Government officials seized money from the bank accounts of two small fuel distributors earlier this year in connection with the sale of stolen natural-gas condensate from Mexico, court documents show. Some $100,000 was taken from San Antonio-based Valley Fuels Ltd., and about $40,000 from Houston-based Continental Fuels Inc.

Neither company could be reached for comment Wednesday.

Valley Fuels attorneys in a June court filing responding to the seizure denied that the seized funds were derived from the illegal sale of condensate; Continental Fuels did not contest the seizure, according to court documents.

Jim McAlister, the assistant U.S. attorney in Houston prosecuting the case, said the money seizures don't necessarily mean the government believes the companies knew the products were stolen.

The seizures are part of a bi-national probe into a group of smugglers that stole condensate, a hydrocarbon liquid, from Mexico's state oil company, aided by one of Mexico's most powerful drug cartels. The investigation has already resulted in the prosecution of Donald Schroeder, the former president of Houston oil-marketing company Trammo Petroleum. Mr. Schroeder pleaded guilty in May to acting as a middleman in a scheme to smuggle $2 million of condensate into Brownsville, Texas.

Mr. Schroeder is awaiting sentencing in December. He couldn't be reached for comment, and his attorney didn't return calls seeking comment.

Mr. McAlister said investigators have found links between Continental Fuels and Mr. Schroeder. He said his office has filed a number of civil search-and-seizure warrants to get money from other companies apart from Continental Fuels and Valley Fuels, but often found only empty bank accounts.

Investigators on both sides of the border have provided few details on the connections between the condensate thieves in Mexico and the U.S. buyers of the contraband. The total amount and value of the smuggled products remains unclear.

Petroleos Mexicanos, Mexico's state oil company, estimates that oil and products stolen from its facilities in 2008 were valued at about $720 million, although most of that stayed in Mexico, according to a spokeswoman from Mexico's attorney general's office.

A Pemex spokesman declined to comment on the investigation Wednesday.

Mr. McAlister said Mr. Schroeder knew the products were illegal, but probably didn't deal directly with the Mexican gang that stole them. He added that the government will not charge companies that bought or sold the stolen products unknowingly.

None of the U.S. companies involved so far is a big player in the oil business. Continental Fuels is listed as a penny stock on the over-the-counter market and reported a loss in its most recent quarterly filing in June 2008.

**Susan Daker at susan.daker@dowjones.com and Ana Campoy at ana.campoy@dowjones.com