Complaint Review: John Gentry HaydenIdaho

In June and July, 2016 our oil and gas brokerage represented two different energy industry clients who desired to buy oil and gas royalty and minerals,  We dealt with John Gentry and Diverse Energy Investments of Hayden, Utah.  These transactions were significant and involved several hundred net acres of oil and gas royalty interests in the Bakken (North Dakota) and the Niobrara (DJ Basin of Colorado).  

Gentry repeatedly confirmed, orally and in writing, that he represented the sellers in the contemplated transactions, had agreements with the sellers to sell the properties. and was authorized to conduct the transactions on the sellers' behalves.

Gentry induced the two different buyers, who were sophisticated in oil and gas industry royalty and minerals transactions, to enter into letters-of-intent by making representations that were subsequently determined to be false and misleading.  Gentry did not enter into the transactions in good faith.  He had no confirmed relationships with the sellers which authorized him to market or sell their properties, and no authority to conduct business on their behalves.  Gentry stated that the sellers preferred that his company, Diverse Energy Investments, be the nominal seller so that the "real" sellers were undisclosed, which is a customary practice.  Gentry therefore inserted Diverse as the seller in the letters-of-intent.  

Gentry's true intention was to obtain letters-of-intent from buyers and then bring the offers to targeted sellers in hopes of gaining their confidence and persuade them to engage in transactions.   

When the transactions progressed into the due diligence stage, Gentry was not forthcoming with the usual and customary data that is exchanged, including check stubs from operators reflecting monthly revenue payments, well descriptions, division orders, and title.  He promsied multiple times that the data was forthcoming, that we would have it tomorrow, etc., but it never was.  One time, as a red herring he sent the wrong set of check stubs, which were obviously wrong because they related to property that was Townships distant, and were aged instead of the current stubs.  Responding to my question, he said "Everyone makes mistakes." 

In both transactions, the buyers eventually determined that Gentry had no control of the properties being offered for sale, no relationships with the sellers, that he mispresented facts to fraudulently induce the buyers into the letters-of-intent, and then marketed the letter-of-intent in the hopes of attracting sellers. The buyers engaged in many days of analysis of the properties purportedly offered for sale, and expended money conducting research, all in reliance on Gentry's fraudulent statements and misrepresentations. Gentry and Diverse Energy Investments had fraudulently induced the buyers into the agreements, and then failed and frustrated performance by refusing to cooperate with due diligence requests and by furnishing false and misleading information.  

Only when Gentry dropped out of sight, refusing to answer his telephone or email, and refused to contact the buyers or this broker any longer, and suspicions arose, was he investigated.  The results of the investigations confirmed that Gentry never had relationships with the property owners, nor authority to market their properties for sale, nor the ability to conduct business or close the transactions on their behalves.  

Gentry lied to this broker and to the buyers, both of whom were ready, willing and able to close on the properties at the agreed upon price.  During multiple telephone calls before Gentry fell out of sight, it sounded to this broker like Gentry was at times intoxicated, especially during the late afternoons and evening hours.  He slurred his words and was unable to stay on task.       

Beware of this purported oil and gas minerals and royalties broker.  He is a fraud and merely wastes your time.