(Texas) Energy investment firm busted for big ($485 million) Ponzi scheme

[sabra]

Source: marketwatch

NEW YORK (MarketWatch) -- Federal authorities have cracked down on an alleged $485 billion Ponzi scheme holding investments in the oil and gas business, with Provident Royalties LLC now facing a suit filed late Tuesday in Texas by the U.S. Securities and Exchange Commission. A federal judge agreed to freeze assets of the company, which holds oil and gas interests, working interest and royalty interest in oil and gas properties in the U.S. Three principals of the firm, Paul Melbye, Brendan Coughlin and Henry Harrison, were named in the suit. The SEC charged the scheme drew in 7,700 investors told to expect yearly returns of up to 18%. Beginning in 2006, Provident began offering limited partnership interests or preferred stock to the public through a number of broker-dealers nationwide. Provident filed for Chapter 11 bankruptcy protection on June 22.

Read more: http://www.marketwatch.com/story/energy-investment-firm-busted-for-big-ponzi-scheme

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edit: changed it to million from billion - appears report has a typo. thanks Lone_Star_Dem!

[Ian David]

1. Please please PLEASE let this bankrupt Bush, Cheney and T. Boone Pickens. n/t

[femrap]

3. Good one! nt

[Ganja Ninja]

4. They're probably Bushco's competition.

No wonder they're being investigated.

[madokie]

6. Damn sam

you know how to blow my high. Here I was all set for this maybe bringing some of bushco down and then you go off and say what you did. durn :rofl: You're probably right too and thats the downer part.

[pleah]

2. K&R

[Lone_Star_Dem]

5. I read last night it was $485 million. (it is per Reuters)

From some 7,700 investors.

Let me look for a link.


Edit: It's million per Reuters.

WASHINGTON, July 7 (Reuters) - Provident Royalties LLC and three founders were charged with securities fraud for allegedly bilking thousands of oil and natural gas investors in a $485 million Ponzi scheme, the Securities and Exchange Commission said on Tuesday.

In a civil case, the SEC alleges that from about September 2006 until January 2009, Texas-based Provident Royalties raised nearly half a billion dollars from at least 7,700 U.S. investors by promising annual returns of over 18 percent and misrepresenting how the funds would be used.

A portion of the proceeds were used for acquisition and development of oil and gas exploration and development activities, but other investor funds were used to pay earlier Provident Royalties investors, the SEC said.

"Investors were told that 86 percent of their funds would be placed in oil and gas investments. That representation was false," the SEC's complaint said.

The SEC said a federal court issued an emergency freeze on assets and appointed a receiver to preserve the assets.

http://www.reuters.com/article/governmentFilingsNews/idUSN0732721720090707

I don't know which one is correct though. :shrug:

It does make one wonder how many rich people aren't as rich as they thought they were due to these Ponzi schemes.

[sabra]

7. made edit, thanks!

[Javaman]

8. so in the current atmosphere of insanity, one would think that an investor

in this mess would want to take a second look at that promised 18% in light of madoff and stanfeld and others and bail the hell out.

I know, call me crazy.