Compared to Bernie Madoff's spectacular collapse, the recent implosion of Dallas-based Provident Royalties, LLC, may not seem that sexy. Try telling that to the more than 7,000 investors who ponied up $485 million for what the SEC now calls a classic Ponzi scheme. There's so much of this stuff going on lately that a new word has been coined: ponzimonium.

According to the SEC, Provident Royalties and its three principals, Paul "Russ" Melbye, Brendan Coughlin and Henry Harrison, misled investors about what they were buying and promised annual returns of up to 18 percent from investments in oil and gas, real estate, leases, and mineral rights. The company raised $485 million between September 2006 and January 2009, but investigators say most of the money was used to pay promised returns to earlier investors.

Victims of the scheme have retained the New York Law firm of Zwerling, Schachter & Zwerling, LLP, to pursue potential claims of securities fraud. The firm will be investigating the actions of Provident Royalties, its principals and related companies, including Provident Asset Management, LLC., Provident Energy, LP, and Shale Royalties, Inc.

"When oil and gas prices were riding high, everyone wanted to get in," says Jeffrey Zwerling, a founding partner of Zwerling, Schachter & Zwerling. "But when prices nosedived, investors disappeared. That meant there was no new money to pay investor returns or return principal to people who wanted to get out. That's when a scheme such as this comes apart."

Provident has officially gone belly-up, filing Chapter 11 bankruptcy shortly before the SEC's action in early July. For more information, please contact Mark Annick at 800-559-4534, 214-213-1754 or mark@androvett.com, or Shaye Fuchs at 1-800-721-3900 or SFuchs@zsz.com.