BEAUMONT, Texas (CN) – A Dallas man was sentenced to 20 years in federal prison for his role in a $535 million oil and gas Ponzi scheme that defrauded more than 7,700 investors, the U.S. Attorney’s Office said.
Joseph Blimline, 36, was sentenced Thursday for two counts conspiracy. U.S. District Judge Marcia A. Crone ordered the sentences to run concurrently and ordered Blimline to pay restitution.
At the sentencing hearing, prosecutors said Blimline and others ran the scheme in Michigan between November 2003 and December 2005, promising inflated rates of return.
“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,” prosecutors said in a statement. “The Michigan scheme netted over $28 million from its investor victims before its collapse.”
In early 2006, Blimline moved the scheme to Texas, where he and his new co-conspirators began operating Provident Royalties in Dallas. As in Michigan, Blimline lied to investors, prosecutors said.
“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,” prosecutors said.
“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.”
Blimline pleaded guilty to both charges in September 2010.