A Dry Hole

Prisoner No. 21-052-013 walks stiffly into a small meeting room at the federal prison in Jefferson County. John Gable's jet-black hair is slicked back and neatly combed, belying his 69 years. He has the solid build and resolute gaze of a Kansas farmer, the life he was born to, but the weariness in his eyes did not come from a lifetime of harvests.

Gable's mud-colored prison jumpsuit is a world away from the Savile Row-style suit he wore as host of a splashy 1981 party, where he feted potential investors in his oil company. He dazzled the moneymen by flying the Chinese ambassador to Denver on his private jet and then ferrying the entourage to the Turn of the Century restaurant in a fleet of limousines.

A twice-convicted felon, Gable is now serving a 41-month sentence for defrauding the federal government through an oil-rebate scam. According to authorities, he masterminded his latest fraud from a cell in this very prison, working to rip off the same government that was keeping him behind bars on a previous conviction for multi-million-dollar bankruptcy fraud. For several years while Gable was serving out that first sentence, the Department of Energy was mailing checks for as much as $45,000 to paper companies created by the convict.

At the height of Denver's oil boom in the early 1980s, Gable's Empire Oil and Gas, the culmination of a two-decade career in the oil business, was worth more than $60 million. Gable regularly surveyed his empire from his Learjet, which had his initials on its tail and allowed him to arc over oil fields that extended from Montana to Texas. But the collapse of the oil market sent Empire into bankruptcy.

The court-appointed bankruptcy trustee, attorney James Rouse, enlisted private investigators and the FBI to track down the company's assets from New Mexico to West Virginia. He says they found drilling equipment on docks waiting to be shipped to Saudi Arabia and piles of rigging with the serial numbers scraped off, but much of the company's property had simply disappeared.

Ultimately, Gable was convicted of trying to hide Empire's assets from its creditors, who lost millions after the company imploded and never collected more than a few cents on every dollar they'd put into Empire. At the time Gable entered federal prison in 1989, there were more than $100 million in civil judgments against him.

Even behind bars, Gable still loves talking about the oil business, reveling in tales of the risk-taking and overnight turns of fortune that could allow a onetime roughneck to rise to the top of the business. "When you drill, you never know if you'll get 1,000 barrels or a dry hole," he says. "It's always a gamble. You either make lots of money or you wind up broke. A lot of people like the Gettys and Hunts spent their last dollars and hit a big one and made a fortune. Hunt had totally run out of money; he couldn't even pay his crews. You hit one oil field and it could have millions of gallons of oil in it."

At the mere mention of legendary oil prospectors who created vast fortunes--Marvin Davis, Sam Gary, billionaire Phil Anschutz--Gable's milky eyes flash and his voice rises. In the Sixties, he says, he even worked for Anschutz's father, Fred, back when the elder Anschutz was struggling so hard he couldn't pay his bills on time.

"We were contracting water hauling for his rigs," he recalls. "I might have to go to his office four or five times to collect $500. When I came out here in 1964 they had repossessed all his rigs. Believe me, they had no money. Then he hit a big well east of Gillette, Wyoming. I don't know how old Phil was at that time. Now he owns half of downtown."

Gable remembers flying over the Anschutz oil strike at night, spotting the flames that heralded a live oil field from far up in the sky. "You could see that fire at night for miles and miles," says Gable. "He found millions of barrels of oil."

Gable, too, has become a legend in the oil business--but not for his financial acumen.

One story has him driving tankers up to other people's oil wells and helping himself to tanks full of crude. Others claim he buried valuable equipment in the desert to hide it from creditors. And rumors of Swiss bank accounts and offshore investments persist, although no one has ever proven that Gable managed to keep any of the millions that disappeared after the collapse of Empire.

Gable insists he's been left with nothing but memories and a prison record. His mild manners and soft voice can't conceal the bitterness he feels toward those he blames for destroying his career, from bankers to government officials to relatives. He calls Rouse, the bankruptcy trustee, "one of the biggest crooks I've ever run into in my life."

People who know Gable describe him as unscrupulous and amoral, a born con man. But they also say Gable is brilliant, a man who could have become a star in the oil industry--if he had ever learned to follow the law.

"He has one of the best memories of anybody I've ever met," says Joe Abell, a petroleum engineer who's known Gable since the 1960s. "If he had played it straight, he'd be one of the most successful people in Denver. He just couldn't do it the way you're supposed to."

The story of John Gable's life is like something out of the prime-time soap Dynasty, which chronicled the activities of oil barons in a fictitious Denver in the 1980s. But Gable's story is all too real.

He grew up near Great Bend, a small town located almost exactly in the center of Kansas, during the Depression. His mother was a full-blooded Cherokee and his father was half Cherokee, a lineage that accounts for Gable's striking black hair. His family life was chaotic: His parents divorced when he was five years old, and both his mother and father remarried several times.

While his father earned $1 a day working for the federal Works Progress Administration, young John was shunted between various aunts and uncles, all of them desperately trying to eke out a living in difficult times.

"It was real hard on him when his parents separated," says Harold Gable, a cousin who grew up with John. "He was kicked around from pillar to post."

Harold's parents already had ten children but agreed to help care for their nephew. John had a reputation as a straight arrow, his cousin remembers, and he never got into trouble as a kid.

After graduating from high school in 1947, John Gable married his high-school sweetheart, JoAnn, and worked as a roughneck in the oil fields. Eventually he started a business trucking water to drilling sites, which introduced him to the financial side of the industry. Gable launched his own drilling company in 1964 and soon expanded operations throughout Kansas and Nebraska.

The fast growth of Gable's business prompted a move to Denver in 1969, just as the city was emerging as the regional capital of the oil industry. Gable quickly formed a succession of drilling firms, over a dozen outfits, that did jobs over a huge swath of the Rocky Mountains and the Great Plains.

"When I had those rigs, I never got more than five hours' sleep," Gable remembers. "I could get on the airplane and be down in New Mexico in fifty minutes or be in Casper, Wyoming, in thirty minutes. We made a lot of contracts to drill multiple wells."

Gable says he formed the various companies with different partners in order to work on widely scattered oil fields. But some of his former colleagues suggest that Gable was involved in crooked deals practically from the moment he arrived in Denver and used the multiple companies to stay one step ahead of creditors. In fact, many of them were resurrected for his most recent scam, in which he made fraudulent claims to the government's oil-rebate program.

"One of the parts of his scams was to use similar names," says Abell, who first met Gable in 1964. Gable would take out bank loans under one corporate name, he explains, and then title the drilling equipment under a different one, making it difficult for creditors to take back anything after a default. "When you went down to repossess it, it was under a slightly different name," Abell says.

Gable became adept at fooling banks and finance companies, switching equipment and replacing new rigs with used ones, Abell continues. "His basic scam was to borrow money and tell them they were paying for new equipment. Then, when they went to repossess, it was all junk. The new stuff was scattered all over the country."

No one ever figured out what Gable did with all the money he collected, Abell says, but he took many trips abroad, including visits to the Bahamas and Switzerland. "He went to Oktoberfest in Germany every year," says Abell.

Despite the European vacations and the private jet, though, Gable enjoyed a surprisingly modest lifestyle. His homes were comfortable but hardly lavish, and his low-key personality reflected his Kansas upbringing.

"He's not the typical flamboyant promoter," says Abell. "If you didn't know what he was doing, he seemed very sincere."

By the early Seventies, the price of oil was starting to skyrocket, and Gable was in the right place at the right time. In 1973 he formed Empire Oil and Gas, a company that would bring him his greatest success--as well as his first prison term.

Drilling in the Rockies is more expensive than drilling on flatter terrain, but with prices soaring, that didn't seem to matter. If you had an oil company, somebody was willing to fund it--and without asking many questions.

"In those days, anybody who could sink a bit and hit oil was making millions of dollars," says Rouse, who spent several years trying to track down Empire's assets. "There were all kinds of people in the business who had no business being there."

Gable had already been convicted of fraud in a 1972 personal-bankruptcy case involving charges that he concealed ownership of a car from the court. But Rouse describes that bankruptcy as "small potatoes," and it certainly didn't prevent Gable from securing huge amounts of financing for his growing oil company, including $39 million from creditors, the largest of which was the Royal Bank of Canada. In 1980 Empire also sold shares to the public, eventually raising over $8 million. Gable, however, maintained a majority interest in the company and owned just over half the stock.

It was no accident that Gable raised most of the money for Empire out of town, Abell says. "Everybody who had been in the business absolutely mistrusted him," he says. "These newcomers in town didn't do any due diligence of any kind. The joke was that if they'd gone to the 7-Eleven on East Colfax, they'd have found out about him. The Canadians in particular were so eager to put money out, they didn't even check."

Empire was in discussions with the Chinese government about drilling there when Gable pulled off his biggest public-relations coup, bringing the Chinese ambassador to Denver for his lavish party in 1981.

Rouse thinks Gable was probably operating Empire legally in those years, making healthy profits at a time when it would have been hard not to. But the collapse of the oil market in 1982 changed everything.

"I think it may have been a legitimate business for a while, but when he was unable to maintain the cash flow, he decided to take off with the assets," Rouse says.

But Abell believes it was only a matter of time before the law caught up with John Gable. After watching him for thirty years, he believes the former oil man is capable of just about anything.

"Any story you hear about him, believe it, because he's done it," Abell says.

James Rouse spent several years of his life trying to figure out John Gable. As oil prices plummeted in early 1982, Gable became increasingly desperate. All around him, oil companies were going under in a financial fiasco that would eventually cost investors and creditors billions of dollars in Denver alone.

Years later, as Gable sits in prison, there's still an edge of fear in his voice as he recalls that time.

"The price of oil went from $45 a barrel to $12," he says. "By the end of March our income was down to zero, and we had 600 employees."

Empire Oil and Gas declared bankruptcy in September 1982, and Rouse was appointed bankruptcy trustee in December of that year. Both Rouse and Gable say the relationship was strained from the beginning, with the first blowup taking place that Christmas.

Gable claims Rouse changed all the locks at Empire's West Colfax headquarters and drove off the employees shortly after taking over as trustee. "He stopped payment on their checks at Christmastime," says Gable. "That started us off on a terrible relationship."

But Rouse says that money was already gone by the time he showed up. "When I took over, all the Christmas payroll checks bounced," he remembers. "Gable had drained all the payroll accounts."

Like others who've entered Gable's world, Rouse was struck by his intelligence and work ethic, and wondered why a man with such enormous potential would choose the life of a scam artist. "I don't see any reason why he couldn't have been a successful oil man," says Rouse. "He's a hard worker; he just worked on the wrong side of the law. He knew government regulations as well as anyone I've ever known. Maybe he thought it was more fun to break the law."

For the next several years, Gable and Rouse jousted countless times as Rouse tried to track down millions of dollars' worth of equipment that seemed to have vanished. Rouse put together an elaborate paper trail that documented Gable's efforts to hide the assets of Empire Oil and Gas. And although Rouse managed to find some of those assets, the majority of the company's property simply vanished.

"He cut off equipment serial numbers and tossed them in a pit with the records," says Rouse. "A lot of the stuff was just never found."

Many of the serial numbers listed on documents given to banks and other creditors didn't seem to be real. Rouse says his team of investigators even found a note to Gable from a man hired to list equipment ID numbers for the bank saying, "Thanks for the Rolex."

It was during this time that the soft-spoken Gable made a rare threat against an agent of the court. Denver private investigator Steve Snyder was working for the bankruptcy trustee in 1984, helping to track down Empire's scattered assets, when Gable confronted him at an equipment auction in Ohio. Snyder testified that Gable screamed, "What are you doing here, fuck the court, fuck the attorneys, and fuck you. I am going to crush your fucking head in, get out of here now or I'll kill you. And if you come back I'll crush your fucking head, and I mean it."

Snyder hasn't forgotten John Gable, nor that day in 1984. "He had a bunch of oil hands surround me to emphasize his statement," he says. "He's capable of making threats to pull off what he wants to."

Gable had transported many of Empire's rigs and other equipment to West Virginia, where he had a small drilling company. "They were running trucks back to West Virginia day and night," says Rouse.

At one point, Rouse had a court order allowing him to reclaim equipment from that West Virginia company. "We were physically barred from the premises," he recalls. "We had to get a bunch of U.S. marshals with M-16s to go in and recover the equipment."

A federal grand jury charged Gable with several counts of fraud in 1988. The following year he was convicted of one count of conspiracy to commit bankruptcy fraud, seven counts of bankruptcy fraud and one count of obstruction of justice. Gable's son, Alan, was convicted on a lesser charge for assisting his father.

The elder Gable was sentenced to ten years in federal prison and was confined at the medium security facility in Jefferson County until he was paroled in April 1993.

But by then, Gable was well into his next business venture. This time his scam had a new target: the U.S. government.

Through much of the 1970s, the federal government regulated the price of crude oil. After several large oil companies were accused of violating the price ceiling, they agreed to establish a pool of money to be refunded to crude-oil purchasers. It was this Department of Energy program that Gable set out to defraud.

Authorities believe Gable started the scam before he was imprisoned and then continued to run it from his cell, perhaps with the help of individuals on the outside.

According to the federal indictment issued last fall against Gable, the first fraudulent claim for an oil refund was filed in June 1988. Over the next three years, while serving his sentence in the federal penitentiary, Gable filed twenty more fake claims on behalf of more than a dozen different drilling companies. The claims gave phony names of company officers, and directed the Energy Department to send checks to several addresses in Kansas and Colorado.

While the U.S. Attorney and investigators who worked on the case decline to comment, the indictment paints a portrait of a sophisticated scam that used aliases and multiple addresses to conceal Gable's involvement. Several of the letters were signed with commonplace names like "Robert Brown" or "William Martinez," but Gable was also audacious enough to use variations on his own name. One 1990 letter listed "John Goble" as the contact person, while another referred inquiries to "Ray Gable." Several of the claims listed an address in Great Bend, while others used addresses in Brighton and Evergreen. In one week in 1991, the Energy Department mailed three checks that totaled more than $86,000 to a post-office box in Brighton.

All told, Gable collected over $170,000 from the government, depositing the money in scattered bank accounts. The indictment also says Gable telephoned a former business associate, Vernon Simmons, from jail to discuss two refund claims and "Simmons' authority to act for both companies." Simmons, the indictment adds, called the Energy Department to ask about the status of those claims and said the money would come in handy for an "operation" one of the partners needed. (Westword was unable to contact Simmons, who reportedly now lives in Arizona.)

When he was released from prison in 1993, Gable applied for a passport in the name of James Douglas Poulson, a deceased former employee. The indictment charges that Gable used Poulson's name and a fake Social Security number to lease a Chevy pickup truck at Medved Chevrolet.

At the time, Gable was telling his parole officer that he was scraping by on a $1,067-a-month Social Security check.

Under a plea agreement reached last February, Gable pleaded guilty to four felony counts, including mail fraud, making a false statement and obstruction of justice. Earlier this summer, U.S. District Court Judge Zita Weinshienk sentenced Gable to 41 months in prison, sending him back to the federal facility he'd left four years before.

"You would have thought the ten-year sentence would have put him away," muses Snyder. "He's more resilient than anybody thought."

John Gable blames a now-deceased brother-in-law for filing many of the claims that landed him back in prison. He admits he received an "overpayment" from the Energy Department but says that most of the claims he filed were legitimate.

As for the passport, Gable says he wanted to take his wife of 49 years on a long-promised trip to Mexico. Under the terms of his parole, he was not allowed to leave the country. Gable scoffs at the speculation that he has money in foreign banks and wanted to leave the country to obtain those funds.

"Believe me, I was drawing my Social Security and helping my daughter sell cars," he says. "If you had a lot of money in a bank account, you wouldn't be doing that."

While Gable has admitted at least some wrongdoing in his latest conviction, he still bristles over the bankruptcy-fraud case. He claims Rouse was involved in a conspiracy to destroy him, working in collusion with the Royal Bank of Canada.

All the money he collected from investors and creditors went into Empire, he insists. "I put all my money into the company, trying to save it," he says. "I was trying to save the company, and Rouse was trying to liquidate it. We had $45 million worth of drilling equipment in a yard in New Mexico. The Royal Bank wanted those rigs to disappear so they could collect the insurance money. Rouse started the rumor that I had stolen the rigs and moved them to West Virginia. Talk about thievery. The main person getting the equipment was Rouse. He sold it off."

Rouse says Gable has never understood that the money Empire collected was not his own and that creditors had a right to take back whatever property had been purchased with those funds. "He considered the lawyers and bankruptcy court to be vultures taking his money," adds the attorney. "He neglected the fact he'd taken millions of dollars in other people's money."

If not for the oil bust, Gable believes that today he'd be a Denver millionaire leading a respectable life instead of a twice-convicted felon.

Harold Gable still remembers the visits his successful cousin would make to his old home. "He used to fly into Great Bend on his plane," he recalls. "At one time he was worth $4 million or $5 million. But I knew when oil got up to $40 a barrel, you'd better put some up on a shelf, because you're going to need that money."

Harold knew his cousin had done time for bankruptcy fraud but was unaware he was back behind bars. "It's too bad he can't stay out of trouble," he says sadly.

Those who've followed Gable's career more closely say trouble is the way he does business. They believe he's capable of scamming just about anybody, both in and out of prison.

"He has absolutely no respect for the system or the government or the law," says Rouse. "But he knows how to manipulate the system."

Abell, who was hired as an oil-industry expert by the bankruptcy court in the 1980s, says Gable was always courteous to him. But he's not shedding any tears for the con man. "We always got along," he says. "But I don't feel a bit sorry for him."

After all, Gable went to great lengths to shield Empire's property from the court. "When we were repossessing his tank trucks, we found he'd taken all the tires off," recalls Abell. "They said they were water trucks, then I'd open the valve and oil ran out. Later we found tanks of oil he'd hidden in town.

"Apparently that was his getaway money. He could take that oil any time and get cash for it.

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