A 71-year-old New York state man pleaded not guilty last Thursday in U.S. District Court to bilking investors out of $35 million in a ponzi scheme involving oil and natural gas exploration in Kentucky and Tennessee.
In an indictment unsealed last Thursday Ashvin Zaveri is charged with 16 counts of money laundering and mail and wire fraud dating back to 2003. According to the indictment, Zaveri solicited investors to invest in about 24 partnerships for oil/natural gas exploration and received about $35 million by mail and wire transfers.
"...[T]he defendant did pay investors a portion of their original investment funds from investment funds received from later investors, which funds involved the proceeds of a specified unlawful activity, with the intent to promote the carrying on of specified unlawful activity..." the indictment says.
Zaveri was the managing partner of Tennessee Oil & Gas Development Partnership and Wright-Overton Drilling Project 2006 Partnership. For these he received investments of more than $1 million and paid original investors with money from those who came after, the indictment alleges.
In a "confidential memorandum" Zaveri is alleged to have told investors that "proceeds would be used specifically to drill oil wells, stimulate natural gas wells, conduct geological studies, for travel, legal fees and a partnership reserve," the indictment says. "In fact, the investment funds...were used to make partial payments to other investors in different partnerships and for the personal use of the defendant."
If Zaveri is convicted, the government is seeking his forfeiture of millions of dollars in fraud proceeds, real estate as well as $100,000 worth of jewelry seized from a safe deposit box.
Last Thursday Judge Charles Siragusa gave Zaveri's attorney two months to review evidence seized by authorities. Zaveri is not expected to have to return to court until April or later.
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