JIM FUGLIE: View From The Prairie — Maybe The Halek Case Is Over; Maybe

If everything goes as planned Monday morning (which would be unusual — nothing much has gone as planned in this case) Jason Halek will walk into the federal courthouse in Bismarck tomorrow morning as a free man, and walk out— figuratively, if not literally — in handcuffs, headed for a federal prison.

You’ve read about Halek here many times before. He’s the guy who dumped 800,000 gallons of poisonous saltwater down an abandoned oil well south of Dickinson about six years ago and is finally going to be sentenced for Federal Safe Drinking Water Act violations tomorrow morning.

Those crimes are going to send him to the pokey, and his co-conspirator, Nathan Garber, who provided enough telling evidence against Halek to put him in the pokey, and save his own hide, will hear his sentence from Judge Daniel Hovland as well. But if he cut a good enough deal fingering Halek, he will go back to Montana on probation.

It’s been a long, drawn-out case, with two darned good defense lawyers, Alex Reichert of Grand Forks and Monte Rogneby of Bismarck, doing their jobs well, although they were surely aided by the incompetence of lawyers for the state of North Dakota, or the unwillingness of their bosses to actually prosecute someone in the oil industry for messing with our environment.

You can read the whole story about this case in a blog I wrote back in August, or if you’d rather, take a glance through this timeline I put together today, just to refresh my memory about this guy Halek, and his former buddy, Garber. They’re quite a pair. But y’know, some of the stuff they did was just typical of the kind of crowd an oil boom can deliver to your backyard. Take a look:

  • 1998 — Jason Halek moves from Minnesota to Texas to get into the oil business.
  • 2002 — Halek goes into business in Texas as Halek’s Truck LLC, later changing the name to Halek’s Enterprises LLC. Used car business, mostly.
  • 2007-2009 — Halek and an associate raise $22 million to drill oil and gas wells west of Fort Worth, Texas. Among those who lost their entire investment was a 24-year-old blind man from Southern California named Anthony Michael Ramsey. He’d handed over $140,000 of the $400,000 trust set up to support him after the motorcycle accident that blinded him, based on big promises from Halek.
  • 2008 — Halek Enterprises LLC, becomes Halek Energy LLC
  • 2008 — Halek Energy puts down at least $15,000 on a luxury suite in Cowboys Stadium in Dallas, has a 2006 Hummer for a company car and hires a “personal assistant” for Halek to handle his email and drive him out to the oil field.
  • 2010 — Halek moves to North Dakota and forms a new company, Halek Operating ND.
  • July 21, 2010 — Halek Operating ND begins seeking oil well permits from North Dakota officials, for wells near Dickinson. Two permits are granted, and Halek raises $3 million from investors.
  • Sept. 1, 2010 — The Securities and Exchange Commission files a lawsuit alleging that Halek and two Texas companies he owns—Halek Energy and CBO Energy—fraudulently sold investments in oil and gas projects, raising about $22 million from at least 300 investors. Halek settles the case with the SEC later that year by agreeing to a $50,000 fine and to repay “ill-gotten gains.”
  • April 6, 2011 — The pit at one of the company’s two wells near Dickinson overflows from snowmelt. The liquid, with a sheen of oil on top, flows into a drainage. Halek Operating ND faces more than $588,000 in potential fines, but the company catches a break from state officials. All but about 10 percent of the fine is suspended. However, the company has to put up a $20,000 cash bond against potential future contamination.
  • April 11, 2011 — Halek Energy LLC, address Southlake. Texas, an affluent suburb of Fort Worth, whose CEO was Jason Halek, files for bankruptcy.
  • October 2011 — Halek writes to assure North Dakota state officials that after unsatisfactory dealings with a local contractor at the oil pit that overflowed, “we sent our own group from Texas, led by Nathan Garber, to make some final adjustments.” He adds, “Nathan is now in charge of the North Dakota projects.”
  • January-February 2012 — Halek Operating illegally dumps 800,000 gallons of saltwater down a dry hole oil well, converted to a disposal well, near Dickinson.
  • Jan. 23, 2012 — Halek transfers ownership of the disposal well to Executive Drilling LLC, whose owner is listed as Nathan Garber.
  • Feb. 27, 2012 — State oil and gas officials approve the transfer of the well from Halek Operating ND to Executive Drilling. The approval came even though state inspectors have found that the company had continued to inject wastewater, despite orders not to do so.
  • April 2012 — Halek signs over his Texas company, Halek Energy to some of the Texas fraud victims.
  • April 2012 — Halek signs over control of Halek Operating ND to someone named Corey Hunt. Halek says Hunt is a small investor in the North Dakota project, as are some of Hunt’s family members. Hunt says in written comments to the state that he got involved to “protect the investors.” No one has heard from Hunt since. Not sure if he is part of the Hunt Oil family.
  • June 2012 — North Dakota officials, including the Bureau of Criminal Investigation, step up their investigation of a defective disposal well for oil field waste at one of Halek’s well sites near Dickinson.
  • July 2012 — After an investigation of the disposal well, North Dakota Industrial Commission fines Halek $1.5 million, which makes big headlines in the state’s newspapers. Oil and Gas Division director Lynn Helms turns the penalty over to the state court system to collect the money. No one has heard from the court system about the fine since.
  • July 27, 2012 — BCI files criminal charges against Garber.
  • Aug. 1, 2013 — Halek admits to four counts of violating the North Dakota Administrative Code by illegally dumping saltwater down the disposal well. Charges later dropped when federal investigators take over.
  • Aug. 5, 2013 — The United States Court of Appeals for the Fifth Circuit issues an opinion Halek is responsible for repaying more than $26 million in fraudulent investments and interest to victims in his Texas oil scheme.
  • Sept. 22, 2013 — Nathan Garber submits an Alford plea in state court in North Dakota and receives a two-year suspended sentence and a $2,500 fine. Garber heads back home to Montana to serve his two-year nonsupervised probation period.
  • Nov. 20, 2013 — North Dakota’s U.S. Attorney Tim Purdon decides state officials, including the North Dakota Industrial Commission staff and commission members Jack Dalrymple, Doug Goehring and Wayne Stenehjem, who is also the state’s top law enforcement officer, are doing a pretty shitty job (my word, not his) of enforcing the law and protecting the state’s environment, and calls in the feds. The U.S. Environmental Protection Agency’s Criminal Investigation Division executes a search warrant at the well site and finds evidence there were at least five violations of the U.S. Safe Drinking Water Act and a conspiracy to cover them up, charges much more serious than the state’s flimsy “violations of the administrative code” charges. Garber quickly pleads guilty to a total of 11 federal charges and faces a 50-year prison sentence.
  • Feb. 19, 2014 — Halek Energy, LLC, emerges from bankruptcy. Notably absent, however, is the company’s founder and namesake, Jason Halek. Texas law firms representing investors continue efforts to recover victims’ money.
  • Nov. 29, 2014 — Halek forfeits a $40,000 bond against his $1.5 million fine. State officials acknowledge they are likely never going to collect the $1.5 million fine, because there is no money.
  • September 2015 — More of Purdon’s work: a federal grand jury returns a 28-page indictment against Halek, with 13 felony charges, including, like Garber’s, violations of the Safe Drinking Water Act, as well as four counts of providing false information to the North Dakota Industrial Commission. Those charges were the result of poring through Industrial Commission documents and interviewing staff and finding violations Stenehjem had declined to uncover or pursue.
  • October 2015 — Presentence investigation on Garber is complete, but no date set for sentencing because prosecutors want to wait and see if he will testify against Halek. Halek trial, originally scheduled for Oct. 27, 2015, postponed until at least mid-2016.
  • Feb. 21, 2017 — Halek agrees to plead guilty to three Safe Drinking Water Act violations.
  • April 13, 2017 — Halek enters a formal guilty plea in U.S. District Court in Bismarck. Sentencing is set for July 31, 2017.
  • July 19, 2017 — Halek’s attorney, Alex Reichert, files a motion for an extension of time to object to the presentence investigation report. U.S. District Judge Daniel Hovland grants the request and sets sentencing for Oct. 11, 2017.
  • Oct. 11, 2017 — Sentencing date comes and goes. Sentencing for both Halek and Garber rescheduled for Nov. 27, 2017.
  • Oct. 27, 2017 — Speculation: Garber agreed to testify against Halek if there was to be a trial, leading to Halek’s guilty plea. Halek was the guy the feds really wanted. My guess is Garber will walk out of court with another suspended sentence and probation period and maybe a fine to cover all the costs of the investigation and prosecution. I don’t know if Garber has any money, but the feds do. And I’d guess Halek will get 24 to 28 months in a federal prison. That would be a pretty steep sentence for a Safe Drinking Water Act violation. Offenders don’t often get prison time for that. And there could be a hefty fine.

During all of this, Halek has gotten back into the used car business in Texas. Maybe there are some assets there. Maybe the North Dakota Industrial Commission could even get a few used cars as part of its $1.5 million fine. I’ve spent a lot of hours writing about this case, Maybe I could get one of those cars. Meanwhile, the Industrial Commission is in the legal process of claiming ownership of the tainted well south of Dickinson. Just what the state needs: an abandoned oil well full of 800,000 gallons of poisonous salt water. Which they then get to clean up. Maybe they could send Garber and Halek out there with some siphon hoses …

We’ll see what happens in the morning. I’ll be in the front row Judge Hovland’s courtroom. Come and join me. It could be quite a show.

Oh, and one last note: I’ve been talking today via text message with Halek’s first girlfriend, Stephanie, with whom he broke up in 1994. She’s predicting the sentencing will be postponed again. “He seems to get out of everything.”

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