Costa Mesa Gas firm frozen

While the website for a Costa Mesa-based company claiming to offer $25,000 investments into oil-producing land in Oklahoma is still up, the business is not.

In an order issued last week by a federal judge in Santa Ana, Cherokee Gas Systems Inc., 333 E. 17th St., Costa Mesa, and its owner, Thomas A. Labry of Newport Beach, had their assets frozen and were ordered to stop doing business.

According to a complaint filed Thursday by the Securities and Exchange Commission, Labry used Cherokee Gas Systems to collect more than $1.4 million from investors, and then used the money on himself instead of investing in land developing oil or gas.

Authorities say Labry bought equipment that made automated “cold” calls to huge sums of people offering them a chance to invest in gas and oil wells in Oklahoma. Each unit cost $25,000 to invest but offered a 35% annual return, according to the SEC. The only problem was, officials said, Labry never invested the money.

In a complaint filed in federal court last week, the government claims Labry withdrew $268,800 in cash from the account filled with investors’ money, cashed in $148,126 in cashier’s checks and spent $466,283 in cashier’s checks made payable to other people.

Thursday’s court order stops the alleged fraud and freezes Labry and his company’s assets. The scam went on from December 2008 to December 2009, according to court documents. The government also claims Labry was running a similar scam through another company in five other states where courts there had to order him to cease and desist.

Attempts to reach Cherokee Gas Systems on Monday were not successful.