Provident Asset Management Charged In Ponzi Scheme
Provident Royalties LLC and three founders were charged with securities fraud for allegedly bilking thousands of oil and natural gas investors in a $485 million Ponzi scheme, according to the Securities and Exchange Commission (SEC) said on Tuesday.
The SEC formally charged Provident Royalties LLC, Provident Asset Management LLC and its founders with securities fraud in connection with an alleged $485 million Ponzi scheme to defraud natural gas and oil investors.
In a civil case, the SEC alleges that from about September 2006 until January 2009, Texas-based Provident Royalties raised nearly half a billion dollars from at least 7,700 U.S. investors by promising annual returns of over 18 percent and misrepresenting how the funds would be used.
A portion of the proceeds were used for acquisition and development of oil and gas exploration and development activities, but other investor funds were used to pay earlier Provident Royalties investors, the SEC said.
The SEC has alleged that investors were defrauded when told that 86 percent of their funds would be placed in oil and gas investments.
The SEC said a federal court issued an emergency freeze on assets and appointed a receiver to preserve the assets.
After filing the charges, which the SEC later characterized as a Ponzi scheme, a court-appointed receiver seized Stanford's global empire of businesses, castles, yachts and private jets.
The three Provident Royalties founders — Paul Melbye, Brendan Coughlin and Henry Harrison — were charged with orchestrating the scheme. Provident Royalties LLC, broker- dealer Provident Asset Management LLC, and the 21 entities that offered and sold securities were also named in the lawsuit.