year ago admitting to three counts of securities fraud. After Mark folded, so did the others.

In a January plea agreement with U.S. attorneys in Dallas, his father admitted guilt to one count each of conspiracy to commit mail fraud and one count of securities fraud, while brother Greg, 47, acknowledged one count of conspiracy to commit mail fraud and three counts of securities fraud, and Bill, the youngest brother at 41, copped to three counts of securities fraud.

Tony, Greg and Bill agreed to pay eye-popping restitution of $99.7 million and forfeit their ill-gotten treasure. Tony and Bill are scheduled to report to prison on Wednesday; Greg's judgment did not include a specific date to report.

A sampling of their booty includes: Greg's 2006 Sunseeker Predator yacht with

a 1,500-horsepower engine; Mark's 1967 Ferrari 275 GTB/4, classic guitars (two Gibson Les Pauls and Fender Stratocasters from 1960 and 1965), art (a Picasso drawing and), jewelry and fine wine; Tony's Jamali painting, 2005 Ferrari and 2007 Mercedes; and $850,000 from the sale of Bill's lake house on Eden Isle in Heber Springs.

Big Brothers
The eldest Rand brothers, Wayne, 49, and Jeff, 48, ran separate oil and gas scams that led to their own judicial reckoning this year as well.

Wayne Rand, president of Rockwall Oil Co. (aka Black Lake Energy Inc.), was sentenced in January to 20 years in Texas state prison for conning investors out of $8 million.

According to court documents, Rand failed to drill nine of the 13 wells that he touted to investors and instead used their money to buy a house, a $368,000 speedboat, numerous pieces of jewelry and $70,000 worth of firearms.

Jeff Rand admitted defrauding investors as early as October 2001. His scam may have been the first to start, and it was the first to unravel after a dogged investigation by Arkansas Securities Department attorney Ted Holder led to a cease-and-desist order in December 2006.

After that order, a lawyer for Aspen Exploration told Arkansas Business that Jeff's business and that of Tony, Greg, Mark and Bill were completely separate. "They are estranged brothers for the most part," attorney Cheryl Moore said.

Jeff, president of Wave Energy Corp. of Houston, pleaded guilty on June 28 to one count of mail fraud for bilking investors of between $2.5 million and $7.5 million in a scam that started when he and Wave were domiciled in Hot Springs.

His victims included at least two Arkansans: Todd Hickingbotham and Phillip Tappan, both of Little Rock.

Hickingbotham has never commented publicly on the Rand case. Tappan told Arkansas Business that he agreed to invest $80,000 with his old college friend in 2004.

"It's so easy to see how he's been so successful at getting people to give him money," Tappan said last week. "He has a great personality and is larger than life when it comes to oratory skills."

In 2003 alone, according to the ASD order, Jeff Rand raised close to $2 million from investors: "Approximately $675,000 of it went to pay for Rand's acquisition of a duck hunting club, and the rest went to pay for Rand's horse racing and breeding operation, Wave's business expenses and other miscellaneous Rand personal expenses."

Jeff was indicted by a federal grand jury in Hot Springs in March 2008, but the indictment was kept sealed for two more years. And another 15 months passed before Jeff, now living in Washington state, pleaded guilty in Fort Smith.

Jeff's sentencing hearing has not yet been scheduled. The federal sentencing guidelines suggest that he will probably serve four to six years in prison. His plea agreement calls for him to pay full restitution to his victims, although the exact amount isn't tallied.

 

A Family Tradition

The Rand family's interest in the Texas oil and gas business even extends to Tony Rand's wife, Mary Ann, and their only daughter, Antoinette. The mother and daughter are managers of Sentry Energy Production LLC of Addison and directors of Reserve Production Inc. of Plano.

Little Rock Architect Gary Dean whose children grew up and went through school with the Rand boys, was stunned to learn of the family's fraud schemes in Texas.

"When you see all these kids growing up and all this happens," Dean said. "Golly, it's such a tragedy."

The ability to attract collection suits is a family trait that Tony Rand passed to his sons in the years preceding their criminal charges. The family patriarch's litigious magnetism was displayed 20 years ago when his movie theater business was falling apart and his financial misdeeds were beginning to be exposed.

Back then, Rand was asked why his companies were involved in so many lawsuits.

"They are insignificant as far as my total picture is concerned and insignificant as far as the effect on our welfare and our expansion plans," Rand told Arkansas Business in September 1989. "You step on toes, make mistakes, have some controversy. Who doesn't, particularly in dealing in Texas real estate?"

Edmund Pankau, a Houston private investigator who delved into Rand's financial dealings, had a different take.

"From our initial investigation and what I have seen since that time, it appears his business is a house of cards," Pankau told Arkansas Business nearly 22 years ago. "And it's all caving in."

Three months later, Pankau offered an even harsher assessment of Rand: "There's so many Tony Rands out there, but people don't want to believe they've been taken, too. I call this type of person a world-class con man."

"Even when he was in his heyday, he was a slow pay," said Bob Laman, a former general contractor who dealt with Rand back in the day.

That was evident even back in the 1970s, when he was evicted from his office space at 2500 McCain Place in North Little Rock for failure to pay his rent.

Rand was asked about his suspect reputation for handling money in a September 1989 interview with Arkansas Business.

"I think we're good money managers," he said. "I don't recall ever not paying a debt in 21 years."

 

‘The Darndest Things'

A bad memory when it comes to repaying investors is another Rand family characteristic.

William Pierre of Muskegon, Mich., was a determined elderly investor who lived to see the Rands answer for their crimes. He was a relentless town crier screaming for politicians and law enforcement agencies in Texas, Washington, D.C., and anywhere else that might help bring the Rands to justice. (See his letter below).

He believed the Rands trumped up expenses on dry holes and withheld money on producing wells.

John Hays, the 69-year-old publisher of the Morning Paper in Ruston, La., knows well the games played by the Rands and others in the oil and gas fields.

"I've been writing about this shit for 35 years," Hays said earlier this month. "And for some reason, I'm on the sucker list. Last Friday, I got three calls."

He believes part of the Rands' game was "dry holing," overselling shares in a well that isn't expected to produce any oil or gas. It's a scheme eerily similar to that of "The Producers" in the classic Mel Brooks comedy that was turned into a Broadway musical.

"The last thing they want to do is hit something," Hays said. "If you sell more than 100 percent, you don't want to actually hit a well because then you have to pay the investors."

Like "The Producers," oilfield scammers like the Rands often prey on elderly investors, whose memory can be suspect, whose pride might prevent them from complaining and whose mortality might eliminate them. (One of Jeff's investors was television personality Art Linkletter, who bragged about his "oil drilling partner" during a 2002 appearance on "Larry King Live," a few days after his 90th birthday. Linkletter died in May 2010.)

"If you stall long enough, they go to the nursing home or die," Hays said.

Pierre and other surviving Rand investors can at least take satisfaction that the Rands are going to prison. That's another family tradition.

 

March 16, 2007

To the Rand Brothers

I was going to say, Dear Rand Brothers, but that would not be appropriate for a bunch of habitual criminals. There are no humans in the Rand Family.

Humans do not steal from poor investors like myself. I am legally blind. I cannot drive a car and have no money to call a cab to go to the doctor or dentist.

Your family has been stealing my oil revenue every month over the last 14+ years, and this has made my retirement life a mess ...

It is hard for me to understand how you thieves have been able to get away with this fraud ... I know that the Rands have more than plenty of money that they do not know what to do with besides investing in all the toys for adults like auto racing, the horses and many other luxury toys.

Yes, with the money that you have defrauded, you could be paying off some of the people that should have your family behind bars, but this is expected to happen soon, and the Rand family will live in the Big House with a lot of tough company for the rest of their lives, for being habitual criminals.

My guess is there will be no escape to some far-off island, like you are no doubt planning. The law enforcement agencies are up to these tricks and know how to prevent them ...

I know that you do not deserve it, but I wish you good luck.

Bill Pierre

Muskegon, Mich.

(The World War II veteran is now 97.)

 

 

 

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