LA man who bilked Midland landowner out of $1.5 M in oil royalties pleads guilty

MIDLAND, Texas (KMID/KPEJ)- A California man pleaded guilty in federal court in Midland to two counts of wire fraud after he forged documents and diverted oil royalty payments away from a Midland landowner.

According to court documents, Mitchell Vaughn Lee, of Los Angeles, acquired and utilized personal identifying information of a mineral rights owner to access the victim’s royalty account with Diamondback Energy, a Fortune 500 oil and natural gas company headquartered in Midland. Lee’s scheme resulted in diverted royalty payments from bank accounts owned by the victim to the bank account controlled by Lee.

On at least two occasions in February 2022, Lee worked to divert about $1.5 million dollars from the victim’s oil royalty account to a bank account in Lee’s control.

In February 2022, law enforcement agents executed a search warrant at Lee’s Los Angeles residence. Among other items, agents recovered a firearm and a direct deposit change form for Diamondback Energy with the victim’s name and unique non-public owner identification number for the victim’s Diamondback Energy oil royalty account.

Lee was initially prosecuted in the Central District of California for Felon in Possession of a Firearm. While awaiting trial, Lee ran away from California; he was located in late 2023 in Miami, Florida by federal agents, and was sentenced to 60 years imprisonment in the Central District of California for Felon in Possession of a Firearm.

In the Western District of Texas wire fraud case, Lee faces up to 20 years in prison for each count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Lee remained in custody as of Friday awaiting further proceedings. A mugshot for Lee was not immediately available.

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