Below is an article that appeared in The St. George Spectrum yesterday. The alleged losses are relatively small so it has not garnered the attention of the press here in Salt Lake City, but the facts are important because they illustrate the modus operandi of guys like this. The facts alleged in the indictment are a classic affinity-fraud scheme – Utah style.
Written by Kevin Jenkins
ST. GEORGE — A Northern Utah resident accused of conning a St. George woman out of her retirement savings by using a relationship of trust within his church congregation and purported signs from God made his initial appearance Tuesday in 5th District Court.
Michael Dee Madsen, 37, of 4971 W. Buffalo Court, Herriman, is charged with felony counts of unlawful dealing of property by a fiduciary, theft and securities fraud, as well as a misdemeanor count of doing business without a license.
Madsen said he plans to retain a Utah County attorney who is representing him and his wife, Indra Charlese Madsen, on unrelated charges there. Madsen has been charged in Utah County with theft, communications fraud, unlawful use of a financial card and a racketeering count of pattern of unlawful activity.
Madsen asked Judge John Walton to delay the next hearing in the Washington County case long enough for Madsen to earn the money to hire his attorney in the new case. Walton scheduled the hearing for Oct. 21.
Deputy County Attorney Rick Erickson said the charges involve the same alleged victim and period of time represented in a lawsuit filed earlier this year by local resident Jolene Drake.
In the lawsuit, Drake alleges the Madsens pretended to work as her financial advisers while taking her $112,000 in retirement savings for their own use, which she says included breast augmentation for Indra.
Drake claims Indra Madsen befriended her while the two were members of the same Church of Jesus Christ of Latter-day Saints ward in St. George. Drake confided to her that she had a significant amount in the retirement account but was worried it might be negatively affected after she left her employment.
Drake alleges in the complaint that Indra falsely said Michael Madsen was a licensed financial adviser and could help her in keeping her funds safe by putting them into risk-free interest-bearing accounts with her children as beneficiaries.
Drake also alleges that as she struggled to decide whether to invest with the Madsens, they proposed a real estate transaction in Dammeron Valley. When the Madsens drove Drake to Dammeron Valley to view the site, Michael got the vehicle stuck in the mud and told Drake “getting stuck in the mud in front of that property was a sign from God that it was God’s will that Jolene should invest her money in that particular piece of property,” her complaint states.
Drake alleges Michael also gave her a blessing using his priesthood “power” to help her make a decision, and in the course of the blessing told her it was God’s will she allow Michael to control her funds.
Drake ultimately chose to confide in the Madsens in September 2007, she states in the complaint, but told them she did not want to invest in real estate and only wanted to keep her funds secure for future use.
Instead, she alleges the Madsens transferred her retirement savings between shell companies in the Madsens’ names and also to Michael’s father and brother, or a company controlled by them with Dammeron Valley land holdings.
Drake states in the lawsuit that she didn’t learn her funds were allegedly being misused until last year, after she had spent months attempting to obtain a portion of her funds and an accounting of the investment before ultimately hiring a private investigator to look into the matter.
She has received no payments from her investment with the Madsens, she states.
The Madsens have asked the court to dismiss the lawsuit on procedural grounds relating to Drake’s delay in notifying all of the defendants in the case.
Michael is the only one of the Madsens to face criminal charges in relation to the situation. Indra was charged as a codefendant with him in the Utah County case filed in July, which stems from unrelated allegations that the Madsens used a company finance card at the American Fork business where they were working to make unauthorized personal purchases in excess of $30,000.
The Madsens also allegedly altered company bookkeeping records to enhance their salaries by more than $14,000 for Michael and more than $13,000 for Indra, and allegedly diverted more than $17,000 of company money to a financial solutions business owned by Michael without authorization or in return for services.
The total damage to the company is alleged to be more than $85,000. According to the arrest information, Indra admitted to altering the bookkeeping software to enhance their salaries, but says she did so at the owner’s request.
Copyright 2013 by Mark W. Pugsley. ;All rights reserved.