U.S. Securities & Exchange Commission
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U.S. Securities and Exchange Commission

Provident Royalties, LLC et al.

On July 2, 2009, the SEC obtained a temporary restraining order, asset freeze and appointment of a Receiver in connection with an alleged offering fraud and Ponzi scheme orchestrated by Paul R. Melbye, Brendan W. Coughlin and Henry D. Harrison through their company, Provident Royalties LLC. The SEC alleged that, from at least June 2006 through January 2009, the defendants sold preferred stock in a series of fraudulent private placement offerings raising approximately $485 million from more than 7,700 investors.

According to the complaint, the defendants promised investors returns of 15-18% a year and that 85% of investor funds raised through the offerings would be used to purchase interests in all aspects of the oil and gas business, including acquiring real estate, oil and gas leases and mineral interests, and conducting exploration and development activities. The SEC alleged that the defendants actually used less than 50% of investor funds to purchase oil and gas assets, commingled offering proceeds and used proceeds from later offerings to pay expenses related to the earlier offerings and to pay returns to investors in earlier offerings.

For more information about the SECís action, you can read Litigation Release No. 21118 (July 7, 2009).

The Court appointed Dennis L. Roossien, Jr., as Receiver to preserve and marshal assets for the benefit of investors. For the latest information about Receivership, you can visit the Receiverís website.


Modified: 08/27/2009