PatrickPretty.com

Tag: U.S. Attorney Barry Grissom

  • PONZI NOTES: (1) Kansas Lawyer Allegedly Ran Scheme Out Of Trust Accounts And Scammed Intended Beneficiaries, Including Clients’ Children And Grandchildren And Prominent University, Feds Say; (2) Former Texas Attorney Pleads Guilty In $7.8 Million Caper

    Yesterday was another bad day for the legal profession’s noble members: They once again had to bear headlines about fraud schemes allegedly operated by colleagues past and present.

    In Kansas, attorney Robert M. Telthorst, 52, of Topeka, was charged with wire fraud and money-laundering amid allegations he ran a Ponzi scheme for all or parts of seven years with clients’ trust accounts.

    After a man identified in court documents as “Otto K.” died, Telhorst was appointed to administer payments to two of the man’s daughters and entrusted with $463,344, prosecutors said.

    One of the daughters was to receive a lump sum, the other a monthly allotment, prosecutors said.

    In the trust for the daughter who was to receive monthly income, “the balance dropped from more than $208,500 to less than $150 after Telthorst removed most of the funds for his own benefit,” prosecutors said.

    Separately, Telthorst scammed three granddaughters of a client by raiding their educational trusts that had been set up with $10,000 each.

    “He depleted all three trusts, leaving them each with balances of less than $350,” the office of U.S. Attorney Barry Grissom of the District of Kansas said.

    Beyond that, two other clients had set up an $80,000 trust to benefit the Business School at the University of Kansas.

    “The balance in the account dropped to less than $1,750 after Telthorst diverted funds to his own benefit,” prosecutors said.

    Assisting in the Telthorst probe were the the FBI and the Shawnee County District Attorney’s Office, prosecutors said.

    Meanwhile, former attorney Billy Frank Davis of Houston pleaded guilty to wire fraud in a case that alleged he held himself out as a real-estate professional for 10 years but actually was running a Ponzi scheme with “a substantial portion of the funds he solicited.”

    “Davis admitted to using a variety of ploys to perpetuate his Ponzi scheme, all of which involved falsely representing to investors the existence or nature of various real estate investment opportunities, accepting funds from investors under such false pretenses, and then using the investor funds in a manner other than as represented to investors,” the office of U.S. Attorney Ken Magidson of the Southern District of Texas said.

    Davis, also known as Bill F. Davis, is 67. The scheme fetched $7.8 million, prosecutors said.

    Sentencing is scheduled for Jan. 11 before U.S. District Judge David Hittner. Davis faces up to 20 years in federal prison, and the FBI led the probe, prosecutors said.

  • URGENT >> BULLETIN >> MOVING: Richard Dalton, Marie Dalton Arrested In Atlanta; Colorado Couple Implicated In Bizarre Ponzi Scheme And Will Be Prosecuted In Denver By Special Government Counsel From Kansas

    URGENT >> BULLETIN >> MOVING: A Colorado husband and wife have been arrested by federal agents in Atlanta and will be returned to Denver to be prosecuted by special government counsel brought in from Kansas, authorities said.

    Why special counsel was appointed to oversee the prosecution of Richard and Marie Dalton was not immediately clear. The allegations in the case, which began as an emergency SEC civil prosecution last year reported on here by the PP Blog, are bizarre. The case may be linked to the mysterious, prime-bank allegations against Larry Michael Parrish of Walkerville, Md., which the PP Blog reported on here.

    Richard Dalton, 65, and Marie Dalton, 60, reside in Golden, Colo. They have been charged with one count of conspiracy to commit mail fraud, wire fraud and interstate transportation of stolen funds, according to the office of U.S. Attorney Barry Grissom in the District of Kansas.

    Parrish’s name was not referenced today in the announcement by Grissom’s office of the prosecution of the Daltons. In March 2011, the SEC described Parrish as a recidivist swindler with a tie to Richard Dalton. Parrish was accused by the SEC of posing as a concerned financial adviser and investment strategist and visiting a dying man in a Colorado hospital.

    The man was suffering from cancer. Parrish assured him that investing with him was safe, that the man’s wife would not have to worry about her finances after his death, that “the investment would provide for his wife for the rest of her life,” the SEC said in March.

    “That money is now gone,” the SEC said. And so is the money from 70 other Parrish investors in three states, about $9.2 million in all, the agency said in March.

    When the Daltons learned they were under investigation by the SEC, Grissom’s office, the FBI and the IRS said today in a joint statement, they discontinued making payments to investors and falsely represented to investors that they could expect payments soon.

    “They also misled investors with false claims that the company’s European trader was switching banks, that the company was liquidating a cache of diamonds to pay investors back, that a plane carrying diamonds had been forced to land in Amsterdam because three engines had gone out and that the company had discovered it was holding 18,000 fake diamonds,” prosecutors said.

    The SEC laid out largely the same fact set in November 2010.

    “This investigation is not over as we are committed to following the money trail,” said Sean P. Sowards, IRS Criminal Investigation Special Agent in Charge. “We will continue to pursue the evidence wherever it leads.”

    The Dalton caper used a “diamond” theme and had an element known simply as “the Trading Program.” It gathered $17 million through a company known as Universal Consulting Resources LLC (UCR)., investigators said.

    “As part of soliciting investors for the Trading Program, Dalton and UCR falsely told prospective investors that their invested funds would be held safely in an escrow account at a bank in the United States, and that a European trader (often referred to simply as ‘the Trader,’ but never known or referred to by name) would use the value of that account, but not the actual funds, to obtain leveraged funds to purchase and sell bank notes,” the SEC charged last year.