The Meissner firm is currently investigating the Securities and Exchange Commission’s (“SEC”) allegations regarding a ponzi scheme and the devising of fraud by Paul R. Melbye, Brendan W. Coughlin and Henry D. Harrison through a company they owned and controlled, Provident Royalties LLC, which has victimized more than 7,700 investors throughout the United States. According to a complaint which has been filed by the SEC, Provident made a series of fraudulent offerings of preferred stock and limited partnership interests while making misrepresentations to investors that 85 percent of the funds raised through the offerings would be used for investment in oil and gas assets, real estate, leases, mineral rights, and interests, exploration and development, all while fraudulently guaranteeing returns of up to 18 percent. The SEC alleges that in fact less than 50 percent of such funds were utilized in such a manner but rather for returns to investors and to pay expenses related to earlier offerings.
Ken Israel, Director of the SEC’s regional office in Salt Lake City stated that “Provident sold ostensibly safe securities such as preferred stock to thousands of investors… It was actually operating a Ponzi-like shell game in which assets were shuttled from one entity to another and investors were paid ‘returns’ from whatever money was available — usually that of the most recent investors.”
The SEC further stated that while Provident Asset Management, LLC, an affiliated broker-dealer, directly sold such securities to the investing public, it “primarily solicited unaffiliated retail broker-dealers to enter into placement agreements for each offering, and those retail broker-dealers sold the stock to retail investors nationwide.” Under FINRA Rules, brokerage firms have an obligation to make suitable recommendations to their customers and perform adequate due diligence with regards to such investments. Any failure to perform such may create liability for the broker dealer through which such investments were purchased. If you were a victim of such impropriety and have sustained substantial losses by investing in these funds, please contact the Meissner firm, which is nationally known for its record win statistics in FINRA Arbitration, for a free consultation.