Former Chairman and Managing Partner of Energy Company Pleads Guilty to $15 Million Ponzi Scheme
A California man who previously served as an executive at an energy company pleaded guilty today to defrauding investors of more than $15 million as part of a Ponzi scheme involving limited partnerships created to provide services to oil and gas companies in North Dakota.
According to court documents, Joey Stanton Dodson, 58, formerly of Indio, engaged in a scheme between November 2012 and May 2015 to defraud investors while serving as the executive chairman and managing partner of Citadel Energy Partners. In his role, Dodson had certain responsibilities for three limited partnerships, Fort Berthold Water Partners L.P., Citadel Watford City Disposal Partners L.P., and H20 Partners L.P., which included raising funds for the limited partnerships, controlling their bank accounts, and disseminating their financial information to investors. As part of the scheme, Dodson made materially false and misleading representations and omissions to prospective and existing investors regarding his receipt of compensation, the intended use of investor funds, and the status of a potential acquisition of the limited partnerships by a private-equity firm, among other things.
After inducing investors to deposit their funds, Dodson pooled the funds from the limited partnerships and conducted multiple transfers between Citadel-related accounts that helped him divert investor funds for his own benefit and conceal his actions. In total, Dodson fraudulently raised over $15.6 million from 51 investors and misappropriated $1.3 million in investor funds, which he used to repay investors in an unrelated investment he operated under an entity known as Duke Equity and to pay other personal expenses. After Dodson’s misappropriation was discovered, the limited partnerships were placed into bankruptcy and the investors suffered a total loss of their investments.
Dodson pleaded guilty to one count of wire fraud. He is scheduled to be sentenced on Oct. 25 and faces a maximum penalty of 20 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division; U.S. Attorney Stephanie M. Hinds for the Northern District of California; and Special Agent in Charge Sean Ragan of the FBI’s San Francisco Field Office made the announcement.
The FBI’s San Francisco Field Office investigated the case.
Trial Attorney Jason M. Covert of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Sarah Griswold of the U.S. Attorney’s Office for the Northern District of California are prosecuting the case. The Enforcement Division of the U.S. Securities and Exchange Commission provided valuable assistance.