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Land men: Sophisticated scheme involving natural gas drilling rights netted scammers $2.4M

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MILWAUKEE -- Two men were able to develop a sophisticated scheme involving natural gas drilling rights and forgotten land -- yielding them millions of dollars in a very short amount of time. United States postal inspectors say this case offers a lesson for everyone.

Land scheme

Land scheme

The idea for this scam came about while the suspects were working as so-called "land men." Their job was to secure the natural gas drilling rights for legitimate companies -- but claiming they had drilling rights when they didn't proved to be more lucrative -- yielding the men more than $2.4 million over a year-and-a-half.

Here's how it worked:

"Most of the people that truly did own the mineral rights were unaware that they owned the mineral rights because it had been transferred to them to their family generations ago," Randy Hayden, U.S. postal inspector said.

The suspects then seized upon this information and decided to claim the rights for themselves.

"They would create different company names, and open bank accounts, open post office boxes in these company names," Hayden said.

Natural gas drilling

Natural gas drilling

Then, they created fictitious documents.

"At the back of the document on the signature page, they would just forge the true mineral rights owners` signatures and then they would also create a fictitious notary stamp," Hayden said.

Then, the documents were turned over to a deeds office. At this point, the bogus company could sell the drilling rights to big firms.

"It was quite lucrative. These energy companies were signing people leases for oil and gas rights for approximately $3,500 an acre. So 100 acres -- you sign a lease agreement, and that is $350,000 dollars," Hayden said.

Eventually, the scam failed. The suspects pleaded guilty and were sent to federal prison.

There's a lesson here for everyone:

"If you`re purchasing a big tract of property in a rural area, ask a few questions about the mineral rights underneath because it`s not always included in the transfer of the surface rights," Hayden said.

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