Did you send me a letter? Call me!

I know this is an unusual post but someone recently sent me a copy of an unsigned whistleblower letter to the SEC.  This post is for that person:

To the person who sent me an unsigned letter involving a company with the initials TEG or EA (I don’t want to identify the company here) please call me or email me immediately.  I can help you!

You have a very interesting whistleblower case, but it appears from your letter that you are still working with the company which is the subject of your report.  Understandably, you are concerned about protecting your identity and your job.  I get it.

The good news is that the SEC’s whistleblower rules provide attorneys with powerful ways to protect your identity, and from retaliation by the company – but there is a catch.

In order to submit a tip submit anonymously you must have an attorney represent you in connection with your submission.  For my whistleblower clients I typically prepare a lengthy submission with a detailed description of the illegal conduct and the statutes that have been violated, and then I transmit it to the SEC on their behalf.

In some cases my clients prefer to remain anonymous.  In those situations my client’s name does not appear on the submission and remains unknown to the SEC staff – and to the company.  The identity of the whistleblower is known only to me and will be protected from disclosure by the attorney-client privilege.

And if the company eventually figures out who you are I can help protect you from retaliation.  The law is clear: employers may not discharge, demote, suspend, harass, or in any way discriminate against you for providing information to the SEC under the whistleblower program, or assisting in any investigation. In fact, retaliation against a whistleblower will likely lead to a separate enforcement action by the SEC against a company and a civil lawsuit (filed by me).  Also, under the Sarbanes-Oxley Act, you may be entitled to file a complaint with the U.S. Department of Labor if you are retaliated against for reporting possible securities law violations.  We can help with that too.

The good news is that individuals who provide original information that leads to an SEC enforcement action with $1,000,000 in fines and penalties will likely qualify for an award.  Awards are between 10% and 30% of the money collected by the SEC – and if the fraud is significant the numbers can be huge.   The SEC’s Office of the Whistleblower recently announced that it has paid a record award of nearly $50 million to two whistleblowers, and a third whistleblower was paid more than $33 million.

There are significant benefits to whistleblowers, so you absolutely want to be in a position to apply for an award.  But you have not done enough to qualify for a whistleblower award at this point.  More needs to be done.

So please, call me!

Mark Pugsley

Direct: 801-323-3380

Email

 

Former Salt Lake City councilman Eric Jergensen Sentenced to 59 Months in Prison

This is an update to my earlier stories about former Salt Lake City councilman and former LDS Stake President Eric Jergensen.  In October of 2017 he and an accomplice were convicted of conspiring to defraud an aerospace company of $2.5 million.  A Syracuse, New York jury returned the guilty verdict after a seven-day trial in U.S. District Court.  And finally today, after several delays, Mr. Jergensen was sentenced to 59 months in federal prison and was ordered to pay $2.5 million in restitution to the aerospace company he defrauded.

If you attended the sentencing hearing please post any additional details about how it went in the comments below.

UPDATE: Former Salt Lake City Councilman and LDS Stake President Eric Jergensen Convicted in New York

UPDATE: For those of you who are watching this case, I have been informed that Mr. Jergensen’s sentencing has been postponed.  The sentencing was rescheduled to March 2, 2018 at 1:30 p.m. in the federal courthouse in Syracuse, NY.  I assume the judge will be the same one who conducted the trial; U.S. District Court Judge Brenda K. Sannes.  If you or someone you know was defrauded by Mr. Jergensen you may want to submit a letter to the Judge to tell her about your experience in advance of the sentencing hearing.


Last week former Salt Lake City councilman and former LDS Stake President Eric Jergensen was convicted of conspiring to defraud an aerospace company of $2.5 million.  A New York jury returned the guilty verdict after a seven-day trial in U.S. District Court in Syracuse, NY. Jergensen and another man, Debashis Ghosh of Chicago Illinois, face a maximum punishment of 20 years in prison and a $250,000 fine.  They may also be ordered to pay restitution to their victims.

The two men were convicted of conspiring to defraud the Laurentian Aerospace Corporation of $2.5 million.  Acting United States Attorney Grant C. Jaquith stated: “Jergensen and Ghosh stole $2.5 million from a group of people who founded Laurentian with the hope of building a new business in the North Country.  Jergensen and Ghosh quickly gained their victims’ trust, and just as quickly abused it by taking their money and then lying to them about what had occurred.  They strung their victims along for years with false promises that their money would be returned.  Yesterday’s verdict brought them to justice, brought justice to their victims, and demonstrates our commitment to investigating and prosecuting financial crime.”

Jergensen and Ghosh were officers of Verdant Capital Group, LLC.   Laurentian retained Verdant to raise funds for the construction of an airplane maintenance facility to be built in Plattsburgh, New York.  Jergensen and Ghosh asked Laurentian to invest $2.5 million as seed money for the project, and promised to retein the money in a Wells Fargo account.  Soon after Laurentian wired $2.5 million into the Wells Fargo account  Jergensen and Ghosh began transferring the money out of the account without Laurentian’s authorization.

For several years after the money had been used, the men assured Laurentian and its investors that their money was safe and secure.  Jergensen even forged a memorandum of understanding showing that the money was still in the bank.  The government also showed at trial that the defendants  misappropriated an additional $2.4 million in funds that other businesses had entrusted to them.

I didn’t see any evidence that any of the victims were members of Jergensen’s stake so this story doesn’t appear to have an affinity fraud angle. Feel free to share your story in the comments below if that is incorrect.

There have been, however, stories in the local press about his financial difficulties that anyone who was considering doing business could have found through a simple Google search.  In 2009 the Salt Lake Tribune reported on several embarrassing headlines and suggested that these troubles were the reason he decided not to seek a third term on the city council.  At the time he had two bench warrants issued against him in 3rd District Court involving his business. He told the paper he had resolved a $98,000 debt his company owed to an Ogden businessman and was working to repay a $120,000 loan from local businessman Kem Gardner, former president of The Boyer Co.

Jergensen served on the Salt Lake City Council from 2001 through 2009, representing Capitol Hill and the Avenues. He also served as head of Salt Lake City’s redevelopment agency.

Copyright © 2017 by Mark W. Pugsley.  All rights reserved.

Jeffrey Mowen Has Been Released From Prison

I recently received an anonymous tip telling me that Jeffrey Lane Mowen, formerly of Lindon, Utah, has been released from prison.  I checked the Bureau of Prisons website and sure enough, he was released on January 12, 2018 and is now presumably at large in the community, so watch out Utah County!

Jeffrey Mowen

Mowen was sentenced to ten years, but it’s not unusual for white-collar prisoners to be released early to make room for violent prisoners.  Regardless, this is not someone who I would recommend doing business with.  If you would like to know more about this case and the criminal charges he pleaded guilty to you can read my prior posts about the case here.

The  press release and complaint the SEC filed against him in September of 2009 can be found here, and the Daily Herald’s article about his plea deal can be found here.

One of the more interesting things about this case is that rather than investing the victims’ money as represented, Mowen used about $6 million of investor monies to purchase over 200 antique, classic and muscle vehicles which he kept in a warehouse in Bountiful.  The collection included  cars, trucks, trailers, motorcycles and three-wheelers, most of which were auctioned off in 2010. You can see some photos of the totally random assortment of cars that they auctioned off in this article from the Deseret News.  As one observer told the paper, “It’s just a bizarre collection. There’s a lot of junk in there.”

Hopefully his taste in automobiles has improved during the time he spent in the federal penitentiary.

John Zane Jeppesen of Garland, Utah And His History of Fraud 

John Zane Jeppesen of Garland, Utah is probably not someone you want to invest your money with.

  • In 1999, Jeppesen entered into an agreement with the Idaho Securities Bureau, under which he admitted to violations of registration, licensing and anti-fraud provisions and was ordered to pay outstanding principal and interest to Idaho investors.
  • In 2003 Lehman Brothers Bank filed a $58 million dollar lawsuit against Jeppesen’s company Beverly Hills Development and others in California alleging it was involved in a massive real estate loan fraud scheme occurring over a three-year period through forgery, identity theft, misrepresentations, fraudulent loan documents, wire fraud, and the illegal laundering of funds.
  • In 2005 the Utah Division of Securities charged Jeppesen with raising approximately $8 million dollars for a company called Beverly Hills Development Corporation from 134 Utah investors though unsecured promissory notes. He settled that case, but the conduct didn’t stop.
  • In April of 2016 he was charged by state prosecutors in the Attorney General’s office with 11 criminal counts including securities fraud, theft and one count of pattern of unlawful activity for running a real estate scheme.
  • In September of 2016 the Utah Division of Securities filed another Order to Show Cause against him that included 8 causes of action including securities fraud, unlicensed selling of securities and “willful violation” of the prior 2005 Consent Order with the Division involving strikingly similar conduct.

Despite all that history of fraudulent activity, much of which he admitted, Third District Court Judge Royal Hansen sentenced Jeppesen to just 30 days in jail after he pled guilty to one count of felony pattern of unlawful activity.  Presumably when he gets out of prison he will start paying back his investors, and in fact Just Hansen stated that was his intent in keeping the sentence reasonably short. When Jeppesen’s 30 days is served, he has six months to pay back the victims or he’ll return to jail to serve 11 more months.  Hopefully that will provide the necessary incentive to get everyone repaid!

As detailed in the Tremonton Leader, Jeppesen originally faced eleven counts of securities fraud, two counts of theft and one count of patterns of unlawful activity, all second degree felonies as a result of his alleged role in a real estate investment scheme that has left six known victims out of hundreds of thousands of dollars.  The linked articles by reporter Cari Doutre in the Tremonton Leader contain a lot of great detail about his conduct, and the heartbreaking testimony from his victims at the sentencing hearing.

I will interested to see whether he will be able to get his victims repaid after he gets out of prison. If you are a victim of one of Mr. Jeppeson’s scams please share your story in the comments below.

Copyright © 2018 by Mark W. Pugsley.  All rights reserved.