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Last defendant sentenced in North Dakota oil theft scheme

The last of four men charged in a scheme to steal millions of dollars worth of crude oil in western North Dakota has been sentenced.

Darrell Woody Merrell, of Watford City, North Dakota, on Thursday pleaded guilty to felony charges of theft conspiracy and dealing in stolen property. A state district court judge sentenced him to serve nearly a year in jail and two years of supervised probation and to pay $200,000 restitution.

Defense attorney Bob Bolinske Jr. told The Associated Press the jail sentence instead of prison time is “a huge, huge benefit” to Merrell.

“It's nothing he's happy about, but it was a lot of relief off of him and kind of a testament to his information that he provided regarding a lot of other bad activity going on out there with relation to oil,” Bolinske said. The judge had previously rejected an initial plea deal with no jail time, he said.

Prosecutor Ty Skarda confirmed that Merrell is the last defendant to be sentenced in connection with the case, telling AP, “I'm glad we had a successful prosecution for all that were involved here in McKenzie County" and that the case is done and resolved.

Defendants Michael Garcia, Mark McGregor and Joseph Vandewalker were sentenced in past months to varying years in prison after pleading guilty to charges.

Authorities in 2022 alleged the scheme in which truck drivers Merrell and Vandewalker skimmed crude oil by manipulating equipment during deliveries to a Crestwood Midstream facility, and stored the oil in tanks near Watford City, to be sold later.

McGregor organized transportation, managed storage and communicated about pickups of the oil, according to court documents.

Authorities accused Garcia of being “the money link between the producer/marketer selling the stolen crude oil and the recruited drivers out stealing the crude oil,” according to court documents.

Merrell told a sheriff's deputy last year that Garcia “approached him about stealing crude oil,” according to the deputy's affidavit.

“It quickly grew, as it does when you get wrapped up into something like this, you start seeing dollar signs and it quickly grew out of hand,” Merrell said, according to the affidavit.

A search of Garcia's bank records indicated he paid Merrell over $26,000 and Vandewalker over $58,000 via bank transfers and checks, not including cash; Merrell told the deputy that Garcia “usually hands him an envelope full of cash," according to the affidavit.

The scheme involved over $2.4 million worth of crude oil in the period from November 2020 to March 2022, according to the court document.

Garcia pleaded guilty in December 2022 to felony charges of theft conspiracy and leading a criminal association. The judge sentenced him to seven years in prison.

His attorney wrote in a sentencing document that Garcia suffered a head injury in war that caused him cognitive difficulties.

“This scheme involved higher level players that persuaded Mr. Garcia to participate and run the ‘ground game’ so that the masterminds of the operation will profit handsomely off" of stolen oil, the attorney wrote. "The masterminds sought out Mr. Garcia and used him to facilitate the scheme."

Vandewalker and McGregor earlier this year separately pleaded guilty to felony charges of theft conspiracy and dealing in stolen property, and were sentenced to three years and four years in prison, respectively.

Garcia, Vandewalker and McGregor also must pay $200,000 of restitution apiece, and serve periods of supervised probation.

A Crestwood spokesperson did not immediately respond to AP's emailed request for comment.

Skarda told AP there “is or was a federal investigation” into the case, but said he didn’t know its results. North Dakota U.S. Attorney's Office spokesman Terry Van Horn confirmed “an ongoing investigation,” but declined to comment on its status or future prosecutorial proceedings.