Allen Man Sentenced to 84 Months in Federal Prison and Ordered to Pay More Than $8.7 Million in Restitution for Running an Oil and Gas Investment Fraud Scheme
DALLAS—Brian J. Polito of Allen, Texas, was sentenced today by Chief U.S. District Judge Jorge A. Solis to 84 months in federal prison and ordered to pay $8,768,351 in restitution following his guilty plea in May 2015 to an information charging one count of mail fraud stemming from his operation of an oil and gas investment fraud scheme. U.S. Attorney John Parker of the Northern District of Texas made today’s announcement.
Polito must surrender to the Bureau of Prisons on January 6, 2016.
Polito was the sole owner/operator of GC Resources, LLC, an oil and gas investment firm that was located on Preston Road in Dallas. Beginning in December 2011, Polito defrauded investors by selling interests in oil and gas projects in which GC Resources had no ownership or interest.
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. 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.
To convince investors to invest with GC Resources, Polito told investors that GC Resources owned the oil and gas drilling leases, when, in fact, it did not have any ownership or interest in the lease. Polito also misrepresented that GC Resources had an interest in Company A’s wells, when in reality, GC Resources had zero interest in Company A’s wells. Polito informed actual and potential investors that GC Resources had a contract with Company A, which was false. Polito even supplied investors with a document purporting to be a contract between Company A and GC Resources, but that document was fraudulent, as Polito had created it using Photoshop to forge signatures of Company A employees.
Polito paid investors of Company A projects with other fraudulently obtained funds in the manner of a Ponzi scheme.
Polito solicited investments by making cold calls to potential investors and sending prospective investors a packet of materials that included the forged Company Agreement and other documents. Polito deposited investors’ money in a GC Resources bank account to which he had sole control. Over the course of the scheme, Polito raised multiple millions from victim investors, all of which was used to fund a lavish lifestyle.
When investors asked to see the well site, Polito, or a salesperson working for him, would take investors to the actual well site, which was under the control of Company A, in an effort to further deceive investors and prolong his scheme. Polito even obtained production records from the Railroad Commission’s website for Company A wells and provided that information to investors, even though neither Polito or GC Resources had any interest whatsoever in Company A’s wells.
According to evidence introduced at sentencing, Polito spent a significant portion of the investors’ money on luxury automobiles. At one time, Polito had the following vehicles: (1) a 2014 50th Anniversary Aventador Lamborghini Coupe; (2) a 2014 50th Anniversary Lamborghini Gallardo; (3) a 2014 Gallardo Squadra Lamborghini Corse; (4) a 2014 Porsche Panamera S E-Hybrid; (5) a 2014 Porsche 911 Turbo S; (6) a 2014 Porsche Cayenne Turbo S; (7) a 2014 Jeep Grand Cherokee SRT8; (8) a 2014 Mercedes-Benz SLS AMG Black Series; (9) a 2014 Nissan GR-R; (10) a 2014 McLaren 12C Spider; and (12) a 2014 Ferrari F12.
The government has engaged in significant efforts to secure assets for potential restitution to victims. Among other things, the government has recovered $664,000 from the liquidation of the net equity in the following vehicles: a 2014 Roll Royce Wraith, a 2015 McLaren 650S Coupe, a 2014 Lamborghini, a Aventador Anniversary Coupe, a 2015 BMW M4 Coupe, a 2014 Mercedes E63 Wagon, a 2014 Ferrari 458 Speciale, a 2014 Jeep Cherokee SRT8, and one bank account subject to the entry of restitution and/or forfeiture orders. In addition, as detailed in the Bill of Particulars filed with the Court, the government seized and will forfeit 64 luxury watches from various manufacturers, including Zenith, Tag Heuer, Rolex, Hyt, Hublot Geneve, Lumirror Panerai, Breitling, among others. The government also coordinated the sale of Polito’s residence in Allen, Texas, recovering an additional $656,923.89 in net proceeds.
The Securities and Exchange Commission (SEC) filed suit against Polito and GC Resources, LLC in April 2015 for defrauding investors through the sale of interests in oil and gas wells the company never owned. A partial judgment has been issued in that case that permanently enjoins him from further violations of the securities laws and permanently bars him from participating in the purchase, offer, or sale of any oil-and-gas related securities offering.
The FBI investigated the case. Assistant U.S. Attorneys J. Nicholas Bunch and Melissa A. Childs prosecuted.