Marcellus Shale landman indicted in mineral rights scheme

August 21, 2013

A landman working to secure Marcellus Shale natural gas leases in Washington County is accused of fraudulently acquiring mineral rights from several property owners and selling them off to make $1.17 million in the scheme.

Derek A. Candelore, 33, of 125 Woodhaven Drive, Jeannette, Westmoreland County, was indicted Tuesday by a federal grand jury on charges of mail fraud and wire fraud for his work in the area from February 2011 to June 2012, federal prosecutors said.

If convicted, Candelore could face up to 120 years in prison and a $1.5 million fine.

Candelore, who used the aliases of Dan Kun and Kevin Kelly, worked for Butler-based Penn-Star LLC to research and pull titles on behalf of Range Resources, according to the federal indictment.

During his time as a landman, investigators said Candelore “devised and intended to devise a scheme to defraud victims” by funneling their mineral rights to false companies he created before selling them off to make a profit.

Prosecutors said he began in April 2011 by setting up a false statutory trust in Delaware and opened a post office box in Murrysville a month later. He then filed a deed through the Washington County recorder of deeds office May 11, 2011, using forged signatures of landholders, prosecutors said.

Candelore later funneled a $334,383 check from Range Resources for 96 acres of land to his postal address and cashed a portion of that money into his personal bank account, according to the indictment.

Candelore pursued similar schemes several more times, prosecutors said, and secured mineral rights for four separate blocks of land that included more than 100 acres in Washington County. Prosecutors said he forged signatures, created fake companies and falsified notary signatures and stamps.

Range Resources spokesman Matt Pitzarella said company officials noticed some “oddities” with the leases and worked with the intermediary mineral buyers to conduct an audit of the situation. Soon, they turned their information over to authorities to handle the investigation, Pitzarella said.

“It’s unfortunate when these things happen, but we were happy to have uncovered it,” Pitzarella said.

He added that the leases Range signed are invalid and the company is working to release them back to the proper landowners.

“They’re not valid leases,” Pitzarella said. “It’s like someone else giving me a fake deed to your house. Even if we paid the money, it doesn’t matter. It’s not valid.”

Investigators list the victims as McComb Hines & Beggs Trust, Davis Minerals LLC, Clark Lumber Co. and Blue Bell Minerals LLC.

Debbie Bardella, Washington County’s recorder of deeds, said she was unaware of the investigation and did not know Candelore.

Candelore is scheduled to be arraigned on the charges in the six-count indictment at 10 a.m. Sept. 10 at the federal courthouse in Pittsburgh.

The U.S. postal inspector conducted the investigation that led to the indictment.

Mike Jones has been a news reporter since 2005, covering crime, state and municipal government, education and energy. In addition to working at the Observer-Reporter, he also has spent time at the Charleston (W.Va.) Daily Mail and He holds a journalism degree from West Virginia University.

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