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Howard Ain, Troubleshooter: Thousands of Kentuckians Fall for Oil Scam

Updated: Wednesday, October 15 2014, 10:50 AM EDT
UNDATED (Howard Ain) -- It's one of the biggest all-time scams in US history and several people in Kentucky fell victim to it. Local 12 Troubleshooter Howard Ain says they fell for the false promise of a huge payoff. The promise in this scam is a share in the millions of dollars made in an oil boom more than a hundred years ago. There have been more than 30-thousand victims in this scam.

This story begins in the 1900s when oil was discovered on Spindletop Hill in Texas, the first major gusher of the texas oil boom. Investors, at the time, made million of dollars.

Then, in the 1950s, a myth emerged alleging the government had stolen profits from Spindletop. Enter Jewel Robbins and her pitch. "What was an urban legend, that there was money that the government took that was not given back to the founding partners."

She told distant heirs of the oil fortune she was willing to fight for what was believed to be "trillions of dollars" still owed to descendants. Robbins didn't stop with getting heirs to invest. "She got other people to help finance because she claimed it would take a lot of money to hire these lawyers to go through the court process in order to get the money back."

Prosecutor Andrea Williams says, "in this scam they would send out letters saying the money is coming, the money is coming, we need more donations to support this lawsuit." In fact, more than tens of thousands of families invested millions of dollars into what they thought was a legal battle over these oil royalties. The problem? "In truth, it is an urban legend. there is no money that the government has pending or on hold or anywhere."

Several state and federal agencies including the US Postal Inspection Service began tracking Robbins and this case and found no government conspiracy - simply greed. "All of this money was going to her bank account to support herself and her various children, which was supposed to be part of the investment."

Some families lost their life savings, "the people who shamed them have already spent the money and done everything with the money. By the time they are prosecuted, all of the money is gone. victims are out in the cold."

In 2009, 76 year old Jewell Robbins was sentenced to 5 years probation for violating securities laws related to the Spindletop oil case.  She died earlier this year at age 80. Since her death, thousands of people have filed claims seeking a piece of her estate in return for the money they gave her in the case.
(Photo courtesy Lexington Herald-Leader)

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