Texas Man Pleads Guilty to Michigan Fraud Charge in Oil and Gas Ponzi Scheme

GRAND RAPIDS, MI—Joseph Stanley Blimline, 35, of Dallas, Texas, pled guilty to mail fraud, U.S. Attorney Donald A. Davis announced today. Mr. Davis was joined in the announcement by Andrew G. Arena, Special Agent in Charge, Federal Bureau of Investigation (FBI), and by Joseph Pirone, Inspector in Charge, U.S. Postal Inspection Service (USPIS). By agreement with the government, Blimline pled guilty in a Texas federal court on the Western Michigan charge. A sentencing date has not yet been set. Blimline faces up to 20 years’ imprisonment as a result of his conviction.

Blimline admitted in his plea agreement that between 2003 and 2007, he operated a group of oil and gas exploration companies, including Jordan River Resources. In 2004, Blimline traveled to Okemos, Michigan, where he hosted a presentation for potential investors. Blimline told investors their money would be used for oil and gas exploration in Oklahoma and Texas and promised a return of six percent per month. When investors asked what would happen if the new wells were not successful, Blimline said he already had wells producing enough revenue to pay the promised dividends regardless.

As Blimline admitted in his plea agreement, he did not in fact have sufficient oil revenue to pay dividends, and soon began paying earlier investors with new investors’ funds. The earlier investors were led to believe their payments were in fact oil and gas revenues, creating the illusion of a profitable company and encouraging additional investment. Blimline further admitted that he took investors funds from the company accounts for personal expenditures. Blimline was assisted in his scheme by Williamston, Michigan residents Eric Merkle and Jay Merkle, who pled guilty to securities fraud, mail fraud, and wire fraud in 2009, and are currently serving 10-year federal prison sentences.

The FBI and the USPIS investigated the case. Assistant U.S. Attorney Nils R. Kessler is the prosecutor.