SHERMAN, Texas (CN) – A Dallas man pleaded guilty to conspiring to defraud investors of more than $535 million in oil and gas investment schemes. Joseph Blimline, 35, admitted he conspired to defraud 7,700 investors in a scheme based in Texas, and conspired to take more than $50 million in a similar, Michigan-based scam.
“Beginning in September 2006, Blimline and other individuals, operating as representatives of Provident Royalties, made materially false representations and failed to disclose material facts to their investors in order to induce the investors into providing payments to Provident,” the U.S. Attorney’s Office here said in a statement.
“Among these false representations were statements that funds invested would be used only for the oil and gas project for which those funds were raised.”
Prosecutors said Blimline failed to disclose he had control over Provident, that he received millions of dollars of unsecured loans, that he had been charged previously with securities fraud by the state of Michigan, and that money from investors in one project was being used to pay people who had invested in previous oil and projects.
According to court records, Blimline and others ran the second scheme from November 2003 to December 2005, promising inflated rates of return, and using new money to pay off old investors – the hallmark of a Ponzi scheme
Blimline faces up to 20 years in federal prison on each of the two conspiracy charges. A sentencing date has not been set.
The case was prosecuted by Assistant U.S. Attorney Shamoil Shipchandler, as part of President Obama’s Financial Fraud Enforcement Task Force.