Federal grand jury indicts North Texas businessman on mail fraud stemming from Ponzi oil and gas fraud scheme

FORT WORTH, Texas — A North Texas businessman, who operated an oil and gas exploration company, was indicted Thursday by a federal grand jury on one count of mail fraud.

This indictment was announced by U.S. Attorney John Parker of the Northern District of Texas. This investigation is being led by the U.S. Postal Inspection Service, with assistance from U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).

James VanBlaricum, 77, has been in custody since his arrest in mid-August 2016 by U.S. Postal Inspectors on a related federal criminal complaint. In ordering the detention, U.S. Magistrate Judge Jeffrey L. Cureton noted that VanBlaricum’s extensive travel and ties to numerous foreign countries made him a risk of flight or nonappearance unless detained.

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, SOG 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.

This 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 Jan. 21, 2006, through Jan. 31, 2009, 53 victims of a mail fraud scheme involving SOG’s LLP were identified with investments totaling $2,633,090.

According to the indictment, VanBlaricum formed SOG and TEM, ostensibly for the purpose of investing in mineral leases, and oil and gas production and earning a profit from those investments. The indictment alleges that VanBlaricum ran the fraud scheme from about January 2007 to August 2016, from his residence and home office located on Sapphire Circle in Colleyville, where many of the acts and transactions alleged in the indictment took place. VanBlaricum raised millions of dollars from investors by various means, including selling securities in the form of limited partnership interests in “programs” offered by COG and TEM.

VanBlaricum employed sales agents who worked on his behalf to raise money, including selling securities in the form of limited partnership interests in “programs” offered by SOG and TEM. Both personally and through investors, VanBlaricum deceived investors and potential investors by misrepresenting material facts. For example, he represented that investors would earn an “assured” rate of return on their initial investment, and they would receive a full refund of their initial investment amount after a defined period of time. He also represented that he intended to use a certain percentage of investors’ money to purchase mineral leases, and oil and gas well projects. However, in fact, he intended to spend a substantially smaller percentage on the leases and oil and gas well projects and use a substantial part of investors’ money for purposes they did not authorize or even know about, including paying purported investment returns to other investors, commissions to sales agents, and paying his personal expenses as well as personal expenses for family members, friends and business associates.

VanBlaricum also represented that he had purchased certain assets, or was in the process of purchasing them, when in fact, he had not purchased these assets and was not in the process of purchasing them. He also represented that the oil and gas well projects were productive and profitable, when in fact, most were “dry holes,” produced oil only for a short period of time, or had not been drilled.

When VanBlaricum made promises about the use of investor funds, he failed to state that he had made the same promises to other investors and then used those investors’ funds for purposes they did not authorize or even know about, including paying purported investment returns to other investors, commissions to sales agents, and payment of personal expenses for VanBlaricum and his family, friends and business associates.

According to the indictment, VanBlaricum also identified himself to investors using a false name. VanBlaricum deposited investors’ funds into, and withdrew and expended investors’ funds, from accounts he controlled in the names of entities he controlled. He caused funds to be transferred to, withdrawn from, and deposited into various accounts to create the appearance of business operations and revenue that he knew did not exist. He also caused “lulling” payments to be paid to investors, ostensibly as returns on investment, when he knew the funds came from other investors rather than from business operations.

VanBlaricum, according to the indictment, secretly, and without authorization, took and spent money entrusted to him by investors for advertising; vacations and international travel; escort and dating services; rent payments; automobile purchases; and payroll and commissions for employees and sales agents.

The indictment includes a forfeiture allegation that would require VanBlaricum, upon conviction, to forfeit a money judgment in the amount constituting the proceeds traceable to the offense. He will also be required to forfeit 10 vehicles, two $25,000 surety bonds, and proceeds in eight accounts in Frost Bank and Chase Bank.

An indictment is an accusation by a federal grand jury; a defendant is entitled to the presumption of innocence unless proven guilty. If convicted, however, the maximum statutory penalty for mail fraud is 20 years in federal prison and a $250,000 fine.

Assistant U.S. Attorney Douglas A. Allen, Northern District of Texas, is in charge of the prosecution.