K
Kickin' Ass and Takin' Names
Guest
Let There Be Light Crude
Evangelical preachers claim that a giant oil find in Israel will usher
in the end of days. Enter the con men and penny-stock hustlers.
Mariah Blake
January/February 2008 Issue
When james cojanis heard the first rumblings of Armageddon, he was
sitting in his San Jose home with the radio tuned to a popular
Christian show called The Prophecy Club. Featured that day was a
charismatic Texas oilman named Harold "Hayseed" Stephens. Speaking in
the rousing cadence of a Southern preacher, he told listeners that
"the greatest oil field on Earth is under the southwest corner of the
Dead Sea"--and that his company, Ness Energy International, was about
to tap into it. In doing so, he said, it would drain the oil fields of
the Persian Gulf, prompt Arab countries to attack Israel, and at last
touch off the great battle that would usher in the end of days.
As soon as the show was over, Cojanis got on the phone to find out how
to invest in the venture. Days later the 70-year-old retiree received
a form letter addressed, "Dear End Time Servant." It claimed that the
oil reserves at Ness' planned drilling site ranged "from one billion
to 40 billion barrels...putting this prospect in a class of the super
giant oil fields of the world." Without a second thought, Cojanis
bought $120,000 worth of stock in Ness. "Faith is a gift God puts in
your heart," he explained when I visited him in October at his
cluttered town house, piled with crumpled boxes of prophecy-themed
newsletters and cassette tapes of old Christian radio shows. "And I
didn't have any doubt that Ness was a plan of God. He raised up
Hayseed Stephens to find Israel's oil."
Eight years later, Ness has yet to sink so much as an initial borehole
for a Dead Sea well. In fact, for most of its existence it has never
even held exploration rights in Israel. Its U.S. headquarters, a
barnlike storefront topped with an open Bible sprouting an oil well,
was shuttered in 2006. Since then, its stock price has fallen from a
high of nearly $5 to a mere 3 cents; Cojanis' $120,000 investment is
now worth $3,000. Not that he's worried. "I'm glad the stock price is
in the tank," he says. "When they hit oil and the stock goes sky-high,
that means Armageddon is around the corner." At that point, he plans
to use his gains to spread the word that the end times are here,
preparing as many souls for heaven as possible.
It is widely believed among evangelical Christians (and some Orthodox
Jews) that Scripture foretells a massive oil find in the Holy Land;
prophecy buffs are especially captivated by a passage in Ezekiel that
says Armageddon will be triggered by a band of nations--Russia, Iran,
and a confederacy of Arab countries are most often named as the likely
suspects--attacking Israel to "take a great spoil." Their faith has
spurred a sprawling, decades-long treasure hunt. At least 10 companies
or individuals have searched for oil in Israel using biblical clues.
So far, few of the more than 400 wells drilled there have turned up
commercial quantities of oil and gas. But the willingness of ordinary
churchgoers to invest their life savings has kept the ventures going--
and made the business rich terrain for a bevy of false prophets, penny-
stock hustlers, and con men.
a burly man who favored Wrangler jeans and fat belt buckles (one of
which bore an oil derrick emerging from a Star of David), Hayseed
Stephens grew up picking cotton and slopping hogs on a Texas
sharecropping farm. For a brief stretch in the early 1960s, he played
quarterback for the New York Titans (now the Jets) before returning to
Texas to work the oil fields and, later, minister to the faithful from
a church he opened in Willow Park, near Dallas.
In 1997 Stephens acquired a publicly traded shell company that he
renamed Ness ("miracle" in Hebrew). With meager assets and no recent
operating history, it was a business in name alone, but that didn't
stop Stephens from selling millions of dollars of stock in it. He got
help from Stan Johnson, a one-time salesman turned doomsday prophet
who founded the Prophecy Club, a Kansas-based ministry that airs
television and radio programs on Christian stations across the country
and holds traveling revival-style meetings. Johnson once told his
followers that Stephens could be drilling within 60 days if he just
collected enough money: "And when the well is drilled, when the oil
comes in, 17 Bible prophecies will be fulfilled...We believe now is
the time and Hayseed is the man."
Besides scriptural backing, Stephens claimed to have geological proof
for his theory. In late 2002 he told Prophecy Club listeners that
"experts from Israel and around the world" had studied his planned
drilling site and concluded that "18 to 50 billion barrels of oil"
were hidden beneath the surface, reserves worth up to a trillion
dollars. "You cannot find such good odds in Vegas, Atlantic City, or
anywhere else in the world, even if you are nothing but a gambler."
Among those swayed was Michael, a 53-year-old Kansas farmer who asked
that his last name not be used. In 1999, he invested half a million
dollars in Ness, learning only later that the shares he bought
couldn't be resold--a claim echoed in lawsuits filed by other Ness
stockholders. He was forced to watch from the sidelines as the share
price climbed from the 45 cents he paid at one point to around $5,
then sank back to around a quarter. At the peak, his stock would have
been worth $11 million. "I thought God was in the project," he says.
"It turns out it was a trap laid for me by the enemy, Satan."
Over the past 10 years, Ness has issued 180 million shares and
collected almost $10 million from investors. What most of them didn't
know--and still don't today--is that behind the fire and brimstone
lurked a standard penny-stock play known as the pump-and-dump scheme,
which entails buying a publicly traded shell company, inflating the
stock price with misleading claims, then selling off shares at a huge
profit and leaving investors holding the bag.
Key Ness executives had a history of such cons. The company's original
chief financial officer, Ivan Webb, moonlighted as president of a firm
called Broadband Wireless, where, according to sec investigators, he
and convicted con man Donald Knight cheated stockholders out of at
least $5 million. Ness' founding ceo, Stanley Swanson, headed an
outfit called Safescript Pharmacies, which had its registration
revoked by the sec for artificially inflating its stock value through
a fraudulent accounting scheme. A few other Ness insiders had ties to
Safescript, including Webb, who served as a consultant. In 2000, Ness
purchased $1 million in Safescript stock--shares that became nearly
worthless within months.
Stephens played a similar game with Ness' stock--driving up prices with
apocryphal claims, then selling shares, ultimately clearing at least
$3.5 million. But in this case, pump and dump was just part of the
swindle.
one of Stephens' darkest secrets is buried in Israel's oil register, a
battered leather binder held together with red electrical tape whose
crumpled pages hold exploration permits dating back several decades.
During a visit last summer to the offices of the Ministry of National
Infrastructures in Jerusalem, I combed through the book with the help
of deputy oil commissioner Avraham Honigstein, an unassuming geologist
who speaks in a precise monotone. It took nearly an hour, but we
eventually unraveled an elaborate shell game designed to give the
illusion that Ness held drilling licenses. In fact, the rights were
held by a private company called Hesed--a firm owned by Hayseed
Stephens. What's more, Ness and Hesed had an operating agreement
saying that Ness was to perform all the work on the proposed Israeli
drilling sites while Hesed would receive all the potential profits. In
other words, had either company struck oil, Ness investors wouldn't
have seen a penny.
In the end, the terms didn't matter much, since Stephens never even
laid the groundwork for a Dead Sea well. "He didn't do the geological
work because he didn't want to spend the money," Moshe Goldberg,
Israel's former oil commissioner, told me. He called the claims that
Stephens sold "lies" and "nonsense."
In April 2003, Stephens sold Hesed and another firm he owned to Ness
for around $4 million--at least four times what they were worth,
according to sec documents. Stockholders were led to believe that
Hesed's value lay in proprietary geological and seismic data collected
on the sites where it had held licenses in Israel; in fact the only
geological work Hesed had ever done was to reinterpret an existing
seismic study.
The deal was Stephens' last. He died the following month, struck down
by a heart attack while praying with a neighbor outside of his Texas
home.
the history of biblical oil prospecting is filled with quixotic quests
and colorful characters, starting with Weslie Hancock, a wealthy
California man who in the 1960s dreamed that Jesus told him he would
find black gold in the Holy Land. He sunk his entire fortune into two
dry holes. In the 1980s, Andy Sorelle, a World War II fighter pilot
and petroleum engineer, collected as much as $25 million from
churchgoers who believed they were buying an interest in his well; he
bored down to 21,500 feet, deeper than anyone had ever drilled in
Israel, before hitting a thick slab of limestone that showed traces of
oil. Across the Bible Belt, the faithful braced for a gusher. On The
700 Club, Pat Robertson reported that Sorelle was about to tap "the
largest oil field ever discovered," a development that could
"revolutionize the fulfillment of biblical prophecy." But the euphoria
evaporated when some testing equipment got jammed in the hole and
Sorelle couldn't conjure the miracle he needed to get it out. That's
when Goldberg started receiving letters from churchgoers who had sunk
their entire savings into the well. "I felt so bad for them," he
recalls. "They were people who had scraped together their dollars, and
when the hard times came, they had nothing. "
Other wildcatters followed, including Bernard Coffindaffer, a West
Virginia businessman who searched for oil using scriptural clues and a
vial of his own blood. In 1999 a penny-stock firm named Covenant
Energy began promoting a bogus oil-exploration project on the spot
where Sorelle had drilled, selling $70,000 worth of stock to investors
before Delaware Securities Division investigators discovered that
corporate officers were pocketing most of the money. The firm's
founders were convicted of fraud and conspiracy in 2003.
today, two companies are searching for oil in Israel based on biblical
passages. One of them, Givot Olam, is run by an Orthodox Jewish
geophysicist named Tovia Luskin. Luskin's firm has drilled three wells
using a blend of science and Scripture. All have shown traces of oil
and gas, though none have turned up commercial quantities.
The other firm, Dallas-based Zion Oil & Gas, was founded by an
evangelical Christian named John Brown. I met him last July in the
Club Lounge of Tel Aviv's David Intercontinental Hotel. A mild-
mannered 68-year-old with a slight Texas twang and a deep tan, he was
wearing denim shorts and reclining in a pink armchair, overlooking the
turquoise waters of the Mediterranean.
Twenty-seven years ago, Brown was a tool-company executive with a
$200,000 salary and a comfortable house in the Detroit suburbs. He was
also a zealous new believer who credited the Lord with delivering him
from a stubborn alcohol addiction. Eager to share the good news, he
doled out "Jesus Loves You!" wallet cards and once sent a memo warning
coworkers to "choose JESUS CHRIST as your Personal Savior" or face
"eternal damnation." Some people were put off by his newfound fervor,
including his wife, who packed up their four kids and divorced him.
It was around this time that Brown heard a sermon from maverick
preacher Jim Spillman, who unfurled ancient tribal maps and quoted
Deuteronomy 33, which tells how Moses scaled Mount Nebo, looked out on
the Holy Land, and described the blessings awaiting the 12 sons of
Jacob. Among them were "treasures hid in the sand" and "precious
things" deep beneath the earth.
Brown later traveled to Israel, where he says the Lord spoke to him
and told him he was the "stranger" that the Book of Kings predicts
will be sent to fortify Israel in the final days. "I knew in my heart
what to do," he recalls. "I knew God was going to put me in the oil
business."
Brown was so convinced that in 1985 he quit his job and moved to
Houston, where he tried to drum up support for an Israeli drilling
venture. But investors weren't eager to back a greenhorn on a mission
from God, especially in the midst of an industry slump. So Brown
waited and prayed and lived off his savings. By 1996, utterly broke,
he ended up scrubbing toilets at a Baptist church for $4 an hour
before moving back to Michigan, where he slept in his brother's
basement. "Talk about one whipped dog: I was it," he says.
It took him two years to get back on his feet, but he never lost sight
of his dream and finally founded Zion in 2000 with the help of Philip
Mandelker, an oil-industry attorney who was also deeply involved with
Ness. Early investors pitched in enough money to complete one drilling
project near the land Brown believes once belonged to Asher, the
Israelite Moses predicted would "dip his foot in oil." Last spring,
the company held its initial public offering on the American Stock
Exchange, raising more than $12 million.
Unlike Ness, Zion is a legitimate wildcatting venture, with respected
geologists on its board of directors. Still, some of its activities
are questionable. The firm was first brought to wide attention by Hal
Lindsey, host of the prophecy-focused TV show The Hal Lindsey Report
and coauthor of the best-selling The Late Great Planet Earth. Lindsey
has bet very publicly on Brown's company, telling his viewers in March
2007 that "Zion Oil right now is on the verge of discovering oil," a
sign that "we are really on the very threshold of Lord Jesus' return."
Around the same time, he touted the company in his column on the
popular conservative website WorldNetDaily, saying, "Zion Oil has sunk
eight exploratory wells, all of which have shown signs of oil and
gas" (it has, in fact, sunk just one), and suggesting Israel's oil
"could rival that of Saudi Arabia."
What Lindsey neglected to mention was that he and his relatives own
millions of dollars of stock in the company. In 2002, John Brown gave
Lindsey a gift of 50,000 shares, worth $337,500 at today's price.
Ralph Devore, Lindsey's cousin and a director of his ministries,
controls nearly 725,000 shares, worth about $4.9 million. Devore was
also a founding member of Zion's board and was at one point hired to
promote the company.
Brown insists his motives for the gift were pure. "It was simply in my
heart to give shares to people who loved Israel," he says. But
Lindsey's support has clearly paid off for the company. After he told
television viewers that Zion was "on the verge" of an oil find, the
trading volume of the company's stock leaped from 11,100 a day to
122,000 and the price climbed from $7.64 to $9.25 a share, a 21
percent increase. (Lindsey did not respond to requests for comment.)
In truth, Zion was never close to striking oil; at its very first
stockholders' meeting this past June, the firm announced plans to
temporarily abandon its only well due to technical problems.
Afterward, John Brown climbed to the podium and arranged himself
between an American flag and an Israeli one. Flipping his Bible open
to the Book of Kings, he began reading a passage about the prophet
Elijah, who heard "the sound of abundance" when Israel was in the
midst of a crippling drought. No one else could hear the sound, but
Elijah prayed and waited, and within hours "the heavens was black with
clouds."
When he finished reading, Brown looked up and told his investors that
he, too, heard "the sound of abundance." Zion is now laying plans for
its next well.
at ness, meanwhile, the saga continues with a new cast of characters.
The main player these days is Hayseed's son, Shannon "Sha" Stephens,
who took the reins of the company after his father's death. Sha
inherited his father's bulky build and cowboy style, not to mention
his taste for life on the margins of the oil business. Before taking
over at Ness in May 2003, he was president of Warrior Resources, a
struggling oil and gas company, where he faced allegations that he
spent the company's money on personal expenses and transferred its
assets into his own name, according to a lawsuit filed in an Oklahoma
District Court. (Sha did not respond to calls seeking comment.)
His first move at Ness was to announce a bold new business plan called
the "New Outlook," which involved expanding the company's U.S.
drilling operations to raise funds for its Israel venture. Shortly
afterward, he sold Ness a handful of Texas oil and gas leases for
$11.5 million. Most of them, the company later announced, "were lost
due to lack of production."
Like his father, Sha used The Prophecy Club to spread deceptive claims
about Ness' prospects, once telling listeners that the company had
enough acreage in Texas for tens of thousands of wells, each bringing
in $5,000 a day. With each misleading claim, the stock climbed, and
insiders dumped millions of shares. Having milked the venture dry, Sha
started folding up the company's operations in 2006, eventually
selling its Texas headquarters that December. In July, Ness was wiped
from the corporate register in Washington state, where it was
incorporated. Yet even with the company seemingly in its death throes,
in September Stephens and crew appointed a British businessman named
Anthony Allenby as the new ceo--a move that drove up the stock 350
percent and triggered clauses that board members and executives had
added to their contracts a couple of years before, giving themselves
large cash payouts in the event of leadership changes. Stephens is in
line to receive at least $750,000.
Allenby departed within a month, leaving the company $30 million in
the red, with no staff, no offices, and no clear claims to any
drilling rights. (During his tenure he declined Mother Jones'
interview requests, but warned of a "media attack by the enemy" on
Ness' blog. "I see this as part of the Lord's work to 'purify' this
Company," he wrote, "and perhaps even the whole 'Christian oil
business' in preparation for what He is about to do.")
And still, devoted stockholders cling to hope. Some have even offered
to band together to pay Sha's salary out of their own pockets if he
returns to Ness' helm. James Cojanis, the San Jose retiree who bought
$120,000 of the firm's stock, says he is thinking of investing another
$100,000, a third of his savings. "One of these days the oil is going
to come," he says. "And when it does, Ness' stock is going through the
roof. I have no doubt that it will happen in God's perfect timing."
http://www.motherjones.com/news/feature/2008/01/let-there-be-light-crude.html
Evangelical preachers claim that a giant oil find in Israel will usher
in the end of days. Enter the con men and penny-stock hustlers.
Mariah Blake
January/February 2008 Issue
When james cojanis heard the first rumblings of Armageddon, he was
sitting in his San Jose home with the radio tuned to a popular
Christian show called The Prophecy Club. Featured that day was a
charismatic Texas oilman named Harold "Hayseed" Stephens. Speaking in
the rousing cadence of a Southern preacher, he told listeners that
"the greatest oil field on Earth is under the southwest corner of the
Dead Sea"--and that his company, Ness Energy International, was about
to tap into it. In doing so, he said, it would drain the oil fields of
the Persian Gulf, prompt Arab countries to attack Israel, and at last
touch off the great battle that would usher in the end of days.
As soon as the show was over, Cojanis got on the phone to find out how
to invest in the venture. Days later the 70-year-old retiree received
a form letter addressed, "Dear End Time Servant." It claimed that the
oil reserves at Ness' planned drilling site ranged "from one billion
to 40 billion barrels...putting this prospect in a class of the super
giant oil fields of the world." Without a second thought, Cojanis
bought $120,000 worth of stock in Ness. "Faith is a gift God puts in
your heart," he explained when I visited him in October at his
cluttered town house, piled with crumpled boxes of prophecy-themed
newsletters and cassette tapes of old Christian radio shows. "And I
didn't have any doubt that Ness was a plan of God. He raised up
Hayseed Stephens to find Israel's oil."
Eight years later, Ness has yet to sink so much as an initial borehole
for a Dead Sea well. In fact, for most of its existence it has never
even held exploration rights in Israel. Its U.S. headquarters, a
barnlike storefront topped with an open Bible sprouting an oil well,
was shuttered in 2006. Since then, its stock price has fallen from a
high of nearly $5 to a mere 3 cents; Cojanis' $120,000 investment is
now worth $3,000. Not that he's worried. "I'm glad the stock price is
in the tank," he says. "When they hit oil and the stock goes sky-high,
that means Armageddon is around the corner." At that point, he plans
to use his gains to spread the word that the end times are here,
preparing as many souls for heaven as possible.
It is widely believed among evangelical Christians (and some Orthodox
Jews) that Scripture foretells a massive oil find in the Holy Land;
prophecy buffs are especially captivated by a passage in Ezekiel that
says Armageddon will be triggered by a band of nations--Russia, Iran,
and a confederacy of Arab countries are most often named as the likely
suspects--attacking Israel to "take a great spoil." Their faith has
spurred a sprawling, decades-long treasure hunt. At least 10 companies
or individuals have searched for oil in Israel using biblical clues.
So far, few of the more than 400 wells drilled there have turned up
commercial quantities of oil and gas. But the willingness of ordinary
churchgoers to invest their life savings has kept the ventures going--
and made the business rich terrain for a bevy of false prophets, penny-
stock hustlers, and con men.
a burly man who favored Wrangler jeans and fat belt buckles (one of
which bore an oil derrick emerging from a Star of David), Hayseed
Stephens grew up picking cotton and slopping hogs on a Texas
sharecropping farm. For a brief stretch in the early 1960s, he played
quarterback for the New York Titans (now the Jets) before returning to
Texas to work the oil fields and, later, minister to the faithful from
a church he opened in Willow Park, near Dallas.
In 1997 Stephens acquired a publicly traded shell company that he
renamed Ness ("miracle" in Hebrew). With meager assets and no recent
operating history, it was a business in name alone, but that didn't
stop Stephens from selling millions of dollars of stock in it. He got
help from Stan Johnson, a one-time salesman turned doomsday prophet
who founded the Prophecy Club, a Kansas-based ministry that airs
television and radio programs on Christian stations across the country
and holds traveling revival-style meetings. Johnson once told his
followers that Stephens could be drilling within 60 days if he just
collected enough money: "And when the well is drilled, when the oil
comes in, 17 Bible prophecies will be fulfilled...We believe now is
the time and Hayseed is the man."
Besides scriptural backing, Stephens claimed to have geological proof
for his theory. In late 2002 he told Prophecy Club listeners that
"experts from Israel and around the world" had studied his planned
drilling site and concluded that "18 to 50 billion barrels of oil"
were hidden beneath the surface, reserves worth up to a trillion
dollars. "You cannot find such good odds in Vegas, Atlantic City, or
anywhere else in the world, even if you are nothing but a gambler."
Among those swayed was Michael, a 53-year-old Kansas farmer who asked
that his last name not be used. In 1999, he invested half a million
dollars in Ness, learning only later that the shares he bought
couldn't be resold--a claim echoed in lawsuits filed by other Ness
stockholders. He was forced to watch from the sidelines as the share
price climbed from the 45 cents he paid at one point to around $5,
then sank back to around a quarter. At the peak, his stock would have
been worth $11 million. "I thought God was in the project," he says.
"It turns out it was a trap laid for me by the enemy, Satan."
Over the past 10 years, Ness has issued 180 million shares and
collected almost $10 million from investors. What most of them didn't
know--and still don't today--is that behind the fire and brimstone
lurked a standard penny-stock play known as the pump-and-dump scheme,
which entails buying a publicly traded shell company, inflating the
stock price with misleading claims, then selling off shares at a huge
profit and leaving investors holding the bag.
Key Ness executives had a history of such cons. The company's original
chief financial officer, Ivan Webb, moonlighted as president of a firm
called Broadband Wireless, where, according to sec investigators, he
and convicted con man Donald Knight cheated stockholders out of at
least $5 million. Ness' founding ceo, Stanley Swanson, headed an
outfit called Safescript Pharmacies, which had its registration
revoked by the sec for artificially inflating its stock value through
a fraudulent accounting scheme. A few other Ness insiders had ties to
Safescript, including Webb, who served as a consultant. In 2000, Ness
purchased $1 million in Safescript stock--shares that became nearly
worthless within months.
Stephens played a similar game with Ness' stock--driving up prices with
apocryphal claims, then selling shares, ultimately clearing at least
$3.5 million. But in this case, pump and dump was just part of the
swindle.
one of Stephens' darkest secrets is buried in Israel's oil register, a
battered leather binder held together with red electrical tape whose
crumpled pages hold exploration permits dating back several decades.
During a visit last summer to the offices of the Ministry of National
Infrastructures in Jerusalem, I combed through the book with the help
of deputy oil commissioner Avraham Honigstein, an unassuming geologist
who speaks in a precise monotone. It took nearly an hour, but we
eventually unraveled an elaborate shell game designed to give the
illusion that Ness held drilling licenses. In fact, the rights were
held by a private company called Hesed--a firm owned by Hayseed
Stephens. What's more, Ness and Hesed had an operating agreement
saying that Ness was to perform all the work on the proposed Israeli
drilling sites while Hesed would receive all the potential profits. In
other words, had either company struck oil, Ness investors wouldn't
have seen a penny.
In the end, the terms didn't matter much, since Stephens never even
laid the groundwork for a Dead Sea well. "He didn't do the geological
work because he didn't want to spend the money," Moshe Goldberg,
Israel's former oil commissioner, told me. He called the claims that
Stephens sold "lies" and "nonsense."
In April 2003, Stephens sold Hesed and another firm he owned to Ness
for around $4 million--at least four times what they were worth,
according to sec documents. Stockholders were led to believe that
Hesed's value lay in proprietary geological and seismic data collected
on the sites where it had held licenses in Israel; in fact the only
geological work Hesed had ever done was to reinterpret an existing
seismic study.
The deal was Stephens' last. He died the following month, struck down
by a heart attack while praying with a neighbor outside of his Texas
home.
the history of biblical oil prospecting is filled with quixotic quests
and colorful characters, starting with Weslie Hancock, a wealthy
California man who in the 1960s dreamed that Jesus told him he would
find black gold in the Holy Land. He sunk his entire fortune into two
dry holes. In the 1980s, Andy Sorelle, a World War II fighter pilot
and petroleum engineer, collected as much as $25 million from
churchgoers who believed they were buying an interest in his well; he
bored down to 21,500 feet, deeper than anyone had ever drilled in
Israel, before hitting a thick slab of limestone that showed traces of
oil. Across the Bible Belt, the faithful braced for a gusher. On The
700 Club, Pat Robertson reported that Sorelle was about to tap "the
largest oil field ever discovered," a development that could
"revolutionize the fulfillment of biblical prophecy." But the euphoria
evaporated when some testing equipment got jammed in the hole and
Sorelle couldn't conjure the miracle he needed to get it out. That's
when Goldberg started receiving letters from churchgoers who had sunk
their entire savings into the well. "I felt so bad for them," he
recalls. "They were people who had scraped together their dollars, and
when the hard times came, they had nothing. "
Other wildcatters followed, including Bernard Coffindaffer, a West
Virginia businessman who searched for oil using scriptural clues and a
vial of his own blood. In 1999 a penny-stock firm named Covenant
Energy began promoting a bogus oil-exploration project on the spot
where Sorelle had drilled, selling $70,000 worth of stock to investors
before Delaware Securities Division investigators discovered that
corporate officers were pocketing most of the money. The firm's
founders were convicted of fraud and conspiracy in 2003.
today, two companies are searching for oil in Israel based on biblical
passages. One of them, Givot Olam, is run by an Orthodox Jewish
geophysicist named Tovia Luskin. Luskin's firm has drilled three wells
using a blend of science and Scripture. All have shown traces of oil
and gas, though none have turned up commercial quantities.
The other firm, Dallas-based Zion Oil & Gas, was founded by an
evangelical Christian named John Brown. I met him last July in the
Club Lounge of Tel Aviv's David Intercontinental Hotel. A mild-
mannered 68-year-old with a slight Texas twang and a deep tan, he was
wearing denim shorts and reclining in a pink armchair, overlooking the
turquoise waters of the Mediterranean.
Twenty-seven years ago, Brown was a tool-company executive with a
$200,000 salary and a comfortable house in the Detroit suburbs. He was
also a zealous new believer who credited the Lord with delivering him
from a stubborn alcohol addiction. Eager to share the good news, he
doled out "Jesus Loves You!" wallet cards and once sent a memo warning
coworkers to "choose JESUS CHRIST as your Personal Savior" or face
"eternal damnation." Some people were put off by his newfound fervor,
including his wife, who packed up their four kids and divorced him.
It was around this time that Brown heard a sermon from maverick
preacher Jim Spillman, who unfurled ancient tribal maps and quoted
Deuteronomy 33, which tells how Moses scaled Mount Nebo, looked out on
the Holy Land, and described the blessings awaiting the 12 sons of
Jacob. Among them were "treasures hid in the sand" and "precious
things" deep beneath the earth.
Brown later traveled to Israel, where he says the Lord spoke to him
and told him he was the "stranger" that the Book of Kings predicts
will be sent to fortify Israel in the final days. "I knew in my heart
what to do," he recalls. "I knew God was going to put me in the oil
business."
Brown was so convinced that in 1985 he quit his job and moved to
Houston, where he tried to drum up support for an Israeli drilling
venture. But investors weren't eager to back a greenhorn on a mission
from God, especially in the midst of an industry slump. So Brown
waited and prayed and lived off his savings. By 1996, utterly broke,
he ended up scrubbing toilets at a Baptist church for $4 an hour
before moving back to Michigan, where he slept in his brother's
basement. "Talk about one whipped dog: I was it," he says.
It took him two years to get back on his feet, but he never lost sight
of his dream and finally founded Zion in 2000 with the help of Philip
Mandelker, an oil-industry attorney who was also deeply involved with
Ness. Early investors pitched in enough money to complete one drilling
project near the land Brown believes once belonged to Asher, the
Israelite Moses predicted would "dip his foot in oil." Last spring,
the company held its initial public offering on the American Stock
Exchange, raising more than $12 million.
Unlike Ness, Zion is a legitimate wildcatting venture, with respected
geologists on its board of directors. Still, some of its activities
are questionable. The firm was first brought to wide attention by Hal
Lindsey, host of the prophecy-focused TV show The Hal Lindsey Report
and coauthor of the best-selling The Late Great Planet Earth. Lindsey
has bet very publicly on Brown's company, telling his viewers in March
2007 that "Zion Oil right now is on the verge of discovering oil," a
sign that "we are really on the very threshold of Lord Jesus' return."
Around the same time, he touted the company in his column on the
popular conservative website WorldNetDaily, saying, "Zion Oil has sunk
eight exploratory wells, all of which have shown signs of oil and
gas" (it has, in fact, sunk just one), and suggesting Israel's oil
"could rival that of Saudi Arabia."
What Lindsey neglected to mention was that he and his relatives own
millions of dollars of stock in the company. In 2002, John Brown gave
Lindsey a gift of 50,000 shares, worth $337,500 at today's price.
Ralph Devore, Lindsey's cousin and a director of his ministries,
controls nearly 725,000 shares, worth about $4.9 million. Devore was
also a founding member of Zion's board and was at one point hired to
promote the company.
Brown insists his motives for the gift were pure. "It was simply in my
heart to give shares to people who loved Israel," he says. But
Lindsey's support has clearly paid off for the company. After he told
television viewers that Zion was "on the verge" of an oil find, the
trading volume of the company's stock leaped from 11,100 a day to
122,000 and the price climbed from $7.64 to $9.25 a share, a 21
percent increase. (Lindsey did not respond to requests for comment.)
In truth, Zion was never close to striking oil; at its very first
stockholders' meeting this past June, the firm announced plans to
temporarily abandon its only well due to technical problems.
Afterward, John Brown climbed to the podium and arranged himself
between an American flag and an Israeli one. Flipping his Bible open
to the Book of Kings, he began reading a passage about the prophet
Elijah, who heard "the sound of abundance" when Israel was in the
midst of a crippling drought. No one else could hear the sound, but
Elijah prayed and waited, and within hours "the heavens was black with
clouds."
When he finished reading, Brown looked up and told his investors that
he, too, heard "the sound of abundance." Zion is now laying plans for
its next well.
at ness, meanwhile, the saga continues with a new cast of characters.
The main player these days is Hayseed's son, Shannon "Sha" Stephens,
who took the reins of the company after his father's death. Sha
inherited his father's bulky build and cowboy style, not to mention
his taste for life on the margins of the oil business. Before taking
over at Ness in May 2003, he was president of Warrior Resources, a
struggling oil and gas company, where he faced allegations that he
spent the company's money on personal expenses and transferred its
assets into his own name, according to a lawsuit filed in an Oklahoma
District Court. (Sha did not respond to calls seeking comment.)
His first move at Ness was to announce a bold new business plan called
the "New Outlook," which involved expanding the company's U.S.
drilling operations to raise funds for its Israel venture. Shortly
afterward, he sold Ness a handful of Texas oil and gas leases for
$11.5 million. Most of them, the company later announced, "were lost
due to lack of production."
Like his father, Sha used The Prophecy Club to spread deceptive claims
about Ness' prospects, once telling listeners that the company had
enough acreage in Texas for tens of thousands of wells, each bringing
in $5,000 a day. With each misleading claim, the stock climbed, and
insiders dumped millions of shares. Having milked the venture dry, Sha
started folding up the company's operations in 2006, eventually
selling its Texas headquarters that December. In July, Ness was wiped
from the corporate register in Washington state, where it was
incorporated. Yet even with the company seemingly in its death throes,
in September Stephens and crew appointed a British businessman named
Anthony Allenby as the new ceo--a move that drove up the stock 350
percent and triggered clauses that board members and executives had
added to their contracts a couple of years before, giving themselves
large cash payouts in the event of leadership changes. Stephens is in
line to receive at least $750,000.
Allenby departed within a month, leaving the company $30 million in
the red, with no staff, no offices, and no clear claims to any
drilling rights. (During his tenure he declined Mother Jones'
interview requests, but warned of a "media attack by the enemy" on
Ness' blog. "I see this as part of the Lord's work to 'purify' this
Company," he wrote, "and perhaps even the whole 'Christian oil
business' in preparation for what He is about to do.")
And still, devoted stockholders cling to hope. Some have even offered
to band together to pay Sha's salary out of their own pockets if he
returns to Ness' helm. James Cojanis, the San Jose retiree who bought
$120,000 of the firm's stock, says he is thinking of investing another
$100,000, a third of his savings. "One of these days the oil is going
to come," he says. "And when it does, Ness' stock is going through the
roof. I have no doubt that it will happen in God's perfect timing."
http://www.motherjones.com/news/feature/2008/01/let-there-be-light-crude.html
