Lake Charles Man Sentenced to More Than 19 Years in Prison for $5.8 Million Ponzi Scheme
LAKE CHARLES, LA—United States Attorney Stephanie A. Finley announced today that a Lake Charles man was sentenced to 235 months in prison for wire fraud in connection with a Ponzi scheme used to defraud investors out of more than $5.8 million.
John Steven Blount, 55, of Lake Charles, was sentenced by U.S. District Judge Patricia Minaldi on one count of wire fraud. He was also sentenced to three years of supervised release and ordered to pay $4.3 million restitution. According to the July 16, 2015 guilty plea, the Financial Industry Regulatory Authority (FINRA) barred Blount from working as an investment adviser in December of 2003. In spite of this prohibition, Blount resumed work illegally as an investment adviser and securities broker from June of 2007 to December of 2014. During that time, he used his company, Professional Consultants LLC, to operate a Ponzi scheme that defrauded at least 73 investors out of approximately $5.8 million. Blount would offer investments in fictitious companies, bonds and IRAs that promised to pay an above-market rate of return. However, instead of investing the money in securities, Blount transferred the payments into his own bank accounts for his personal use and to support his other business interests.
In order to avoid detection and to continue operation of the Ponzi scheme, Blount e-mailed investors false account statements that purported to show the value of their investments. As necessary, Blount would also provide his victims with monetary payments, which Blount falsely represented to be interest payments or principal withdrawals from the investments. In fact, these “lulling payments” were actually investments Blount received from other victims of the Ponzi scheme. Over the course of the scheme, Blount paid $1,743,198.84 “lulling payments” to investors.
The victims of Blount’s scheme were primarily retirees residing along the Louisiana and Texas Gulf Coast who invested large portions of their retirement savings in Blount’s scheme. Blount recruited his victims through his website, through his own personal and family relationships, and through his involvement in various Lake Charles area charities.
“Through his fraudulent investment operation, Mr. Blount stole the life savings of dozens of retirees,” stated Finley. “Financial crimes are devastating to our citizens, creating lasting effects and hardships. Federal prosecutors along with our federal partners will continue to vigorously prosecute these crimes.”
“John Blount’s sentencing represents a victory for those individuals who were defrauded out of millions of dollars, and in most cases, their life savings,” said Special Agent in Charge Jerome R. McDuffie, IRS—Criminal Investigation. “This victory would not have been possible without the collaboration of law enforcement. Both local and federal law enforcement have represented the citizens of this community well, and IRS—Criminal Investigation is very proud to have been a part of this team of fine investigators. While we realize John Blount’s sentencing and restitution orders will not make the victims in this case whole, we hope that it will aid their peace of mind to know that he will be serving a lengthy prison term for his wrongdoings.”
The FBI and IRS Criminal Investigations investigated the case. Assistant U.S. Attorney David C. Joseph prosecuted the case.