Dallas Men Indicted in $485 Million Investment Fraud Scheme in East Texas

Two Dallas men have been indicted in connection with a $485 million investment fraud scheme in the Eastern District of Texas, according to U.S. Attorney John M. Bales.

Brendan Coughlin, 46, and Henry Harrison, 47, both of Dallas, have been charged with one count of conspiracy to commit mail fraud and 10 counts of mail fraud. The indictment was returned by a federal grand jury on July 11, 2012.

According to the indictment, Coughlin and Harrison, on behalf of Provident Royalties LLC, conspired with others to defraud investors in an oil and gas scheme that involved over $485 million and 7,700 investors throughout the United States.

Specifically, beginning in approximately September 2006, Coughlin, Harrison, and other individuals made materially false representations and failed to disclose material facts to their investors in order to induce the investors into providing payments to Provident.

Among these false representations were statements that funds invested would be used only for the oil and gas project for which those funds were raised; among the omissions of material fact were the facts that another of Provident founders, Joseph Blimline, had received millions of dollars of unsecured loans; that Blimline had been previously charged with securities fraud violations by the state of Michigan; and that funds from investors in later oil and gas projects were being used to pay individuals who invested in earlier oil and projects.

If convicted, Coughlin and Harrison face up to 20 years in federal prison.

This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force.President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

Also See:

SEC, FINRA Issue Investor Alert On Pension or Settlement Income Streams

House Committee Passes Bill Fast-Tracking Exemptions to Securities Registrations to Small Businesses

Traders Charged in Massive Kickback Scheme Involving Venezuelan Official

SEC Charges Gatekeepers of Two Mutual Fund Trusts for Inaccurate Disclosures about Decisions on Behalf of Shareholders

SEC Seeks to Halt Scheme Raising Investor Funds Under Guise of JOBS Act