Kansas City brothers plead guilty to defrauding investors of millions in oil, gas fraud
Two Kansas City-area brothers have pleaded guilty to federal charges that they defrauded investors out of millions of dollars in a scheme related to the oil and gas industry.
Much of the money was squandered on personal expenses, a land deal and, by a third defendant, on Las Vegas casinos, according to court records.
Phil Hudnall, 49, of Lenexa pleaded guilty Friday to one count of conspiracy to commit money laundering. Brian Hudnall, 43, of Kansas City pleaded guilty midweek to the same charge. Both face up to 10 years in prison, forfeiture of money and property and must pay their victims restitution.
A Texas man allegedly involved in the scheme was indicted late last month on one count of wire fraud. Duc Nguyen of Houston pleaded not guilty this month at the federal courthouse in Kansas City.
The Star last month published details of the scheme, as well as comments from victims, after the federal Securities and Exchange Commission filed a civil suit against the brothers, Nguyen and others in connection with the scheme.
According to court documents, Phil Hudnall, a former cross country coach and one-time winner of the Kansas City marathon with a history of cheating investors in oil and gas schemes, solicited more than $4 million from investors in 2019 by promising rapid returns of 20 to 30 percent on their investments.
He said the money would be used to buy, refurbish and resell equipment used to extract oil and natural gas.
Instead, Hudnall spent most of that money on a land deal and personal expenses, including a $100,000 sport utility vehicle. Brian Hudnall helped launder the money through shell companies controlled by his brother and took a cut for himself, court records said.
Phil Hudnall transferred more than $1 million to Nguyen to buy some oil and gas equipment, but according to the SEC and federal prosecutors Nguyen never bought any drilling gear. Instead he spent the money on a car and at casinos.
Under their plea agreements, the Hudnalls must repay their victims and forfeit $3.8 million. The government has already seized some of that.
Sentencing dates have not been set. The SEC civil case remains pending.
