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Man Sentenced in $400 Million Ponzi Scheme

   BEAUMONT, Texas – 5/9/2012 - A federal judge has sentenced a 36-year-old Dallas man in connection with his role in a pair of complex, lucrative oil and gas Ponzi schemes that operated in Michigan and Texas, U.S. Attorney for the Eastern District of Texas John M. Bales announced on May 4.
    Joseph Blimline was sentenced to 240 months in federal prison on each of the charges related to the Ponzi schemes following a five-hour sentencing hearing on May 3 before U.S. District Judge Marcia A. Crone, who ordered the sentences to run concurrently and ordered that restitution be made to the victims of the schemes.
    “The Michigan agents worked hand in hand with the agents in Texas and with federal and state securities regulators to untangle both of these complicated Ponzi schemes and bring the perpetrators to justice for their abuse of the trust of others to obtain criminal profits,” Bales said. “To all potential investors, I urge you to be wary of investment vehicles that promise exorbitant rates of return. Remember: If the opportunity appears too good to be true, then it probably is.”
    At the sentencing hearing, the government presented testimony and evidence which established that Blimline and others began operating a Ponzi scheme in Michigan between November 2003 and December 2005, specifically by promising inflated rates of return in order to obtain payments from investors. Lacking any legitimate source of income with which to make payouts to the investors, Blimline directed that later investor payments be used to pay previous investors and diverted investor payments for his own personal benefit. The Michigan scheme netted over $28 million from its investor victims before its collapse.
    In early 2006, Blimline exported the Michigan Ponzi scheme to Texas, where Blimline and his new co-conspirators began the operation of Provident Royalties in Dallas. Consistent with his previous actions in Michigan, Blimline made materially false representations and failed to disclose material facts to their investors in order to induce the investors into providing payments to Provident. Blimline received millions of dollars in unsecured loans from investor funds and also directed the purchase by Provident of worthless assets from his Michigan enterprise. In the Provident scheme, funds from later investors were also consistently used to make payments to early investors, resulting in the collapse of the scheme in 2009. The Provident scheme netted over $400 million from approximately 7,700 investor victims.
   U.S. Attorney for the Western District of Michigan Donald A. Davis praised the diligent work and cooperation of all involved. “Stealing money through fraud and deceit will not be tolerated,” he said.
   The Michigan case was investigated by the FBI and the U.S. Postal Inspection Service and was prosecuted by Assistant U.S. Attorney for the Western District of Michigan Nils Kessler.  The Texas case was investigation by the FBI and prosecuted by Assistant U.S. Attorney for the Eastern District of Texas Shamoil T. Shipchandler.
   Source: www.stopfraud.gov.
  

Photo by Steve Rensberry (c) 2014