Lake Charles man pleads guilty to wire fraud in 5.8 million Ponzi scheme
LAKE CHARLES, La. – United States Attorney Stephanie A. Finley announced that a Lake Charles man pleaded guilty Thursday to wire fraud in connection with a Ponzi scheme used to defraud investors out of more than $5.8 million.
John Steven Blount, 54, of Lake Charles, pleaded guilty before U.S. District Judge Patricia Minaldi to one count of wire fraud. According to the guilty plea, the Financial Industry Regulatory Authority (FINRA) barred Blount from working as an investment advisor in December of 2003. In spite of this prohibition, Blount resumed work illegally as an investment adviser and securities broker from June of 2007 to December of 2014. During that time, he used his company, Professional Consultants LLC, to operate a Ponzi scheme that defrauded at least 73 investors out of approximately $5.8 million. Blount would offer investments in fictitious companies, bonds and IRAs that promised to pay a high rate of return on those investments. Instead of investing the money, Blount transferred the payments into his own bank accounts for his personal use and to support his other business interests.
In order to avoid detection and continue defrauding investors, Blount emailed investors false account statements that purported to show the value of their investments. As necessary, Blount would also provide his victims with monetary payments, which Blount falsely represented to be interest payments or principal withdrawals from the investments. In fact, these “lulling payments” were actually investments Blount received from other victims of the Ponzi scheme. Over the course of the scheme, Blount paid $1,743,198.84 “lulling payments” to investors.
The victims of Blount’s scheme were primarily retirees residing along the Louisiana and Texas Gulf Coast who invested large portions of their retirement savings in Blount’s scheme. Blount recruited his victims through his website, through his own personal and family relationships, and through his involvement in various Lake Charles area charities, including his role as a board member of Moss Bluff Buddy Ball Sports – a 501(c)(3) organization that provides disabled children the opportunity to play sports at no cost to their families.
“Mr. Blount targeted some of the most vulnerable members of our society,” Finley stated. “He has admitted to convincing dozens of retired Gulf Coast residents to invest their life savings or retirement in his Ponzi scheme. He perpetrated his get-rich-quick schemes to circumvent the law and defraud retired residents of their hard-earned money.”
Blount faces up to 20 years in prison, three years of supervised release, a $8,390,283.48 fine and restitution. A sentencing date of October 22, 2015 was set.
The FBI and IRS Criminal Investigations investigated the case. Assistant U.S. Attorney David C. Joseph is prosecuting the case.