Colleyville, Texas, Businessman Arrested for Running Ponzi Oil and Gas Fraud Scheme
Defendant Operated Signal Oil and Gas Company
FORT WORTH, Texas — A Colleyville, Texas, businessman, James VanBlaricum, who operated an oil and gas exploration company, was arrested Wednesday by U.S. Postal Inspectors on a federal criminal complaint charging him with mail fraud, announced U.S. Attorney John Parker of the Northern District of Texas.
VanBlaricum, 77, made his initial appearance in federal court yesterday before U.S. Magistrate Judge Hal R. Ray, who ordered that he remain in custody pending a detention hearing set for Tuesday, August 23, 2016, at 2:00 p.m.
According to the complaint, Signal Oil and Gas Company (SOG) was incorporated by VanBlaricum in 2000; he was the registered agent and sole incorporator. The Land Lease Program (LLP) was one of several oil and gas investment programs offered for purchase to SOG investors. Texas Energy Management and Texas Energy Mutual (TEM) are the names of SOG’s follow-on companies that VanBlaricum and other coconspirators began operating in 2008. SOG initially operated from an Airport Freeway address in Fort Worth, but in 2004, it also began receiving mail at a commercial mail receiving agency on Northwest Highway in Grapevine, Texas. The name on this mail box was changed in November 2010 to TEM.
The investigation began when the U.S. Postal Inspection Service was contacted by the Texas State Securities Board (TSSB) after it began receiving complaints about VanBlaricum related to various programs he promoted and misrepresentations made to them by SOG salespeople. One of the main complaints was lack of investment payments. In fact, an investigation disclosed that from January 21, 2006, through January 31, 2009, 53 victims of a mail fraud scheme involving SOG’s LLP were identified with investments totaling $2,633,090.
Each LLP prospectus reflected 1) an “assured” rate of return on an initial investment; 2) the “assured” rate of return ranged from nine to 15 percent of the amount invested; and 3) investors would receive a full refund of their initial investment amount after the three to five-year investment period. Some prospectuses provided Minimum Assured Income Schedules that reflected assured and estimated potential rates of return of five to 35 percent, and some prospectuses reflected potential, projected, or examples of the allocation of investor funds in 50 percent hard assets and 50 percent oil and gas exploration.
An analysis of the use of LLP investor funds SOG received showed that approximately $2 million of LLP investor funds were deposited into SOG Wells Fargo bank accounts along with comingled funds from other sources. The analysis further revealed that funds deposited into the Wells Fargo accounts had not been used for purposes described in prospectuses and appear to have been misused by SOG and VanBlaricum. In fact, more than one-half of investor funds went to employee payroll and day trading.
“Dividend” or investor payments included payments to older investors from programs that preceded LLP, and those “dividend” payments came from Wells Fargo accounts where deposits from newer investors were kept – highly indicative of a Ponzi scheme where older investors are paid with newer investor money. Many of the victims in VanBlaricum’s LLP program invested at the recommendation of several financial consultants.
A federal criminal complaint is a written statement of the essential facts of the offense charged, and must be made under oath before a magistrate judge. A defendant is entitled to the presumption of innocence until proven guilty. The U.S. Attorney’s office has 30 days to present the matter to a grand jury for indictment. The maximum statutory penalty for the charged offense, mail fraud, is 20 years in federal prison and a $250,000 fine.
The investigation is being led by the U.S. Postal Inspection Service with assistance from U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI). Assistant U.S. Attorney Douglas A. Allen is in charge of the prosecution.
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