The investments, according to prosecutors, were for two oil wells to be drilled by North Shore with the promise of as much as 15 percent to 20 percent return on investment.
As collateral, the company touted gas wells that were operational. But North Shore was already in litigation over the rights to the land where the wells were to be drilled and at least one of the gas wells was already capped.
Thus, those who invested money were not told the whole truth and lost their money.
On Monday, the courtroom was filled with victims.
Warren Townsend, a CPA, said, “I lost $56,000 on this deal. I am a CPA. I am held to a very high standard. The IRS holds me to a high standard. They (the convicted men) should be held to the same high standard.”
John Morehead and his wife, a retired nurse, lost $140,000.
“I met him (McManus) over the radio. Listened to his show,” said Morehead. “They promised me 15 percent.”
Morehead said the couple’s life and retirement accounts are now strained.
Gary Gruber told the judge he had also listened to McManus’ radio show. He invested $250,000 that he had saved to pay for his children’s college education.
“I trusted Bob,” Gruber said. “He swore to me this money was safe.”
North Shore’s William Troy West, 48, of Texas, who pleaded guilty in 2015 to fraud and sale of unregistered securities, was sentenced to six years in prison. He too was immediately taken to the county jail.
A third defendant, Catherine Schaper, of Texas, also a member of North Shore, has taken a plea deal and will be sentenced in August.
John Holcomb Jr., attorney for West, said his client has invested in a company in South Texas that cleans water from the oil wells and he is “working diligently” to pay investors. On Thursday, a payment of $54,000 was made, Holcomb said.
West said, “I would like to apologize personally to any one in this room who considers themselves a victim of these circumstances.”
McManus said he has lost his home and his business and that his family is “a mess. He told the judge he was “sorry and ashamed.”
He said he did not know West and Schaper were going to defraud on the investments. He also maintained he did not know the laws about the sale of promissory notes in Ohio. McManus said he searched the Internet and trusted Schaper to make the sales.
McManus admitted he never consulted an attorney.