Derek A. Candelore, Mail Fraud, Pennsylvania 2013

PITTSBURGH – A brazen scheme to steal mineral rights on behalf of natural gas production companies has landed two Western Pennsylvania men in prison, according to the U.S. Attorney’s Office.

Derek A. Candelore, aka Dan Kun, and Kevin Kelly, 34, of Jeannette, PA 15644, received sentences of 40 months in prison and three years supervised release for their roles in the mail fraud scheme. William J. Ray, 30, of Verona, PA 15147, was sentenced to 20 months in prison and two years supervised release.

Candelore and Ray, employed by Penn-Star Energy, LLC, used forged signatures, fake companies and forged notary signatures and stamps to steal mineral rights on behalf of Range Resources Corporation. The scheme, which began in February 2011 and ended in June 2012, resulted in a total loss of $2,400,144.77 to unsuspecting investors.

The scheme involved setting up post office boxes and bank accounts in the names of companies created by Candelore and Ray. They arranged for deeds and other documents to be filed at the Washington County Recorder of Deeds Offices, furthering the illusion that the true mineral rights owners had transferred their rights to the fake companies.

After acquiring what appeared to be ownership of the mineral rights, Candelore and Ray leased and/or sold the rights to innocent investors, including local investors, out-of-state investment groups and Range Resources. Candelore pocketed $1,856,998.27, and Ray pocketed $543,146.50.

The scheme began to unravel when one of the mineral rights owners hired an attorney to sell the mineral rights, leading to the discovery of a forged signature on a deed. The U.S. Postal Inspection Service led the investigation, which was prosecuted by Assistant U.S. Attorney Nelson P. Cohen.

U.S. Attorney David J. Hickton commended the Postal Inspection Service for their role in bringing the perpetrators to justice. Candelore and Ray were ordered to pay restitution totaling $2.4 million.

The sentences handed down by U.S. District Judge Arthur J. Schwab are a stark reminder of the consequences of engaging in such egregious crimes. As the U.S. Attorney’s Office continues to work tirelessly to protect the public from white-collar crimes, it is clear that those who seek to profit from such schemes will be held accountable.

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