Dallas man pleads guilty to defrauding 7,700 investors in 2 oil and gas schemes worth $535M

Tuesday, August 31, 2010

Dallas man pleads guilty in $535M oil, gas schemes

SHERMAN, Texas — A Dallas man pleaded guilty Tuesday to participating in two oil and gas schemes that defrauded 7,700 investors out of about $535 million.

Joseph Blimline, 35, pleaded guilty in federal court in Sherman, Texas, to conspiracy to defraud investors in a scheme worth about $485 million. He also pleaded guilty to a second charge of defrauding investors in a $50 million scheme based in Michigan, U.S. Attorney John M. Bales said.

Authorities say Blimline helped operate a Ponzi scheme in which funds from new investors were used to pay people who had invested in previous oil and gas projects.

He faces up to 20 years in federal prison on each charge. No sentencing date has been set.

His attorney, Kerry Pedigo, did not immediately return a message left by The Associated Press.

In court papers, Blimline acknowledged that he agreed to “defraud investors by making materially false and fraudulent pretenses, representations and promises.”

The schemes date back to September 2006, authorities said. Blimline and others, operating as representatives of Texas-based Provident Royalties, falsely told investors their money would be used only for specific projects they thought they were supporting.

Provident has declared bankruptcy and under orders from the Securities and Exchange Commission was placed into receivership in July 2009. The court-ordered receiver has been selling off Blimline’s personal assets and the projects for which he raised money in order to return funds to bilked investors.

Blimline’s assets are worth about $3 million, the receiver said in court papers.

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