SEC Charges Texas Businessman and Others in Oil and Gas Ponzi Scheme
The Securities and Exchange Commission has charged Texas resident James VanBlaricum and six others for running an oil and gas Ponzi scheme.
The Securities and Exchange Commission has charged Texas resident James VanBlaricum and six others with running an oil and gas Ponzi scheme.
The SEC alleges that VanBlaricum was the driving force behind a company called Texas Energy Mutual LLC (formerly Texas Energy Management), and because he was a securities fraud recidivist with a history of running fraudulent schemes, he convinced Rodney Pope and Chet Inglis to serve as the face of the company. Together, they enlisted Robert Gilliam, Matthew Leaverton, William Hill, and Erik Rhodes to solicit investors.
Among other things, the SEC claims that the defendants raised in excess of $10 million by guaranteeing investment returns and promising investors that their funds would be used to drill oil wells. Instead, the defendants used investor money for a variety of personal expenditures, including luxury international vacations and wedding expenses.
According to the complaint, VanBlaricum created a “special needs” program to keep dissatisfied investors from discovering the fraudulent conduct. The defendants allegedly lulled investors with cash Ponzi payments that purported to be a return on their investment or rolled over investors from a failed drilling program to a newer one.
VanBlaricum, Pope, Inglis, Gilliam, Hill, and Rhodes each agreed to be permanently enjoined from further violating securities laws. The SEC is pursuing the same against Leaverton.
VanBlaricum, Pope, and Inglis also consented to officer and director bars. Rhodes agreed to disgorge $33,000 in ill-gotten gains while a federal judge will determine disgorgement and penalties with respect to Hill.
In addition to the SEC action, VanBlaricum, Pope, Inglis, Leaverton, and Gilliam were charged in a parallel criminal case by federal authorities and have each pleaded guilty and were sentenced to prison terms ranging from 30-84 months and ordered to pay between $1.8 million and $32 million in restitution.
