FORT WORTH (CN) - A Texan was sentenced Thursday to 6½ years in federal prison for a $5.8 million oil and gas Ponzi scheme that ripped off at least 45 investors.
Jeffrey Watts, 41, of Fort Worth also was ordered to pay $4.6 million in restitution.
Watts pleaded guilty in July 2014 to wire fraud . He faced up to 20 years in prison.
Prosecutors said Watts, founder and principal of Blue Alpha Energy, ran the scheme from late 2011 to December 2013, "falsely representing to investors that the company had invested in oil and gas well in Texas and was owned and/or operated by Arrowhead Productions, a legitimate, but unrelated company based in Fort Worth."
Watts showed investors documents that bore the signature of the actual president of Arrowhead Productions, prosecutors said.
"Watts falsely portrayed these sham entities as legitimate, third party lenders or investors in his alleged oil and gas interests, and he transferred investor funds between these accounts and the accounts of Blue Alpha Energy," the U.S. Attorney's Office said in a statement announcing his sentence.
To keep the scheme going, Watts made monthly payments to investors in Blue Alpha Energy, using investor money transferred from the sham entities he controlled.
The scheme unraveled in December 2013 when Blue Alpha Energy investors learned Watts never had investment agreements with Arrowhead Productions.