The man behind Admiral Oil Company ended up on an island – a federal  penitentiary in Puget Sound, Washington.

Admiral Oil was one of many sham companies created by Gilbert S. Johnson, who was indicted October 5, 1922, in Los Angeles.

A grand jury determined that Johnson “did devise and intend to devise, a certain scheme and artifice to defraud and to obtain money and property, by means of false and fraudulent pretenses, representations and promises.”

The grand jury noted that after instituting a campaign for the sale of stocks, Johns “would assign certain oil and gas leases, previously acquired by himself as aforesaid, or portions of such lease, to such trust estates, at enormous and excessive prices and at unlawful and wrongful profit to himself.”

For his schemes, Johnson used the U.S. Mail and advertisements proclaiming, for example:

The Admiral Oil Company has before it a tremendously profitable future, we are confident, and if you own any of the securities which can be exchanged for Admiral stock at this time, do so without fail while the opportunity is still available.

“Whereas, in truth and in fact, as the defendant then and there well knew” – noted the grand jury noted – “that the best interest of the stockholders in the various syndicates merged by and into the Admiral Oil Company would not be served at all by the merger.”

As a result, “the merging of these various insolvent syndicates by and into the Admiral Oil Company was simply another scheme and artifice by which the defendant could and would obtain additional money and property.”

Johnson made many other “false, inflammatory, exaggerated and gross misrepresentation, pretenses and promises, too numerous to mention or set forth herein, for the purpose of causing and inducing the persons to be defrauded to believe that they might make and would be safe in making safe and profitable investments in the shares,” the indictment concluded.

After lengthy litigation and appeals, Johnson was convicted of “Use of Mails in Scheme to Defraud” and sentenced to four years in the federal penitentiary at McNeil Island off Puget Sound in Washington and now known as McNeil Island Corrections Center.

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