Here is an update on this story from the Salt Lake Tribune. There is another moral to this story that is evident in these prosecutions, and that is you need to be careful who you solicit money on behalf of, and its better not to do it at all. If you are not licensed to sell securities and accept a fee for raising money on behalf of another person it could get you into a lot of trouble — regardless of whether its a scam or not:
Utahns among six sanctioned over Ponzi scheme
By Tom Harvey
The Salt Lake Tribune
Published: March 7, 2012
Federal regulators have imposed sanctions on six Utah and Colorado men for their involvement with Jeffrey Mowen, the Utah County man who plead guilty to fraud charges for running a Ponzi scheme that took in about $18 million from investors on promises of returns of 2 percent or more a month.
The Securities and Exchange Commission said the six solicited millions of dollars of investor money that went to Mowen using false claims about where the money would go and about the security of the investments.
Sanctions were imposed against Thomas R. Fry, Cedar Hills; Michael W. Averett, Pleasant Grove; Michael G. Butcher, Loveland, Colo.; Gary W. Hansen Berthoud, Colo.; James B. Mooring, Highland; and Bevan J. Wilde, Highland.
In a 2009 lawsuit the SEC said the six had raised about $41 million from 150 investors in various states. Of that, about $18 million went to Mowen, who used about half of it to make interest payments to investors so it appeared his operation was profitable in what’s known as a Ponzi scheme.
Mowen, who is now serving a 10-year prison sentence, misappropriated another $8 million for personal use, including buying a large collection of luxury and antique motor vehicles, with another $650,000 going to his then wife.
The lawsuit said Fry led the group of promoters in distributing false information about the investments. They also failed to do adequate research to ensure the information was legitimate, it said.
Fry ignored the fact that Mowen had been under investigation and eventually was convicted of securities fraud, the lawsuit said. When Fry learned that Mowen had been convicted, he failed to disclose that information to investors or other promoters.
Fry and the others settled the lawsuit against them and were ordered not to commit anymore violations. The SEC is seeking repayment of funds they earned in the process.
In recent administrative actions, the SEC barred the six from participating in investment sales, services and promotions, including penny stocks.
A seventh man named in the lawsuit, David G. Bartholomew, continues to defend himself.
Tom Harvey reported in the Salt Lake Tribune yesterday that Jeff Mowen finally pled guilty to one count of wire fraud and will spend ten years in prison. I have not previously written about Mr. Mowen, but now that he has pleaded guilty I feel like I can write about it. I met with Jeff Mowen several times when he was trying to hire me as his defense attorney. He never actually hired me and he certainly never paid me a dime, but I am not going to reveal any potentially privileged communications in this post. Continue reading “UPDATE: Lessons to be Learned from Jeffrey Mowen”