COVINGTON, La. — Thousands of oil and gas investors have sued a Louisiana company and a Wall Street brokerage, alleging that they misled investors and should have to repay more than a billion dollars, a published report said.
Suits filed in New York by investors in one group of partnerships seek $1.3 billion from Graham Resources of Covington, Prudential Securities Inc. and its corporate parent, Prudential Insurance Co.
The suits involve 26 energy income funds, which raised more than $1.3 billion from 1983 to 1990, the New Orleans Times-Picayune reported.
Other partnerships, which bought troubled oil and gas loans from banks, raising $350 million in 1987 and 1988, are the target of suits filed in federal court in New Orleans and state court in Houston.
The New Orleans suits maintain that investors were told to expect returns of 15% to 20%, but got less than half their original investment. One partnership returned as little as 25 cents for each dollar invested, the suit said.
But the partnership has been "a bonanza for Prudential-Bache and the Graham Group," the suit alleges.
The investors want their money back plus interest.
Graham and Prudential deny the allegations, the newspaper reported. They contend that the plaintiffs did not study the investments before buying into the funds.
The Texas suit represents 1,500 plaintiffs. In New Orleans, U.S. District Judge A. J. McNamara consolidated 19 suits into one class action.
Prudential sold more than $6 billion in oil and gas and real estate limited partnerships to more than 100,000 investors during the 1980s. Individuals could put in as little as $1,000. Today the partnerships are worth far less than $6 billion.
Graham, located 75 miles north of New Orleans, would buy and manage the oil and gas properties.