Christopher Bentley, who founded Bellatorum Resources LLC in 2016 and raised funds from about 150 wealthy individuals, closed its doors on April 9 and contacted U.S. prosecutors. His firm bought mineral rights in Texas shale fields, betting on appreciation as oil and gas drilling rose.

The Federal Bureau of Investigation and Department of Justice are reviewing the company's records, Bentley said in the interview on Tuesday. Bentley has not been charged.

The FBI said it does not confirm or deny the existence of any investigations and referred questions on Bentley to the U.S. Attorney's office. A spokeswoman for U.S. Attorney Jennifer Lowery of the Southern District of Texas did not reply to several requests for comment.

Alongside this year's spectacular investment busts, Bellatorum's is small. This year's failure of highly leveraged equity investor Archegos Capital saddled investors with billions of dollars in losses. But Bellatorum stands out for its founder's mea culpa email to investors and decision to turn himself into authorities.

'I WAS OVERLY CONFIDENT'

At times contrite about his failings, the 40-year-old former energy worker and U.S. Marine admitted to acquiring "bad" and "non-arm's-length" deals, overspending on corporate overheads, and failing to hire professionals to advise him. He said he lost some of his own money in the venture.

"I was overly confident that if I can hit even one home run that'll make everything right," Bentley said of his hiding the fund's financial troubles from investors and employees. "I kept digging the hole. I turned myself in because I couldn't live the lie any longer."

The buying and selling of mineral rights, an about $2.1 billion-a-year business in the United States, took off in the shale patch around 2016 as drilling activity jumped, said Enverus M&A analyst Andrew Dittmar. But the business slumped last year as deals dried up with oil demand.

Bentley had borrowed money using fund assets in a last-ditch effort to generate enough cash to pay investor distributions. Instead, he used some of the cash to finance Bellatorum's daily operations and cover distributions to early fund investors, he told Reuters.

"I have made serious mistakes in an effort to keep the operation going," he told investors in the email dated April 9 and seen by Reuters. The company's two largest funds have almost no assets left, he said, after he borrowed $6.6 million against the assets and the lender foreclosed earlier this year.

'TIME WILL TELL'

Jeff Voelkel, an investor in Bellatorum's third and smallest fund who has reviewed its records, said less than half the $2.6 million that 40 investors put into the fund was used to buy assets, with the rest apparently consumed by expenses.

Voelkel described Bentley as "open and forthcoming with information" since the April 9 email, but added: "Only time will tell if he siphoned anything off for himself."

Bentley stressed to Reuters he had not diverted funds, saying he had sold his own assets and put money into the company. But he admitted working nights and weekends to keep the losses hidden from his employees and investors. Bellatorum staff, 21 employees at its peak, were unaware of his actions, he said.

"I didn't let them have access to information. That's why they didn't end up working for me for long," he said.

(Additional reporting by Liz Hampton in Denver; Writing by Gary McWilliams in Houston; Editing by Howard Goller)

By Shariq Khan