Utahns among Texans' investors

"Provident sold ostensibly safe securities such as preferred stock to thousands of investors," Ken Israel, director of the SEC's Salt Lake regional office, said in the release. "But it was actually operating a Ponzi-like shell game in which assets were shuttled from one entity to another and investors were paid 'returns' from whatever money was available — usually that of the most recent investors."

The SEC's complaint charges Paul R. Melbye, Brendan Coughlin and Henry Harrison with orchestrating the scheme, as well as Provident, broker-dealer Provident Asset Management LLC, and the 21 entities that offered and sold securities.

Israel told the Deseret News that the probe would likely take months to sort out. In addition to the asset freeze, the court has appointed a receiver to preserve and organize assets for the benefit of investors, he said.

Mike Dubek of Murray declined to divulge the amount of his personal investment into the company but told the Deseret News that he was stunned to learn that Provident was being investigated for fraud.

"It's shocking just to hear the alleged fraud or Ponzi scheme being used," he said. "I wasn't aware of anything remotely close to that."

A Salt Lake County dentist, who invested about $25,000 and asked not to be identified, told the Deseret News he was initially disappointed when the company filed for Chapter 11, but became angry to find out that he and others may have been victims of an elaborate scam.

"I'm surprised I got caught in the middle of it," he said. "I always thought it happened to other people."

e-mail: jlee@desnews.com