Pasadena Man Sentenced to 300-Month Term in Multi-Million-Dollar Investment Fraud Scheme
|U.S. Attorney’s Office April 16, 2014|
PLANO, TX—Gary Lynn McDuff, 59, was sentenced to 300 months in prison today for his role in conspiring to defraud investors of almost $11 million in an investment fraud scheme and laundering the proceeds in the Eastern District of Texas, announced U.S. Attorney John M. Bales. United States District Judge Richard A. Schell also ordered the payment of over $6.5 million in restitution to the victims of the fraudulent scheme. McDuff’s fellow conspirators, Gary Lancaster, 62, of Oregon, and Robert Reese, deceased, of Carmel, California, previously pleaded guilty and were sentenced to terms of imprisonment for their roles in the scheme.
According to evidence presented during the federal trial, McDuff and Lancaster agreed to create the Lancrorp Investment Fund, to draft a prospectus for the fund, and to solicit investments from individuals across the United States. While McDuff controlled the operation, Lancaster agreed to serve as the “front” since McDuff could not possess a securities license or sell securities because of a past felony conviction. McDuff recruited Reese to help sell the investment despite the fact that Reese had been barred by the state of California from selling securities. McDuff, Lancaster, and Reese made numerous false representations to their investors in order to induce payments, including representations that the fund would only invest in A+ or A1 rated bonds, that the principal of each investment would be insured and never at risk, and that Lancaster had experience operating this type of investment. McDuff, Lancaster, and Reese never disclosed McDuff’s felony conviction or Reese’s securities ban. McDuff then laundered the criminal proceeds in order to promote the operation of the fraudulent scheme. After hearing the evidence, the jury needed just six minutes to convict McDuff on the conspiracy and laundering charges.
“This significant sentence reflects how seriously we take investment fraud. We will not tolerate false representations being made to investors in order to take their money,” said U.S. Attorney Bales.
This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force.
President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service and prosecuted by Assistant United States Attorneys Shamoil T. Shipchandler and Camelia Lopez.