Risk Management

Former Patterson-UTI CFO Pleads Guilty

Jonathan Nelson faces up to 30 years in jail for defrauding the oil and gas drilling company.
Marie LeoneMay 1, 2006

Jonathan Nelson, the one-time chief financial officer of oil and gas drilling company Patterson-UTI Energy Inc., pleaded guilty to defrauding his former company. Nelson’s plea agreement, reached last week, included one count of wire fraud and one count of engaging in monetary transactions derived from specified unlawful activity, reported the Associated Press.

In November, the Securities and Exchange Commission charged Nelson with embezzling more than $77 million from his former employer over a five year period using a phony invoice scheme that funneled money into a company he controlled. The 36-year-old Nelson faces a maximum of 30 years in prison and a $500,000 fine, noted the wire service. A sentencing date has not been set.

Nelson was slapped with both criminal and civil charges. The SEC accused him with violating U.S. securities laws by signing off on financial reports that he knew were false. That criminal complaint was filed one day after the regulator sued Nelson claiming that he embezzled funds from the company. According to court documents, the finance chief used the ill-gotten funds to purchase an airplane, an airfield, a cattle ranch, homes, vehicles, and a full-service truck stop, as well as other assets.

In December, Patterson-UTI officials announced a restatement for the three years ended December 2004, as well as for the first three quarters of 2005. At the time, the company also noted that it had collected about $8.4 million in cash from Nelson, identified and frozen $4.2 million in a brokerage account, and traced another $33 million or so to non-liquid assets.

Patterson-UTI, the second-biggest operator of land-based drilling rigs in North America.