DALLAS (CN) - A North Texas man was sentenced Wednesday to seven years in federal prison for an $11.8 million oil and gas Ponzi scheme, and ordered to pay $8.8 million in restitution.
Brian J. Polito, 34, of Allen, pleaded guilty in May to mail fraud. He was ordered to report to federal prison on Jan. 6, 2016.
Prosecutors recovered more than $664,000 for investors by selling Polito's cars , including a 2014 Rolls-Royce Wraith, a 2015 McLaren 650S Coupe, a 2014 Lamborghini, a Lamborghini Aventador Anniversary Coupe, a 2015 BMW M4 Coupe, a 2014 Mercedes E63 Wagon and a 2014 Ferrari 458 Speciale.
Prosecutors said Polito spent a "significant portion" of the money on luxury cars.
As sole owner of Dallas-based GC Resources LLC, Polito started selling interests in phony wells in 2011 that his company did not own or control.
"As part of the scheme, Polito researched 'Company A' on the Texas Railroad Commission's website and determined that Company A's wells were producing," prosecutors said in a statement Wednesday. "Polito then identified Company A's drilling permits for wells that were going to be drilled in the future. Through GC Resources, Polito began soliciting investments into Company A's projects even though GC Resources had no control or interest in the wells."
The Railroad Commission regulates oil and gas drilling in Texas.
Polito gave investors a fraudulent contract between Company A and GC Resources, created with Adobe Photoshop, to forge Company A's signatures.
"Over the course of the scheme, Polito raised multiple millions from victim investors, all of which was used to fund a lavish lifestyle," prosecutors said.
Polito took his victims to actual well sites when asked, and gave them Railroad Commission production records he got from the agency's website.
Federal officials also sold Polito's Allen home for $657,000 and seized 64 luxury watches from manufacturers including Rolex, Tag Heuer, Lumirror Panerai and Breitling.
Polito cut a deal and pleaded guilty one month after being sued by the Securities and Exchange Commission in Dallas Federal Court.
Under a partial judgment in the civil suit, Polito is permanently enjoined from breaking securities laws and permanently barred from participating in oil-and-gas related securities transactions.
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