No, You Can’t Even Trust The Mayor! – Update #3

Posted on June 6, 2013 by

Former Mayor Eric Richardson

UPDATE #3:  The U.S. Commodity Futures Trading Commission (“CFTC”) announced today that it obtained federal court orders for more than $2.7 million in disgorgement and civil monetary penalties against Bentley Equities, LLC  and its principals, Christopher D. Hales and Eric A. Richardson.

On May 31, 2013, the Honorable Dee Benson of the United States District Court for the District of Utah, Central Division, entered a Consent Order for Permanent Injunction against Richardson requiring him to pay $100,000 in disgorgement and a $150,000 civil monetary penalty. On May 14, 2013, Judge Benson also entered an Order that requires Hales to pay $382,080 in disgorgement and $1,146,240 in civil monetary penalties and Bentley to pay an $840,000 civil monetary penalty. That Order also permanently bans Hales and Bentley from engaging in any commodity-related activity.

But its doubtful that any of this money will ever get paid back to the victims.  Hales is currently an inmate at the Federal Correctional Institution in Safford, Arizona, and Richardson is currently an inmate at the Florence Federal Correction Complex in Florence, Colorado. In their criminal cases Hales was sentenced to more than seven years imprisonment and ordered to pay $12,719,236 in criminal restitution, and Richardson was sentenced to a year and a day imprisonment and ordered to pay $110,000 in criminal restitution.

UPDATE #2:  These guys have been busy!  Three days after resigning as mayor of Cedar Hills (finally) Eric Richardson was charged in federal court with bank fraud in connection with an alleged equity skimming scheme.  Richardson signed a blank loan application in February 2010 with Heritage West Credit Union for $57,144 for a 2009 Land Rover, knowing that an accomplice would falsely represent his monthly income was $15,000 and that he was an area manager with Bentley Equities for five years, according to court documents filed on June 27, 2012 in U.S. District Court.

UPDATE:  This week the U.S. Commodities Futures Trading Commission sued Christopher D. Hales, Eric A. Richardson and Bentley Equities LLC in Federal Court here in Utah.  A copy of the complaint can be found here.

According to the CFTC’s complaint, Bentley, Hales, and Richardson misrepresented to customers that they actively managed more than $1 million in commodity futures accounts. In reality, the defendants were not successful commodity futures traders and never managed more than $480,000 in commodity futures trading accounts at one time. In fact, the defendants lost approximately $1,296,600 of the Bentley participants’ and managed clients’ funds trading commodity futures contracts, according to the complaint.

The complaint further charges that the defendants misappropriated at least $628,000 of customer funds for personal use, including food, clothing, auto expenses, and utility and credit card payments. The defendants also allegedly used misappropriated funds to make payments to existing participants and clients, as is typical of a Ponzi scheme.

To conceal their trading losses and misappropriation, defendants allegedly issued false account statements to participants and clients by altering trading statements that they received from the futures commission merchant carrying the Bentley pool account. These doctored statements falsely showed inflated account balances and profitable commodity futures trading returns, when, in fact, the defendants’ futures trading for their participants and clients “consistently lost money,” according to the complaint.

The CFTC seeks civil monetary penalties, restitution, disgorgement of ill-gotten gains, trading and registration bans, and preliminary and permanent injunctions against further violations of the federal commodities laws.

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As I predicted, the Christopher Hales case is getting bigger.  The Salt Lake Tribune details additional allegations that have been made by federal agents and prosecutors in the case involving Christopher Hales, who was denied bail last week by a Federal Judge.  The new allegations involve the current Mayor and former City Councilman of Cedar Hills, Eric Richardson, who ran a company called Bentley Equities.

I have some personal knowledge of Mr. Richardson because  I negotiated with him for several months involving a purported investment that Richardson said would pay spectacular returns to my client.  We were never able to get answers to many of our questions, and many of the documents he sent to me were suspicious and could not be authenticated.  The transaction involved foreign banks and shadowy individuals who never checked out.  Now I understand better why; it seemed too good to be true — and it was!

According to the Tribune article Hales has admitted that the CD investment that he and Richardson solicited for $300,000 was “completely bogus,” and he was involved in a number of transactions that are also alleged to be fraudulent.   It is unclear to me why Mr. Richardson has not been indicted yet, perhaps that will happen on Monday.

I’m sure some of the good voters in Cedar Hills are wondering how a guy like this was able to be elected first as a city councilman and now as mayor, but it makes perfect sense to me.  Con men are really just people who are good at sales; it’s just that the products they are selling don’t exist.  And of course the skills that are necessary to be a good salesman are also pretty helpful in politics.  Although they seem to be defending him so far, perhaps the citizens of Cedar Hills should consider themselves just another one of Mr. Richardson’s victims.

Copyright 2013 by Mark W. Pugsley.  All rights reserved.

One Response to “No, You Can’t Even Trust The Mayor! – Update #3”

  1. Regardless of Eric’s actions outside of Cedar Hills, he did great things for our city! If he’s guilty in this stuff, it’s his family that suffers. Our city will replace him and move on.

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