Securities Fraud: Two Indiana Men Are Charged with Running Ponzi Scam, NY Investment Adviser Gets Five-Year Prison Sentence for $1.725M Scam, and Illinois Investment Firm Owner is Ordered to Pay $270K in Restitution  

Two Men Are Accused of Scamming Indiana Investors in More than $3.5M Ponzi Scam 
Prosecutors are charging two Indiana men with securities fraud involving a Ponzi scam. They claim that Richard E. Gearhart and his business partner George R. McKown sold securities to investors who moved their annuities, pensions, cash, and 401ks to invest in Asset Preservation Specialists Inc. The investors were purportedly promised a guaranteed return rate.

The authorities say that McKown and Gearhart were not registered with the state of Indiana or the Securities and Exchange Commission to sell these securities.

It was in 2013 that a number of Gearhart’s clients filed complaints against him after he filed for Chapter 13 federal bankruptcy. They contended that their losses collectively totaled over $2M. Court records, however, indicate that the two men allegedly stole over $3.5M from over two dozen investors. between ’08 and ’13.

NY Investment Adviser To Go to Prison After Pleading Guilty to Financial Fraud

A federal judge has sentenced David Blaine Welliver to five years in prison for bilking investors of $1.725M. Welliver pleaded guilty to one count of securities fraud following an indictment of 14 federal fraud and money laundering criminal counts.

Welliver had agreed to pay $100K to another investment adviser to acquire two mutual funds’ assets even though his Dblaine Capital had under $200 in liquid assets and  there was less than $2K in his own account. He then borrowed $4M from Lazy Deuce Capital Company but he only used $95K of that money to obtain a mutual fund’s assets. He diverted over $500K toward his own expenses.

Welliver admitted that he used $1.725M of investor funds to invest in a shell company set up by Semita Partners. In December 2010, he liquidated almost all of the Dblaine Fund’s stock to satisfy redemption requests. This left the fund with worthless Semita shares.

In 2011, the SEC sued Welliver, claiming that he and his firm had engaged in a number of securities violations. Previous to these financial woes, in 2000 Welliver lost a $14.6M judgment to the Minneapolis Firefighters’ Relief Association and the Minneapolis Police Relief Association due to his mismanagement of fund assets.

 

Ex-Baytree Investors President Goes to Prison for 70 Months
A district court judge has sentence Christopher A. Jansen to seventy months in federal prison and three years of supervised release. Jansen, who was formerly the president of Baytree Investors, an Illinois firm that is no longer in operation, must also pay almost $270K in restitution. He pleaded guilty to wire fraud and income tax evasion in 2008.

Throughout the US and for investors who’ve worked with financial firms and their financial representatives that are based in this country, Shepherd Smith Edwards and Kantas, LTD LLP is here to help our investor clients try to recoup our losses. Contact our broker fraud law firm today and ask for your free, no obligation case consultation. Over several decades, we have helped thousands of investors in getting their money back.

Two men charged with securities fraud for alleged Ponzi scheme, Indianapolis Business Journal, December 29, 2016

Feds arraign men in alleged $3.5 million investment scheme, NWI.com, January 5, 2017

Securities fraud plea nets former Buffalo fund adviser 5 years in federal prison, Star-Tribune, December 28, 2016

A Fallen Fundster Gets Five Years in Prison, MutualFundWire, December 29, 2016

Former investment company executive sentenced for tax evasion, Chicago Business Journal, December 29, 2016

Trucking executive sentenced to 70 months in prison for wire fraud, tax evasion, Chicago Tribune, December 29, 2016

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