UPDATE II: Jeff Rand Receives 57-Month Sentence for Million-Dollar Oil, Gas Scam

Even after declaring himself to be "an honest guy," Jeffrey Scott Rand was sentenced Monday morning in Hot Springs to 57 months in federal prison.

The former Arkansas resident was ordered to pay $7.92 million in restitution to 138 victims of his oil and gas scam, and his prison sentence will be followed by three years of supervised release.

U.S. District Judge Robert T. Dawson rejected pleas by Rand's attorney for probation and instead imposed the highest sentence recommended under the federal sentence guidelines. Dawson also ordered that Rand be taken into custody immediately and rejected his request to report to prison at a later date.

"Jeff Rand’s fraudulent scheme preyed on investors, and he has now been sentenced to prison for his actions. This case shows that we will actively prosecute individuals that defraud investors through misrepresentations and deceit," U.S. Attorney Conner Eldridge said in a written statement issued after the sentencing hearing. 

Rand, dressed in a  red striped golf shirt and light colored slacks, made a brief plea to stay out of jail.

"I received my first subpoena in this problem on Dec. 24, 2001," Rand said, an apparent reference to a Texas investigation that ensnared most of his family. For years he followed his lawyers' advice not to say anything, but eventually he "pled to the problem to stop the train. I'd had enough."

"I'm an honest guy," Rand told the judge. "I accept responsibility for this mess. I'm just praying I don't get put in jail. I've accepted responsibility to stop the train."

Rand is the sixth member of his immediate family to be sentenced for similar crimes. He lived in Hot Springs at the beginning of his criminal enterprise. He continued the scam in Houston and now lives in Washington state and, according to a memorandum filed by his lawyer, works as a "successful consultant" in the oil and gas industry.

Judge Dawson said the Rand case was the oldest criminal case on his docket and probably the oldest in the western district of Arkansas.

It has been almost four and a half years since Rand, 49, was indicted on 25 counts of securities fraud and mail fraud, and almost six years since he was the subject of a cease-and-desist order by the Arkansas Securities Department.

He made a plea deal in June 2011 in which 24 counts were dismissed, but in pleading guilty to one count of mail fraud he stipulated that his crimes involved between $2.5 million and $7 million from between 10 and 50 victim. Judge Dawson commented that the plea deal worked to Rand's benefit.

"I think the actual number of victimes was more than 50 and the actual loss was more than $7 million," the judge said. 

Rand faced up to 20 years in prison; federal sentencing guidelines recommended 46 to 57 months. Rand's attorney, Morse U. Gist Jr. of Hot Springs, asked Dawson to sentence his client to probation, suggesting that Rand's continuing employment as a consultant was so lucrative that he might be able to pay the court-ordered restitution in fairly short order.

"I know the court doesn't see that often... but I think that even if the court were to order the full $8 million, that would be something he'd be able to pay in the next year or two," Gist told the judge.

But Rand won't be returning to the oil and gas industry anytime soon. Even during his three years of supervised release following prison, Rand was ordered not to engage in the sale of oil or gas leases without the express permission of federal probation authorities.

On Aug. 16, Gist filed a motion seeking to delay the sentencing hearing until the conclusion of his personal and corporate bankruptcy cases in Texas. There is, Gist wrote, "still remaining a certain amount of funds in possession of the U.S. Bankruptcy Court," and he argued that the restitution paid to victims through the bankruptcy procedure should be considered before sentencing.

Eldridge, U.S. Attorney for the Western District of Arkansas, objected to the delay, pointing out in his response that Rand's bankruptcy and that of his Wave Energy Corp. were involuntary. No victims will receive anything from Rand's personal bankruptcy, and any money coming out of Wave Energy's bankruptcy is "unlikely to compensate the victims in any substantial way, would not compensate any victims who did not make claims, and cannot in any way be characterized as a voluntary restitution by Jeff Rand."

Pre-Sentence Memorandum
A pre-sentence memorandum that Gist filed in federal court on Friday noted that Jeff Rand was born in Conway to Tony and Mary Ann Rand on July 6, 1963, and that he has four brothers. It does not, however, include the fact that Tony Rand and all four of those brothers are currently serving prison sentences -- one in a Texas state prison and the others in federal prisons -- for similar oil and gas scams.

Gist wrote that Rand had resisted voluntary bankruptcy because he "still had hopes of repaying his investors without going into bankruptcy." When the involuntary bankruptcy cases were brought in Texas, Gist wrote, he "completely cooperated" and more than $29.5 million has been distributed from the Wave Energy bankruptcy and more than $6.3 million from Rand's personal bankruptcy.