Several companies have taken root in Bowling Green selling stakes in oil and natural gas drilling projects, but prosecutors and some former employees say not all of them are legitimate.

These companies would purchase lists of clients, then sell them oil securities, which were parts of wells the company planned to drill.

But in May, the owner and an employee of one company will be sentenced for running the business illegally, while another is facing federal charges of tax evasion. Another well-known figure in the industry, former Bowling Green resident David G. Rose, has had a number of lawsuits filed against him.

Jason Uhles, 31, and Dean Knight, 40, both of Bowling Green, werethe first to face criminal charges and are scheduled to be sentenced May 3 in U.S. District Court in Bowling Green.

Knight is in jail awaiting sentencing. Knight was the president of Universal Development Investments Inc. and Universal Realty. Uhles held the title of vice president of development with Universal Development.

The investigation began when Knight complained to the Bowling Green Police Department that Uhles had gone on a Hawaiian vacation and taken company money. After interviewing Knight and Uhles, city police turned the investigation over to the FBI.

When contacted, Uhles said he couldn’t speak about his case because of the terms of his plea agreement. Uhles has agreed to cooperate fully with the FBI investigation of Knight and others in the industry in exchange for the U.S. Attorney’s Office considering the recommendation of a reduced sentence.

&#8220Theywant people that have criminal records or are only concerned about money,” Uhles said.

The companieswanted that sort of people because they would not question the sales or other activity as being illegal, he said.

Uhles had no criminal record when he was hired by Rose’s company, but was convicted in May of 2003 of second-degree forgery and theft by deception for passing a bad check. He paid $6,445 in fines and restitution and received five years probation and a two-year suspended sentence.

The companies have claimed several times in court they drilled for oil and gas, but were unsuccessful. Uhles claims the companies would raise from clients several times what it cost to drill a well, and pocket the difference.

Oil and gas is a simple industry for this type of scheme to work, Uhles said.

&#8220People have seen people who have made a lot of money in the oil and gas industry,” he said. &#8220They know it’s risky, but they don’t care.”

Ken Richardson of Lindsay, Calif., was one of the people Uhles sold oil securities to while with Allied Energy Group and Universal Development, both based in Bowling Green. Both companies are out of business, with the owners in jail.

He was told his initial investment would be repaid within six months and then he would begin to turn a profit, Richardson said. He invested approximately $30,000 with the two companies.

&#8220I looked at the brochure and it appeared they were some real good producers,” he said. &#8220There were a whole lot of people promising big payouts.”

Richardson said he called the FBI about the scheme when he realized what was occurring. The company was simply taking advantage of customers with no intention of providing profits for wells.

&#8220I felt like I was just another name they were going to add to the list,” he said.

It is good to know that some of them are going to prison, Richardson said.

Elmer Rauckman of Freeburg, Ill., said he was told during his first contact with Universal Development that the company was drilling over an existing well and simply doing some cleanup to make it operate more efficiently, and the investment was &#8220very low-risk.”

&#8220I’ve never seen any money out of it,” he said. &#8220I called back six months later and their phones had been turned off.”

Rauckman invested between $3,000 and $4,000 in the Universal Development project, he said.

&#8220I was hopeful for them, but I didn’t trust them,” Rauckman said. &#8220They seemed so sincere.”

Not very many oil companies are solid investments, he said.

&#8220There’s a few, but they’re few and far between,” Rauckman said. &#8220It’s a minefield, and hopefully putting a few of these people in the pen will make things safer for the rest of us.”

After investing in a number of oil companies, he said some provide monthly return checks.

&#8220What these companies have done is screw up a bunch of people’s retirements,” Rauckman said.

Knight made a &#8220blind plea” of guilty, which is a plea where there is no signed agreement with the prosecution in the case, said his attorney, Joseph Kirwan of Bowling Green.

In federal courts, a plea agreement provides no benefit because it’s not binding, Kirwan said.

If a person simply pleads guilty, the sentence can be appealed, but not if a plea agreement has been reached, he said.

Negotiations for a plea agreement never reached the point where the U.S. Attorney’s Office would ask for testimony against others, like it has from Uhles, Kirwan said.

Knight is also facing two counts of theft by deception over $300 in Warren County Circuit Court over charges of writing bad checks and is charged with being a persistent felony offender. He was convicted on two previous occasions in Warren County of theft by deception for writing bad checks, according to court records.

Allied Energy is the second company owned by Richard P. Underwood, 53, of Bowling Green. He also owned OTR Media, which sold investments in a soon-to-be publicly traded company that would place photos of missing children on tractor-trailers.

OTR is out of business and Underwood is facing federal charges on six counts of tax evasion.

The indictment accuses Underwood of not paying taxes on $3.6 million he earned over a six-year period. He was granted a personal recognizance bond March 22 in an initial hearing. He’s scheduled to appear in court for a pretrial hearing April 12.

Uhles also worked for both OTR Media and Allied.

&#8220It seemed like every time we would get ready to go public and start doing it, something would happen to delay it and finally the company went out of business,” he said, referring to OTR Media.

According to OTR documents, the company raised $4.1 million in its first round of selling private shares. The second effort raised another $2.7 million, Uhles said. Underwood is accused of evading taxes on some of these funds.

OTR was a billboard company originally, with its focus and name changing to Allied when it became a securities company.

The companies all use similar training materials, Uhles said.

The training guide for Universal Development provided to The Daily News is taken from the book &#8220Closers” by Jim Pickens, including a chapter on psychological manipulation.

It says &#8220the master closer out-sells anyone, anywhere, anytime through head games, psychological manipulation and knowledge.”

The OTR Media sales training book told employees if they could send four booklets about the company to customers within four hours, within two years they could have a net worth of more than $2 million.

Salespeople were given complete transcripts of what to say, including definitions of terms in the event their customers asked questions.

Some had terms at the top such as the &#8220no money” pitch or the &#8220not interested” pitch. Documentation on potential investors kept by the companies would include items such as income level, house values and anticipated amount the person could invest.

In addition, David G. Rose, former owner of Robo Exploration Inc. and then Sunclear Energy, was accused of securities fraud by former investors and taking advantage of customers by selling the securities in a fraudulent or deceiving manner.

Rose was named in a civil suit, with the company having to pay a $2.7 million judgment to Randall and Delores Daringer in a case that began in Maryland and was settled in U.S. District Court in Bowling Green.

Two cases, which named Rose, involved Sunclear. Both were dismissed – one because of jurisdictional problems, and no reason was listed in the federal court documents in the other case.

Rose has no felony criminal record in Kentucky, according to state court records.

Uhles, who currently works as an independent contractor delivering newspapers for the Daily News, urged young men working for oil exploration securities companies to be careful and ask questions about their job.

&#8220They should get out before it’s too late,” he said.