Investors were promised a bonanza as a London-based company hoped to raise cash to exploit natural gas resources in the United States, Southwark Crown Court heard yesterday.
Exploitation of minerals in Louisiana was touted as the saviour of Alliance Resources. Brokers on the London stock market were able to forecast millions in profit based on "proven resources" the company hoped to extract from the field. But it is alleged that former Alliance chief executive, Mr John O'Brien, defrauded professionals and shareholders in £7.2 million sterling (€11.3 million) flotation in April 1995.
The Irishman is said to have played an illicit game of make-believe and ran an elaborate deception to get money into company coffers and boost the value of his own holding in Alliance.
Mr David Wilson, of brokers Butterfield Securities, based in London, told the court how a prospectus for the issue predicted the Alliance holding in the Valentine Oilfield would put the company £4 million in profit by 1996. He claimed Mr O'Brien personally approved his company's appraisal and confirmed its "accuracy".
The issue was ultimately handled by another firm of brokers, Williams de Broe.
Mr O'Brien, (45) of Midleton, Co Cork, denies five charges of forgery, two charges of theft, and two charges under the Financial Services Act.
Mr Anthony Shaw, QC, for the Serious Fraud Office, alleges that Mr O'Brien falsely claimed Alliance held the rights to explore 1,825 acres of the Valentine Sugars Plantation when in fact the lease had been terminated.
Further, in strictly governed "listing particulars" for the issue, it was falsely claimed a company well, Valentine 14, was producing significant quantities of gas - in reality Mr Shaw alleges the drilling on the site had been discontinued after disappointing results.
Mr Wilson confirmed Butter field was predicting the "turnaround" for Alliance based on reports that Valentine 14 could successfully produce millions of cubic feet of gas per day and dramatically improve cash-flow. Mr Wilson said Mr O'Brien had verified the report he was selling to the stock market.
The trial continues.
