Story By Brian Knox |Wise County Messenger| A former Boyd Texas resident, Billy Marcum, Jr., has been sentenced to more than 17 years in federal prison for running a multi-million dollar oil and gas Ponzi-type scheme, stealing millions from investors, according to the U.S. Department of Justice.
Billy Marcum Jr., 67, of Stephenville pleaded guilty to wire fraud in U.S. District Court in Fort Worth in December. Last Thursday, U.S. District Judge Mark Pittman sentenced Marcum to 210 months in prison and ordered him to pay $16,640,735.02 in restitution.
According to federal court records, Marcum is the owner of at least six of oil and gas companies. Those businesses include four that are registered in Boyd, including Navarro Minerals, Caddo I, Blue Creek Energy, and Viejo Services, according to the Texas Comptroller’s Office.
In plea papers, Marcum admitted to soliciting money from investors, telling them their funds would be used to purchase oil and gas leases and to pay for well oil repairs, and returns would be paid out of profits from the ensuing oil and gas sales.
“A classic Ponzi scheme, instead of purchasing the leases, Mr. Marcum used new investors’ money to fund earlier investors’ returns, lulling them into believing their investments were sound and that they should continue investing with him,” the DOJ announced in a news release.
Beginning in or before January of 2018 and continuing until May of 2022, according to federal court documents, Marcum represented to investors in Navarro Minerals that their money would be used to purchase oil and gas leases, and they would be paid with the profits from the oil and gas sales. However, Marcum failed to purchase many of the leases, instead using investor funds to pay investor returns, attorney fees unrelated to the investments, unrelated operational expenses and personal expenses, according to the DOJ.
“As part of the scheme to defraud, Marcum emailed Navarro investors periodic reports containing materially false statements regarding oil production and oil sales data for the leases and disguised the true oil sales by emailing false run statements purportedly for the investment leases,” the plea papers state.
By September of 2018, the DOJ alleges Marcum realized he lacked sufficient revenues and could no longer raise sufficient funds to pay existing investors, so he conspired with Jay Taylor to solicit investor funds for his company Viejo Services and Viejo Exploration.
“Mr. Marcum knowingly supplied false information to Mr. Taylor, who used the information to successfully solicit additional funds,” the DOJ news release stated.
On April 19, 2022, Marcum admitted to FBI agents that he made false run statements on oil and gas sales that he sent directly to Navarro investors and indirectly through Taylor to Viejo investors in order to entice investments, according to federal court records.
“Marcum also admitted that he used new investor funds to pay off other investors and represented to them that the returns were from oil sales. Yet, between April 20, 2022, and May 3, 2022, Marcum collected an additional $256,000 in investor funds from Taylor, which he used to pay other investors and Taylor’s commission,” the plea papers state.
On April 18, 2022, the FBI executed a seizure warrant at Frost Bank and seized $5,251.87 from an account listed in the name of Navarro Production. On May 4, 2022, the FBI executed a seizure warrant at First Financial Bank and seized $152,915 from an account listed under Marcum’s name as the sole member of Viejo Services; $300,612 from an account in Marcum’s name associated with Viejo Exploration; and $234,078 from an account under Marcum’s name associated with The Caslin Group.
“Each of these seizures was made based on probable cause to believe that the funds in those accounts were traceable to the oil and gas lease Ponzi scheme in which Marcum was involved,” the plea papers state.
At last week’s sentencing, prosecutors said Marcum defrauded more than 150 victims, collecting nearly $30 million in investor funds and inflicting more than $16 million in losses.
The federal court documents don’t list the victims in the scheme or where the leases were located, but in a separate lawsuit filed in 271st District Court in Decatur, Marcum, and his businesses are listed as defendants in a lawsuit brought by more than 50 plaintiffs — located in Texas, Colorado, and Kansas — who say they were victims of the Ponzi scheme.
The civil case documents state, “None of the plaintiffs are experienced or sophisticated investors in the area of oil and gas exploration or production. Some of the plaintiffs mortgaged their homes, sold assets, liquidated retirement accounts or made similar material financial decisions in order to come up with the funds necessary to invest in the defendant’s fraudulent schemes.”
The plaintiffs said Marcum’s plan included identifying oil and gas assets in various Texas counties that were suitable for investment and development purposes with the plaintiffs fronting the costs. They were supposed to then be assigned those oil and gas assets after purchase.
The plaintiffs allege those leases were never purchased.
Taylor also pleaded guilty in federal court to wire fraud and was sentenced in April to eight years in federal prison.