Penwell raceway owner indicted

Two owners of the Penwell Knights Raceway and two other men have been indicted in federal court on six counts of mail fraud and one count of conspiracy in connection with claims they defrauded an oilfield equipment company of more than $2 million.

Gary Gardenhire, 36, was arrested Friday and held in the Midland County jail until Monday.

Jerrod Gardenhire, 34, Cody Dale Eckel, 37, and Fred Welch Foster, 32, were allowed to turn themselves in Monday, said Matt Espenshade of the FBI’s Permian Basin Oilfield Theft Taskforce.

The Gardenhire brothers and Eckel were each released on a $10,000 bond. Foster was being held Monday at the Odessa Detention Center.

Larry Webb, majority owner of the 12-person drilling-rig service equipment company The Hose Connection, Inc., said Gary Gardenhire was minority owner and president since 2003, while Jerrod Gardenhire had joined as a salesman in 2006.

Webb said the Gardenhires were no longer with the company as of August 2009.

Espenshade said the Gardenhires sold equipment from the company and had the payments sent to a shell company they’d set up, Louder Than Hell Speakers.

Espenshade said Eckel and Foster knowingly bought the equipment and sent the money to the shell company, receiving kickbacks for not asking questions. Espenshade said others bought equipment and made payments to LTH, but didn’t conspire to it do it.

Espenshade said because the payments were made through the mail, the supposed crime was interstate commerce and a federal concern.

Espenshade said the scheme started in 2007 and during that time, about $2.6 million in profits were funneled to the shell company.

“The main victim had its inventory basically being sold out the backdoor,” Espenshade said.

Espenshade said the money was spent on luxury items, vehicles and residences, but also on the Penwell Knights Raceway.

“We’re looking into how much was spent on the racetrack,” Espenshade said.

Espenshade said the taskforce began looking into the company in December, and executed a search warrant on the raceway on or about March 2.

“We’ve been seizing property we’re alleging were proceeds from the alleged activity,” Espenshade said of purchases and upgrades on the track.

In June 2009, Gary Gardenhire reported to the Odessa American that since he’d opened the raceway in April 2008, they had spent more than $1.5 million into the facility for upgrades such as new track surfaces, bleachers, concession stands and more parking area.

The Penwell Knights Raceway also had a history of contributing thousands to charitable causes such as the Fallen Officers Benevolence fund for the families of the three officers slain in Sept. 2007, and then 3-year-old Shaylee Crosson, injured by a pitbull in June 2009.

The raceway is apparently now closed but still has a working website.