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Let There Be Light Crude

By Mariah Blake | Tue January 8, 2008 12:00 AM PST

When james cojanis heard the first rumblings of Armageddon, he was sitting in his San
Jose home with the radio tuned to a popular Christian show called The Prophecy Club.
Featured that day was a charismatic Texas oilman named Harold "Hayseed" Stephens.
Speaking in the rousing cadence of a Southern preacher, he told listeners that "the
greatest oil field on Earth is under the southwest corner of the Dead Sea"—and that his
company, Ness Energy International, was about to tap into it. In doing so, he said, it
would drain the oil fields of the Persian Gulf, prompt Arab countries to attack Israel, and
at last touch off the great battle that would usher in the end of days.

As soon as the show was over, Cojanis got on the phone to find out how to invest in the
venture. Days later the 70-year-old retiree received a form letter addressed, "Dear End
Time Servant." It claimed that the oil reserves at Ness' planned drilling site ranged "from
one billion to 40 billion barrels...putting this prospect in a class of the super giant oil
fields of the world." Without a second thought, Cojanis bought $120,000 worth of stock
in Ness. "Faith is a gift God puts in your heart," he explained when I visited him in
October at his cluttered town house, piled with crumpled boxes of prophecy-themed
newsletters and cassette tapes of old Christian radio shows. "And I didn't have any
doubt that Ness was a plan of God. He raised up Hayseed Stephens to find Israel's oil."

Eight years later, Ness has yet to sink so much as an initial borehole for a Dead Sea
well. In fact, for most of its existence it has never even held exploration rights in Israel.
Its U.S. headquarters, a barnlike storefront topped with an open Bible sprouting an oil
well, was shuttered in 2006. Since then, its stock price has fallen from a high of nearly
$5 to a mere 3 cents; Cojanis' $120,000 investment is now worth $3,000. Not that he's
worried. "I'm glad the stock price is in the tank," he says. "When they hit oil and the
stock goes sky-high, that means Armageddon is around the corner." At that point, he
plans to use his gains to spread the word that the end times are here, preparing as
many souls for heaven as possible.

It is widely believed among evangelical Christians (and some Orthodox Jews) that
Scripture foretells a massive oil find in the Holy Land; prophecy buffs are especially
captivated by a passage in Ezekiel that says Armageddon will be triggered by a band of
nations—Russia, Iran, and a confederacy of Arab countries are most often named as
the likely suspects—attacking Israel to "take a great spoil." Their faith has spurred a
sprawling, decades-long treasure hunt. At least 10 companies or individuals have
searched for oil in Israel using biblical clues. So far, few of the more than 400 wells
drilled there have turned up commercial quantities of oil and gas. But the willingness of
ordinary churchgoers to invest their life savings has kept the ventures going—and made
the business rich terrain for a bevy of false prophets, penny-stock hustlers, and con
men.

a burly man who favored Wrangler jeans and fat belt buckles (one of which bore an oil
derrick emerging from a Star of David), Hayseed Stephens grew up picking cotton and
slopping hogs on a Texas sharecropping farm. For a brief stretch in the early 1960s, he
played quarterback for the New York Titans (now the Jets) before returning to Texas to
work the oil fields and, later, minister to the faithful from a church he opened in Willow

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Park, near Dallas.

In 1997 Stephens acquired a publicly traded shell company that he renamed Ness
("miracle" in Hebrew). With meager assets and no recent operating history, it was a
business in name alone, but that didn't stop Stephens from selling millions of dollars of
stock in it. He got help from Stan Johnson, a one-time salesman turned doomsday
prophet who founded the Prophecy Club, a Kansas-based ministry that airs television
and radio programs on Christian stations across the country and holds traveling revival-
style meetings. Johnson once told his followers that Stephens could be drilling within 60
days if he just collected enough money: "And when the well is drilled, when the oil
comes in, 17 Bible prophecies will be fulfilled...We believe now is the time and Hayseed
is the man."

Besides scriptural backing, Stephens claimed to have geological proof for his theory. In
late 2002 he told Prophecy Club listeners that "experts from Israel and around the
world" had studied his planned drilling site and concluded that "18 to 50 billion barrels of
oil" were hidden beneath the surface, reserves worth up to a trillion dollars. "You cannot
find such good odds in Vegas, Atlantic City, or anywhere else in the world, even if you
are nothing but a gambler."

Among those swayed was Michael, a 53-year-old Kansas farmer who asked that his last
name not be used. In 1999, he invested half a million dollars in Ness, learning only later
that the shares he bought couldn't be resold—a claim echoed in lawsuits filed by other
Ness stockholders. He was forced to watch from the sidelines as the share price
climbed from the 45 cents he paid at one point to around $5, then sank back to around
a quarter. At the peak, his stock would have been worth $11 million. "I thought God was
in the project," he says. "It turns out it was a trap laid for me by the enemy, Satan."

Over the past 10 years, Ness has issued 180 million shares and collected almost $10
million from investors. What most of them didn't know—and still don't today—is that
behind the fire and brimstone lurked a standard penny-stock play known as the pump-
and-dump scheme, which entails buying a publicly traded shell company, inflating the
stock price with misleading claims, then selling off shares at a huge profit and leaving
investors holding the bag.

Key Ness executives had a history of such cons. The company's original chief financial
officer, Ivan Webb, moonlighted as president of a firm called Broadband Wireless,
where, according to sec investigators, he and convicted con man Donald Knight
cheated stockholders out of at least $5 million. Ness' founding ceo, Stanley Swanson,
headed an outfit called Safescript Pharmacies, which had its registration revoked by the
sec for artificially inflating its stock value through a fraudulent accounting scheme. A few
other Ness insiders had ties to Safescript, including Webb, who served as a consultant.
In 2000, Ness purchased $1 million in Safescript stock—shares that became nearly
worthless within months.

Stephens played a similar game with Ness' stock—driving up prices with apocryphal
claims, then selling shares, ultimately clearing at least $3.5 million. But in this case,
pump and dump was just part of the swindle.

one of Stephens' darkest secrets is buried in Israel's oil register, a battered leather
binder held together with red electrical tape whose crumpled pages hold exploration
permits dating back several decades. During a visit last summer to the offices of the
Ministry of National Infrastructures in Jerusalem, I combed through the book with the

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help of deputy oil commissioner Avraham Honigstein, an unassuming geologist who

speaks in a precise monotone. It took nearly an hour, but we eventually unraveled an
elaborate shell game designed to give the illusion that Ness held drilling licenses. In
fact, the rights were held by a private company called Hesed—a firm owned by
Hayseed Stephens. What's more, Ness and Hesed had an operating agreement saying
that Ness was to perform all the work on the proposed Israeli drilling sites while Hesed
would receive all the potential profits. In other words, had either company struck oil,
Ness investors wouldn't have seen a penny.

In the end, the terms didn't matter much, since Stephens never even laid the
groundwork for a Dead Sea well. "He didn't do the geological work because he didn't
want to spend the money," Moshe Goldberg, Israel's former oil commissioner, told me.
He called the claims that Stephens sold "lies" and "nonsense."

In April 2003, Stephens sold Hesed and another firm he owned to Ness for around $4
million—at least four times what they were worth, according to sec documents.
Stockholders were led to believe that Hesed's value lay in proprietary geological and
seismic data collected on the sites where it had held licenses in Israel; in fact the only
geological work Hesed had ever done was to reinterpret an existing seismic study.

The deal was Stephens' last. He died the following month, struck down by a heart attack
while praying with a neighbor outside of his Texas home.

the history of biblical oil prospecting is filled with quixotic quests and colorful
characters, starting with Weslie Hancock, a wealthy California man who in the 1960s
dreamed that Jesus told him he would find black gold in the Holy Land. He sunk his
entire fortune into two dry holes. In the 1980s, Andy Sorelle, a World War II fighter pilot
and petroleum engineer, collected as much as $25 million from churchgoers who
believed they were buying an interest in his well; he bored down to 21,500 feet, deeper
than anyone had ever drilled in Israel, before hitting a thick slab of limestone that
showed traces of oil. Across the Bible Belt, the faithful braced for a gusher. On The 700
Club, Pat Robertson reported that Sorelle was about to tap "the largest oil field ever
discovered," a development that could "revolutionize the fulfillment of biblical prophecy."
But the euphoria evaporated when some testing equipment got jammed in the hole and
Sorelle couldn't conjure the miracle he needed to get it out. That's when Goldberg
started receiving letters from churchgoers who had sunk their entire savings into the
well. "I felt so bad for them," he recalls. "They were people who had scraped together
their dollars, and when the hard times came, they had nothing. "

Other wildcatters followed, including Bernard Coffindaffer, a West Virginia businessman

who searched for oil using scriptural clues and a vial of his own blood. In 1999 a penny-
stock firm named Covenant Energy began promoting a bogus oil-exploration project on
the spot where Sorelle had drilled, selling $70,000 worth of stock to investors before
Delaware Securities Division investigators discovered that corporate officers were
pocketing most of the money. The firm's founders were convicted of fraud and
conspiracy in 2003.

today, two companies are searching for oil in Israel based on biblical passages. One of
them, Givot Olam, is run by an Orthodox Jewish geophysicist named Tovia Luskin.
Luskin's firm has drilled three wells using a blend of science and Scripture. All have
shown traces of oil and gas, though none have turned up commercial quantities.

The other firm, Dallas-based Zion Oil & Gas, was founded by an evangelical Christian

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named John Brown. I met him last July in the Club Lounge of Tel Aviv's David
Intercontinental Hotel. A mild-mannered 68-year-old with a slight Texas twang and a
deep tan, he was wearing denim shorts and reclining in a pink armchair, overlooking the
turquoise waters of the Mediterranean.

Twenty-seven years ago, Brown was a tool-company executive with a $200,000 salary
and a comfortable house in the Detroit suburbs. He was also a zealous new believer
who credited the Lord with delivering him from a stubborn alcohol addiction. Eager to
share the good news, he doled out "Jesus Loves You!" wallet cards and once sent a
memo warning coworkers to "choose JESUS CHRIST as your Personal Savior" or face
"eternal damnation." Some people were put off by his newfound fervor, including his
wife, who packed up their four kids and divorced him.

It was around this time that Brown heard a sermon from maverick preacher Jim
Spillman, who unfurled ancient tribal maps and quoted Deuteronomy 33, which tells
how Moses scaled Mount Nebo, looked out on the Holy Land, and described the
blessings awaiting the 12 sons of Jacob. Among them were "treasures hid in the sand"
and "precious things" deep beneath the earth.

Brown later traveled to Israel, where he says the Lord spoke to him and told him he was
the "stranger" that the Book of Kings predicts will be sent to fortify Israel in the final
days. "I knew in my heart what to do," he recalls. "I knew God was going to put me in
the oil business."

Brown was so convinced that in 1985 he quit his job and moved to Houston, where he
tried to drum up support for an Israeli drilling venture. But investors weren't eager to
back a greenhorn on a mission from God, especially in the midst of an industry slump.
So Brown waited and prayed and lived off his savings. By 1996, utterly broke, he ended
up scrubbing toilets at a Baptist church for $4 an hour before moving back to Michigan,
where he slept in his brother's basement. "Talk about one whipped dog: I was it," he
says.

It took him two years to get back on his feet, but he never lost sight of his dream and
finally founded Zion in 2000 with the help of Philip Mandelker, an oil-industry attorney
who was also deeply involved with Ness. Early investors pitched in enough money to
complete one drilling project near the land Brown believes once belonged to Asher, the
Israelite Moses predicted would "dip his foot in oil." Last spring, the company held its
initial public offering on the American Stock Exchange, raising more than $12 million.

Unlike Ness, Zion is a legitimate wildcatting venture, with respected geologists on its
board of directors. Still, some of its activities are questionable. The firm was first brought
to wide attention by Hal Lindsey, host of the prophecy-focused TV show The Hal
Lindsey Report and coauthor of the best-selling The Late Great Planet Earth. Lindsey
has bet very publicly on Brown's company, telling his viewers in March 2007 that "Zion
Oil right now is on the verge of discovering oil," a sign that "we are really on the very
threshold of Lord Jesus' return." Around the same time, he touted the company in his
column on the popular conservative website WorldNetDaily, saying, "Zion Oil has sunk
eight exploratory wells, all of which have shown signs of oil and gas" (it has, in fact,
sunk just one), and suggesting Israel's oil "could rival that of Saudi Arabia."

What Lindsey neglected to mention was that he and his relatives own millions of dollars
of stock in the company. In 2002, John Brown gave Lindsey a gift of 50,000 shares,
worth $337,500 at today's price. Ralph Devore, Lindsey's cousin and a director of his

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ministries, controls nearly 725,000 shares, worth about $4.9 million. Devore was also a
founding member of Zion's board and was at one point hired to promote the company.

Brown insists his motives for the gift were pure. "It was simply in my heart to give shares
to people who loved Israel," he says. But Lindsey's support has clearly paid off for the
company. After he told television viewers that Zion was "on the verge" of an oil find, the
trading volume of the company's stock leaped from 11,100 a day to 122,000 and the
price climbed from $7.64 to $9.25 a share, a 21 percent increase. (Lindsey did not
respond to requests for comment.)

In truth, Zion was never close to striking oil; at its very first stockholders' meeting this
past June, the firm announced plans to temporarily abandon its only well due to
technical problems. Afterward, John Brown climbed to the podium and arranged himself
between an American flag and an Israeli one. Flipping his Bible open to the Book of
Kings, he began reading a passage about the prophet Elijah, who heard "the sound of
abundance" when Israel was in the midst of a crippling drought. No one else could hear
the sound, but Elijah prayed and waited, and within hours "the heavens was black with
clouds."

When he finished reading, Brown looked up and told his investors that he, too, heard
"the sound of abundance." Zion is now laying plans for its next well.

at ness, meanwhile, the saga continues with a new cast of characters. The main player
these days is Hayseed's son, Shannon "Sha" Stephens, who took the reins of the
company after his father's death. Sha inherited his father's bulky build and cowboy style,
not to mention his taste for life on the margins of the oil business. Before taking over at
Ness in May 2003, he was president of Warrior Resources, a struggling oil and gas
company, where he faced allegations that he spent the company's money on personal
expenses and transferred its assets into his own name, according to a lawsuit filed in an
Oklahoma District Court. (Sha did not respond to calls seeking comment.)

His first move at Ness was to announce a bold new business plan called the "New
Outlook," which involved expanding the company's U.S. drilling operations to raise
funds for its Israel venture. Shortly afterward, he sold Ness a handful of Texas oil and
gas leases for $11.5 million. Most of them, the company later announced, "were lost
due to lack of production."

Like his father, Sha used The Prophecy Club to spread deceptive claims about Ness'
prospects, once telling listeners that the company had enough acreage in Texas for
tens of thousands of wells, each bringing in $5,000 a day. With each misleading claim,
the stock climbed, and insiders dumped millions of shares. Having milked the venture
dry, Sha started folding up the company's operations in 2006, eventually selling its
Texas headquarters that December. In July, Ness was wiped from the corporate
register in Washington state, where it was incorporated. Yet even with the company
seemingly in its death throes, in September Stephens and crew appointed a British
businessman named Anthony Allenby as the new ceo—a move that drove up the stock
350 percent and triggered clauses that board members and executives had added to
their contracts a couple of years before, giving themselves large cash payouts in the
event of leadership changes. Stephens is in line to receive at least $750,000.

Allenby departed within a month, leaving the company $30 million in the red, with no
staff, no offices, and no clear claims to any drilling rights. (During his tenure he declined
Mother Jones' interview requests, but warned of a "media attack by the enemy" on

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Ness' blog. "I see this as part of the Lord's work to 'purify' this Company," he wrote, "and
perhaps even the whole 'Christian oil business' in preparation for what He is about to
do.")

And still, devoted stockholders cling to hope. Some have even offered to band together
to pay Sha's salary out of their own pockets if he returns to Ness' helm. James Cojanis,
the San Jose retiree who bought $120,000 of the firm's stock, says he is thinking of
investing another $100,000, a third of his savings. "One of these days the oil is going to
come," he says. "And when it does, Ness' stock is going through the roof. I have no
doubt that it will happen in God's perfect timing."

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