Petro America defendants are convicted on all counts

A federal jury convicted all five defendants Wednesday in the Petro America Corp. stock fraud that began in local churches and grew to international proportions.

Petro founder Isreal Owen Hawkins Jr., 57, of Kansas City, Kan., who defended himself at trial, was taken into custody after the verdicts were read shortly after the lunch hour in U.S. District Court in Kansas City.

Four others are free on bond pending sentencing. Nine more, including some local ministers, had pleaded guilty to various felonies before the trial.

Thousands of investors from across the nation, in Canada and as far away as England had put up more than $10 million since 2008, according to prosecutors, in a company they were told was worth $284 billion. Promoters promised that the rewards would come suddenly when Petro America shares began to trade publicly.

“We just thought we were going to become millionaires,” said Arnetta Johnson, 83, of Grandview, who paid $100 for 100,000 shares after hearing about Petro at church. “You hate to be duped.”

Federal prosecutors took action in 2010 with a raid that netted some cash, jewelry and other properties bought with proceeds. They’re still trying to identify investors because company records were a mess and much of the stock was sold and resold.

“It’s sad that so many of the people who bought stock in this company were older people, poor people, disabled people and especially religious people — and that the defendants were willing to line their pockets with proceeds from people who really couldn’t afford it,” said Dan Nelson, an assistant U.S. attorney who led the government’s case.

Some of the defendants unsuccessfully portrayed themselves as victims at the trial, arguing that they relied on Hawkins’ representations.

Teresa Brown, 55, of Bandera, Texas, regrets the $3 million she collected by selling shares that Hawkins had given her mostly for free, said her attorney, Willie J. Epps Jr. of Dowd Bennett LLP.

“She (now) understands this company was not real,” Epps said. “There are some who still believe despite the verdicts.”

Jurors rejected Brown’s claim that she had acted in good faith rather than sought to defraud investors. The other three defendants essentially raised the same defense to no avail.

“He believed Mr. Hawkins and relied on that,” said Lance Sandage, who represented Johnny Heurung, 59, of Little Falls, Minn.

Jurors instead confirmed prosecutors’ claims that the five illegally conspired in the sale of shares, failed to tell investors that Missouri securities officials had ordered a halt to the sales, and falsely presented Petro America as the owner of gold mines and successful businesses.

Attorneys for the other defendants could not be reached.

Jim Lucot, who had known Heurung for years, said he relied on Heurung’s word when he bought $700 worth of Petro stock from Brown. He forked over thousands more to go on a 2010 Petro shareholder cruise.

“We really were told nothing on the cruise. It was a waste of our money,” said Lucot, a 79-year-old resident of North Huntington, Pa. “I really trusted him.”

During the trial, Hawkins tried to convince jurors Petro America was a real company that the government had sought to destroy.

“The government is trying to convince you that this company isn’t real,” Hawkins had said in his closing arguments to the jury on Tuesday. “They’re railroading people. They’re railroading shareholders.”

He was convicted of one count each of securities fraud, aggravated currency structuring, money laundering, conspiracy and two counts of wire fraud.

Brown was convicted of six counts of wire fraud, and one count each of securities fraud and conspiracy.

Heurung was convicted of one count each of wire fraud and conspiracy. An additional wire fraud charge was dismissed by U.S. District Judge Brian C. Wimes and was not weighed by the jury.

William Miller, 42, of Independence, was convicted of one charge each of money laundering, wire fraud and conspiracy.

Martin Roper, 47, of Kansas City, Kan., was convicted of conspiracy.

The Associated Press contributed to this article.