Arctic Explorer turns Oil Promoter
A controversial North Pole explorer’s fraudulent claims are part of failed oil company ventures, a mail fraud conviction and jail time.
Arctic explorer Dr. Frederick Albert Cook in 1908 made the widely accepted claim to have reached the North Pole.
Although he was celebrated in newspapers as having achieved this milestone – his claim was later found to be false.
Many considered Cook a fraud soon after Admiral Robert E. Peary made a better documented journey in 1909.
Cook would spend years defending his claim – despite a lack of navigation evidence. He published My Attainment of the Pole – and threatened to sue anyone who said he had faked the trip. Then he got involved in the oil business.
In 1917 Cook conducted geological explorations in Wyoming for his newly formed company, the Texas Eagle Oil Company of Fort Worth.
Wyoming’s first real oil boom had arrived in 1908 when Salt Creek’s “Big Dutch” well came in as a gusher, bringing a flood of entrepreneurs and investors.
However, even with new railroad tank cars, Wyoming oil could not compete in eastern markets because of transportation costs. Read more Salt Creek history at First Wyoming Oil Wells.
Wyoming’s falling oil prices forced the Texas Eagle Oil Company into bankruptcy. But in September of 1920, Cook rebounded with Fort Worth investors and incorporated the Revere Oil Company.
“My experience with the Texas Eagle taught me that if I could have raised $50,000, I could have saved that large company with its large properties for its stockholders,” Cook would later claim.
“Combining with the Revere taught me that that was a reasonable method of how many other companies then being neglected or lying inactive, put under one head, could be renovated and the stockholders put in a position to make some money.” he added.
Postal Service investigators saw it differently. Subsequent federal grand jury indictments of Cook noted:
“In March, 1921, the promoters, it is charged, entered upon a ‘so-called merger plan,’ each merger resulting in the acquisition of additional lists of stockholders who were advised in extravagantly phrased circulars and letters of the merger and promised safety from loss in their investment in the old company.”
The indictments noted that investors were required to “exchange their stock dollar for dollar for stock in the Revere Company with the stipulation that they purchase new stock equal to 25 percent of their holding in the ‘merged company.’”
Blizzard of Hyperbole bilks Investors of Millions of Dollars
Undeterred by legal threats, Cook organized the Petroleum Producers’ Association in 1922 – using the same Revere Company “fold in” merger scheme as it was known at the time.
Cook and his ad man, Seymour “Alphabet” Cox, launched a blizzard of hyperbole. Their marketing campaign eventually amounted to a daily total of up to 30,000 promotional letters, brochures, and industry “tip sheets.”
Instead of oilfield roughnecks, Cook contracted for more than 50 full-time stenographers. Other employees included two “addressograph” operators, two printers, and a full-time mail boy. His fraudulent marketing convinced thousands of unwary investors to buy into the Petroleum Producers’ Association.
Eventually, Petroleum Producers’ Association and Revere Oil Company will be charged for “having taken over more than 250 smaller companies in most of which investors had already suffered huge losses.”
Among the companies taken over was the Rose City Petroleum Company, which was $50,000 in debt at the time, according to G.W. Hays, former governor of Arkansas and a shareholder in the company, founded in 1921 to build a 1,000-barrel-a-day refinery in Little Rock. It had struggled, thus making its investors susceptible to Cook’s scheme.
Newspapers reported that Cook bought “sucker lists” from defunct and dying oil companies to target vulnerable investors, “each one holding out a new hope of recouping money lost in a previous adventure or of becoming rich overnight from the black gold that flows from Texas oil wells.”
Federal investigators charged that in three years of operations, Revere Oil Company bilked investors of more than $6 million.
In 1923, after testimony from almost 300 witnesses, Cook, “Alphabet” Cox and others were convicted of ”dispersing stock-sales revenues as dividends, claiming income from nonproducing wells, and otherwise misrepresenting the company’s position.” Learn more about “Alphabet” Cox in Prudential Oil and Refining Company.
Frederick Albert Cook, the once self-proclaimed conquer of the North Pole was fined $12,000 and sentenced to 14 years and 9 months in Leavenworth prison in Kansas. “You have at last got to the point where you can’t bunko anybody,” said District Court Judge John Killits. Cook was paroled in 1930 – and pardoned by President Franklin D. Roosevelt in March of 1940. The Arctic explorer died five months later at age 75.
The many stories of many exploration companies trying to join petroleum booms (and avoid busts) can be found in an updated series of research in Is my Old Oil Stock worth Anything?
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