A son of legendary oil investor T. Boone Pickens was sentenced to five years of probation on Monday and ordered to take part in a substance abuse program for orchestrating a fraud scheme that involved distributing fictitious stock tips to investors.
Michael O. Pickens, 53, also was ordered to pay restitution of $1.2 million in connection with the fraud. Prosecutors said he enticed investors to buy shares of thinly traded companies by sending handwritten hoax faxes meant to make them think they had mistakenly received a hot stock tip.
His billionaire father, who attended the sentencing hearing in U.S. District Court in Manhattan, said he would pay the restitution. Michael Pickens has a history of substance abuse and already has spent 17 months at a treatment facility.
"Because of Mike's courageous efforts in treatment and because I wanted to clear our family's name by making the victims whole, I have made full restitution on behalf of Mike,'' said T. Boone Pickens, head of the BP Capital hedge fund.
"I am thankful that it has forced Mike to truly confront his demons for the first time in his life,'' he said.
Michael Pickens pleaded guilty in October 2006 to securities fraud. According to a July 2005 indictment, he tried to illegally pump up share prices of small companies such as Infinium Labs, which has since changed its name to Phantom Entertainment.
Prosecutors said he sent hundreds of thousands of hoax faxes meant for a fictitious "Dr. Mitchel'' to investors around the United States. After the fake tips boosted trading volume and stock prices, he would sell his shares, netting more than $300,000 in illegal profit in the scheme, according to court papers.
Pickens was ordered to report to a substance abuse program in Dallas next week. U.S. District Judge Loretta Preska cited his substance abuse problems in sparing him prison time.
"This defendant started drinking when he was 13, started with marijuana at 15, prescription drugs thereafter, and that went on for the rest of his life,'' she said.
At the hearing, Pickens apologized for his conduct and said he hoped to help others in their battles with substance abuse.