Provident CEO/Founder Guilty in $485 Million Investment Fraud Scheme
|U.S. Attorney’s Office November 08, 2012|
SHERMAN, TX—A 47-year-old Dallas man has pleaded guilty in an investment fraud scheme in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Paul R. Melbye pleaded guilty to conspiracy to defraud investors today before U.S. Magistrate Judge Amos Mazzant.
According to information presented in court, Melbye, a founder and CEO of Provident Royalties LLC, conspired with others to defraud investors in an oil and gas scheme that involved over $485 million and 7,700 investors throughout the United States. Melbye, acting on behalf of Provident, made materially false representations and failed to disclose material facts to investors in order to induce the investors into providing payments to Provident. Among those omissions of material fact were that another Provident founder, Joseph Blimeline, had received millions of dollars in unsecured loans; that Blimline had been previously charged with securities fraud violations by the state of Michigan; and that funds from investors in later oil and gas projects were used to pay individuals who invested in earlier oil and gas projects.
Blimline, 35, pleaded guilty in connection with the scheme and was sentenced to 240 months in federal prison in May 2012. Two other Provident principals, Brendan Coughlin, 46, and Henry Harrison, 47, were indicted by a federal grand jury in July 2012 and are awaiting trial.
Melbye faces up to five years in federal prison at sentencing. A sentencing date has not been set.
This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
This case is being investigated by the FBI and prosecuted by Assistant U.S. Attorney Shamoil T. Shipchandler.