Lansing Area Man Pleads Guilty to Securities Fraud in Oil-and-Gas Ponzi Scheme

GRAND RAPIDS, MI—Eric Riley Merkle, 55, of Williamston, Michigan, pled guilty to securities fraud, mail fraud and conspiracy charges, U.S. Attorney Donald A. Davis announced today. Mr. Davis was joined in the announcement by Andrew G. Arena, Special Agent in Charge, Federal Bureau of Investigation, and by Joseph Pirone, Inspector in Charge, U.S. Postal Inspection Service.

Merkle admitted at his change of plea hearing that he created a company known as Platinum Business Industries (“PBI”), that operated as a large-scale Ponzi scheme. Merkle solicited investors by telling them PBI would use their money to fund oil and gas exploration in Oklahoma, and promised returns as high as 6 percent per month, or 300 percent over three to five years. Instead, Merkle put the investors’ money in high-risk schemes unrelated to oil and gas, both in the United States and overseas, and lost it.

Merkle admitted that when PBI could not pay promised returns, he used money raised from new investors to pay “earnings” to earlier investors, creating the illusion of a profitable company. He further admitted that when soliciting new investors, he did not tell them their funds would be sent overseas, or used to pay off previous investors. According to Merkle, he deliberately concealed both PBI’s insolvency and his actual plans for investor funds, because he knew clients would not invest if they were told the truth. By Merkle’s own admission, losses attributable to the PBI scheme approached or exceeded five million dollars. Merkle faces up to 20 years' imprisonment for each of the two fraud counts, and up to five years' imprisonment for the conspiracy charge.

U.S. Attorney Davis commended the Federal Bureau of Investigation and the U.S. Postal Inspection Service for their thorough investigation. This case was prosecuted on behalf of the United States by Assistant U.S. Attorney Nils R. Kessler.