This is a repost of a story that appeared yesterday on ksl.com.
December 16th, 2010 @ 7:33pm By Jasen Lee
SALT LAKE CITY — For much of his life, Eric Nelson had been a person who saved and planned for his family’s future.
After doing so diligently for more than 20 years, he now finds himself trying to recover from “acute financial stress” brought on by his dealings with an admitted fraudster — a man who turned the lives of Nelson’s family and many others upside down by stealing tens of thousands of dollars from each, not to mention their hopes for better lives.
On Dec. 20, Fasi Filiaga Jr., 49, is scheduled to be sentenced after pleading guilty to four counts of securities fraud. In March, Filiaga was charged with misusing over $2 million in funds from investors, including Nelson, who believed they would receive high returns using trading techniques they would learn from Filiaga.
Nelson said he lost thousands, which has put an intense financial strain on his family, though he is “solvent.”
“I’ve put myself in a bit of a financial crisis (and) I’m still in it,” the 46-year old Lindon father of four explained. “With … some hard work I’ve been able to do some restructuring.”
While Nelson said his family is managing this predicament, he said he hopes his story can serve as a cautionary tale to others who might otherwise fall victim to scammers like Filiaga.
Another victim, St. Petersburg, Fla. resident Carol Fankhanel, said she was devastated to learn that the person she had trusted for several years turned out to be so dishonest.
She met Filiaga in late 2004 after attending seminars conducted by Spread Training Systems — an online training firm run by Filiaga that purported to provide instruction on options trading. He allegedly promised investors phenomenal returns at low risk using methods he would teach them.
“I’ve been investing in the stock market for years,” Fankhanel said. “But I wanted to learn (the technique of) options trading.”
As she became more involved in the educational group, she took classes and went to seminars, all the while gaining more respect for Filiaga as a person and more belief in what he was teaching.
“(Over time), you’ve got some confidence in this person and you see what a good trader he is,” she said. After about two years, Filiaga asked his students to become investors in a new venture called PT Investments.
Fankhanel said she invested a total of $125,000 with Filiaga, having no idea that she would eventually lose every penny.
“He didn’t even put it into a trading account,” she said. “He just put it into his pocket and bought boats and guns and … stuff for himself.”
After becoming aware of the fraud, Fankhanel — along with a group of nine other duped investors — hired an attorney in an attempt to recover their lost funds.
“We went to court and got a judgment against him (for) racketeering and fraud and unjust enrichment,” she explained. The court awarded triple damages totaling over $6 million, but no money has been collected, thus far.
She said despite the fact they may never be able to get any of the money back — as Filiaga has filed for his second bankruptcy — getting a legal victory was “absolutely” worth the effort.
“Just for my mental health, it was worth it just to hold him accountable,” Fankhanel said. “To just not let somebody like that get away with it and continue to get away with it.”
She believes Filiaga is still trying to scam other investors even while he awaits sentencing for his crimes involving STS and the PT Group, through a company called Stock Market Mastery.
How much time Filiaga spends behind bars is still unknown, but Nelson and Fankhanel hope his sentence is commensurate with the crime he committed against so many unsuspecting investors.
“(Convicted investment scammer Bernie) Madoff got 150 years, what’s the difference (from what Filiaga did)?” she queried rhetorically.
According to her Salt Lake City-based lawyer Joe Cartwright, under the terms of his plea agreement, Filiaga may only get two months for his crimes.
“(The recommendation by the prosecutor) was for Fasi to serve 60 days in jail,” Cartwright said. “Some of (my clients) are furious about it. Sixty days for stealing $2 million is ridiculous.”
A judge will have the final say in how much time Filiaga serves, he said.
Among those who will be watching closely that day will be former partner Mark Ely, a life-long friend of Filiaga and one of the people who also fell victim to his scheme.
Ely, along with a third partner named Greg Jensen, was one of the founders of STS.
“When we created the company, it was an education company to teach people how to manage their own financial assets,” Ely said. He helped develop the technology portion of the business and even put in $596,000 of his own money into the company.
At no time did he ever think he would find himself pitted against someone whom he considered to be his ‘life-long best friend.” They had met in junior high school, both sons of military fathers living in Missouri at the time.
They learned that they shared many common interests and their families were both members of The Church of Jesus Christ of Latter-day Saints. When Ely joined the Air Force in 1981, he asked to be stationed in Utah so he could be close to the Filiaga family who had moved there earlier and “was an extension of my family.”
Fasi Sr. served in the bishopric and is “an exceptionally good man” who doesn’t deserve to have this slight on his name, Ely said. The legal problems of Fasi Jr. have had a major impact on his entire family, he said.
While involved with Filiaga as a business partner over time, Ely said he began to notice his friend changing, becoming more distant and exhibiting unusual behaviors. Filiaga began collecting large caches of high-powered firearms, as well as accumulating provisions and property in Alaska.
Curious as to how Filiaga was able to afford all the items, Ely learned that his friend had used company funds to make the purchases. He also learned that Filiaga had developed an elaborate “Ponzi scheme” using money from investors in his newly created investment firm.
Soon after learning that Filiaga had created PT Investments, Ely realized that things had begun to move in a direction he was not comfortable with.
“The concept that there would ever be … investment management was something I was against,” Ely said.
It wasn’t long before Ely joined the group seeking to expose Filiaga’s complex illegal activities — the sad end to a relationship that had begun some 35 years ago.
Many of the victims plan on being present when Filiaga is sentenced on Monday, including Fankhanel and Nelson.
Nelson said little can be done to right this terrible wrong, but he and his fellow investors will one day be able to recover from this very difficult life-altering lesson of deceit and misplaced trust.
“We’ll figure out a way to claw ourselves out of this,” Nelson said. “We’ll rebound from this.”