SEC Charges Texas Businessman in Multi-Million Dollar Ponzi Scheme
Litigation Release No. 24176 / June 26, 2018
Securities and Exchange Commission v. James VanBlaricum, et al., No. 4:18-cv-518 (NDTC) (June 26, 2018)
The Securities and Exchange Commission today filed charges against Texas resident James VanBlaricum and six others for running an oil and gas Ponzi scheme.
The SEC's complaint alleges that VanBlaricum was the driving force behind a company called Texas Energy Mutual, LLC (f/k/a Texas Energy Management). Because he was a securities fraud recidivist with a history of running fraudulent schemes, the complaint also alleges that VanBlaricum convinced Rodney Pope and Chet Inglis to serve as the face of the company. Together, they enlisted Robert Gilliam, Matthew Leaverton, William Hill, and Erik Rhodes to solicit investors. Among other things, the complaint alleges that the defendants raised over $10 million by guaranteeing investment returns and promising investors that their funds would be used to drill oil wells. Instead, the defendants used investor money for a variety of personal expenditures, including luxury international vacations and wedding expenses.
According to the complaint, VanBlaricum created a "special needs" program to keep dissatisfied investors from discovering the fraudulent conduct. The defendants allegedly lulled investors with cash Ponzi payments that purported to be a return on their investment or rolled over investors from a failed drilling program to a newer one.
VanBlaricum, Pope, Inglis, Gilliam, Hill, and Rhodes each agreed to be permanently enjoined from violating Sections 5(a), 5(c), and 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder. The Commission is pursuing the same charges against Leaverton. VanBlaricum, Pope, and Inglis also consented to officer and director bars. Rhodes agreed to disgorge $33,000 in ill-gotten gains while a federal judge will determine disgorgement and penalties with respect to Hill. In addition to the SEC action, VanBlaricum, Pope, Inglis, Leaverton, and Gilliam were charged in a parallel criminal case by federal authorities and have each pleaded guilty and were sentenced to prison terms ranging from 30-84 months, and ordered to pay between $1.8 million and $32 million in restitution.
The SEC's investigation was conducted by Jason A. Braun and John Devine and supervised by Jim Etri and Eric R. Werner. The litigation is being conducted by Janie Frank. The SEC acknowledges the assistance of the U.S. Attorney's Office for the Northern District of Texas and the United States Postal Inspection Service.