A Washington state man who is accused of bilking nearly $550,000 from 17 elderly investors was arrested earlier this month and faces more than 50 charges related to fraud and theft. His bail was set at $100,000.
The purported financial advisor is accused of setting up a Ponzi scheme to lure investors, most of whom were retirees from the Bellingham area. Although he also found investors in Spokane; San Antonio, Texas; Brigham City, Utah; and Ashland, Oregon.
He then used their money for gambling, hotels, restaurants, and other personal expenses, as well as re-investing in the scheme.
A Ponzi scheme involves soliciting money from investors by promising to generate a high rate of return with little risk, then using that money to pay early-stage investors, creating the false appearance that the money is from successful investment profits, according to the U.S. Securities and Exchange Commission. Ponzi schemes tend to collapse when it becomes difficult to recruit new investors or when a large number of investors ask to cash out.
The man was arrested earlier this month and faces 25 counts of theft in the first degree and 29 counts related to securities fraud. In addition to running the scam, authorities said, the financial advisor had not told his clients he had twice filed for bankruptcy or that the Internal Revenue Service had four tax liens against him.
Violating the Securities Act of Washington is a Class B felony, punishable by up to 10 years in prison, or a $20,000 fine, or both. A person who knowingly alters, destroys or hides records to evade legal charges also is guilty of a Class B felony, but in that case the fine can be as much as $500,000.
However, a person cannot be sent to prison for violating the act if he or she can prove they did not know about the rule. Nor can they be indicted if more than five years has passed from the violation or three years has passed after discovery of the violation, whichever date is later.
A person is guilty of theft in the first degree if he or she steals:
- Property or services which exceed $5,000, other than firearms;
- Property of any value, other than firearms or motor vehicles, taken directly from another person;
- A search and rescue dog while the animal is on duty; or
- Metal, and the costs of the damage to the owner's property exceeds $5,000.
Each count of theft in the first degree also is a Class B felony.
Regardless of the circumstances of your arrest, if you are facing criminal charges in Washington state, call the Seattle law office of Steve Karimi at (206) 621-8777 or contact him online.