A Fort Worth man pleaded guilty Wednesday in federal court to one count of wire fraud after cheating 45 people with a oil and gas Ponzi scheme, the U.S. attorney’s office for the Northern District of Texas said.
Jeffrey Watts defrauded investors out of about $5.8 million from 2011 though 2013.
Watts told investors his company, Blue Alpha Energy, invested in oil and gas wells in Texas that were owned or operated by Arrowhead Productions, according to the Justice Department release.
Arrowhead is legitimate company in Fort Worth.
Watts used Blue Alpha Energy and a group of “related sham entities” to convince people they were investing in oil and gas wells owned by Arrowhead.
“To further the scheme, Watts made monthly payments to investors in Blue Alpha Energy, using investor funds transferred between bank account of the sham entities he controlled,” the Justice Department said.
In December 2013, several investors realized that “Watts never had investment agreements with Arrowhead Productions and, in fact, funneled the investor funds into the sham business entities he controlled.”
He now faces 20 years in prison, a $250,000 fine and restitution.
Sentencing was set for December 9.
The case was part of a national effort by the Financial Fraud Enforcement Task created in 2009.