Candwich Canned Sandwich

Posted by Mark Pugsley.

Update #3: Today Judge Clark Waddoups rejected the plea bargain that Wright had negotiated with prosecutors concluding that the deal appeared too light given the magnitude of how Wright had “intentionally deceived and misled people.” The defendant will now be forced to negotiate a new plea bargain with the U.S. Attorney’s office — or go to trial. The judge’s decision appears to be based primarily upon the letters he received from angry investors.

UPDATE #2: Last week Travis Wright pleaded guilty to one count of fraud, admitting he operated a massive Ponzi scheme that owed investors at least $44 million when it went bust in 2009. He will be sentenced after the judge hears testimony from the victims.

UPDATE: My friend Tom Harvey reported yesterday in the Salt Lake Tribune that Travis Wright, who ran Waterford Funding, entered a plea of not guilty before U.S. Magistrate Paul Warner to the charge of mail fraud. The article can be found here.

Canned sandwich

On July 7, 2010 the New York Times ran a story about the SEC’s recent lawsuit against Travis Wright and Waterford Funding. The SEC’s press release about the case can be found here. Among other things, the SEC’s lawsuit alleges that Wright lied to his investors saying he was investing their money in hard money loans secured by real estate, when really he was funneling most of their money to the inventor of the “Candwich” (who also planned to offer Pepperoni Pizza Pockets and French toast in a can). Yum.

This is the part that is really baffling to me about this case. Did he really think the Candwich would be more profitable than real estate? Given the current state of the real estate market it may be the case — but not between 2001 and 2007 when the fund was really going strong. The SEC also alleges that he used $15 million of investor funds for personal use, including the purchase of a $5 million home on Walker Lane from former Jazz legend Jeff Hornacek, which he completely renovated and imported cobblestones from France for the driveway. But it was probably pretty trashy after Hornacek moved out.

You gotta love it when the New York Times decides to write about Utah culture. The article says: “Utah has long endured a reputation as a place where many people are naïve or trusting to the point of losing their shirts.” True or not, Mr. Wright raised $145 million from 175 investors — most of whom were based in Utah — by promising returns of 24%. The SEC alleges that only $6 million of the total amount raised was actually invested in hard money loans as represented. But at least he actually invested most of the money, albeit in a different place than where it was supposed to go. In my experience many perpetrators of Ponzi schemes simply pocket the money or buy cars with it.

And in case you’re wondering, the Candwich may still be coming to a store near you. The president of Mark One Foods, Mark Kirkland, hopes to go into production later this year. Unfortunately that is probably little consolation to the Waterford Investors who are unlikely to see much (if any) of their original investment returned.

© 2010 Mark W. Pugsley, all rights reserved.

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