Thursday, April 27, 2006

Former Patterson-UTI Energy CFO Pleads Guilty to Embezzling Over $77 Million

Jody Nelson was a senior financial officer of Patterson-UTI Energy, Inc., a Snyder, Texas, based oil rig company, for nearly ten years, and he seems to have spent a good deal of that time engaging in a series of schemes to defraud the company of over $77 million, an astounding amount of money.  Nelson moved up from controller to CFO in 1999, and served in that position until the SEC filed an emergency action freezing his assets once the embezzlement came to light.  Nelson entered a guilty plea to wire fraud and money laundering charges, and a press release issued by the U.S. Attorney's Office for the Northern District of Texas (here) describes four different schemes by which he siphoned off millions from the company.  He first forged a series of checks from 1998 to 2000, totaling $4,639,750, an ostensibly substantial amount but merely a warm-up for what was to come.  Nelson moved to his biggest scam that involved fictitious invoices authorizing payments to companies he controlled, and a series of wire transfers totaling $69,434,342 were made from 2001 to 2005.  While he was at it, in 2004 Nelson has Patterson-UTI buy him an executive airplane, billing the company the $2,126,891 it cost.  Finally, by forging the company's chief operating officer's signature, Nelson was able to obtain payment of a bogus invoice for $1,586,666 so he could buy shares in a construction company.

Where was the internal audit department at Patterson-UTI, or its outside auditors?  Neither apparently paid much attention to the millions of dollars flowing out of the company over an extended period of time, so look for a lawsuit at some point raising these issues.  Moreover, if Nelson received assistance from anyone inside or outside Patterson-UTI, the investigative focus will shift to that person.  In the meantime, unless Nelson can pay back a substantial portion of the money or provide significant cooperation before his sentencing, he will be looking at an extended term of imprisonment. (ph)

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» Former Patterson-UTI CFO cops plea deal from Houston's Clear Thinkers
These previous posts reported on the unusual case of Jonathan D. "Jody" Nelson, the former chief financial officer of Snyder, Texas (between Abilene and Lubbock)-based Patterson-UTI Energy, Inc., one of the largest land-based drilling contractors in th... [Read More]

Tracked on May 1, 2006 3:44:09 AM


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