Bernie Madoff and his $65 billion scam have singlehandedly made Ponzi schemes a near-daily front-page news story. Now it’s Provident Royalties LLC making news. Provident, along with its three founders – Paul Melbye, Brendan Coughlin and Henry Harrison – was charged by the Securities and Exchange Commission (SEC) in July for allegedly bilking thousands of oil and natural gas investors in a $485 million Ponzi scheme. Broker-dealer Provident Asset Management LLC and the 21 entities that offered and sold the securities to investors also were named in the lawsuit.
According to the complaint, Dallas-based Provident raised nearly half a billion dollars from more than 7,000 investors by promising high returns and misrepresenting how the funds would actually be used. The alleged fraud reportedly went undetected by regulators for three years – from September 2006 until January 2009. In typical Ponzi-like fashion, a portion of investors’ funds is said to have been used to pay earlier Provident investors.
“Investors were told that 86% of their funds would be placed in oil and gas investments. That representation was false,” the SEC’s complaint said.
For more information about the SEC’s action against Provident, you can read Litigation Release No. 21118. Dennis L. Roossien, Jr., has been named as the court-appointed receiver in the case. For the latest information about the receivership, visit the Receiver’s Web site.