The U.S. Securities and Exchange Commission filed new charges Tuesday against seven executives of Grapevine-based Texas Energy Mutual involved in a $10 million oil and gas Ponzi scheme between 2013 and 2016 that defrauded hundreds of investors in several states.
Some TEM executives were criminally prosecuted last year, but the SEC’s lawsuit filed Tuesday charges two new officials that they say were part of the fraud and it seeks to ban all seven from ever serving as an executive or on the board of directors of a corporation ever again.
In a 19-page complaint filed in federal court in Fort Worth, the SEC states that it is worried that some of the leaders of the securities offering fraud will try to be involved in similar scams in the future.
Lawyers in the Fort Worth Regional Office of the SEC claimed that James VanBlaricum of Colleyville, Rodney Pope of Bedford, Chet Inglis of Fort Worth, Matthew Leaverton of Garland, Robert Gilman of Hurst, William Hill of Keller and Erik Rhodes of Rochester, NY, raised $10 million from investors by making false claims about guaranteed returns and lying about their exploration and production experience in the oil patch.
“The offering documents … stated that the funds raised would be used to purchase land and mineral interest leases, working interests in producing wells, purchase or develop geophysical/3-D seismic data, and purchase and/or lease oil and gas drilling, production, and other associated equipment for production, storage, and transportation of oil and gas,” the SEC states in court documents.
“However, the investors lost all of their funds, as the Defendants did not spend the funds as represented in the offering documents.”
Instead, the TEM officials spent investor money on an online dating site for Russian brides, exotic international vacations, new cars and expenses for a wedding for one of the executive’s sons, according to the SEC.
VanBlaricum, Pope, Inglis, Gilman and Leaverton were charged last year for their role in the fraud. VanBlaricum, who is 78, pleaded guilty and is serving a seven-year prison sentence.
Hill and Rhodes were not previously charged.
Federal court records show that six of the seven defendants have agreed to the SEC demands. However, Leaverton is fighting the SEC’s demand that he be banned from the industry.
Rhodes agreed to disgorge $33,000 in ill-gotten gains while a federal judge will determine disgorgement and penalties with respect to Hill.
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.
“In cases like this, investors benefit when the U.S. Securities and Exchange Commission and the Justice Department work together to stop fraudulent conduct, return money to harmed investors, and bar those most culpable from being in positions to commit further violations,” said Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office. “We continue to build a strong and successful relationship between the SEC’s Fort Worth Regional Office and the United States Attorney’s Office for the Northern District of Texas.”