Two Investment Fraud Con Men Sentenced to Prison
|U.S. Attorney’s Office December 20, 2012|
Kenyen Brown, U.S. Attorney for the Southern District of Alabama, and Joseph P. Borg, Director of the Alabama Securities Commission, announced that defendants Patrick Daleiden and Bruce Mabey were sentenced to 33 months and 12 months and a day, respectively.
The investment scam began in the summer of 2006 when Bruce Mabey, Patrick Daleiden, and others solicited four Alabama investors by offering an opportunity to invest in a new industrial park they were planning to develop on a 3,200 acre tract of land in Choctaw County, Alabama. Daleiden, Mabey, and others told investors that Daleiden was in discussion with Bermuda-based Butterfield Bank about a $10 million credit facility for his company and that a closing of that facility was expected in fall of 2006. The investors were told that the loan proceeds from the credit facility were to be used for the purchase of the land in Choctaw County and to develop the industrial park. The collateral for the loan was to be a $200 million bank guarantee issued by the United Bank of Switzerland (UBS), which was purportedly issued to Starboard Capital Inc. In addition, investors were told of a lending commitment for the project by a New York based real estate lending fund for the purchase of the land.
Neither loan was ever closed, and the bank guarantee from UBS to Starboard Capital was fake.
Based on the false and fraudulent promises, pretenses, and representations made by Daleiden, Mabey, and others, the four Alabama investors invested nearly $1.5 million in the Choctaw County industrial park project. Within days of the money being wired into the Starboard Capital bank account, the investors’ money was withdrawn or transferred to other accounts.
From 2006 through 2009, Mabey, and agents of Starboard Capital sent e-mails to the Alabama investors in an effort to lull them into believing that the deal would eventually go through and the industrial park would be developed. However, the land was never purchased, the park was never developed, and none of the investors received any of their money back.
Both Daleiden and Mabey have already pled guilty to related state criminal securities fraud charges in Choctaw and Madison Counties. Those state cases were prosecuted by the Alabama Securities Commission.
United States Attorney Kenyen Brown is very pleased with the joint effort between the U.S. Attorney’s Office and the Alabama Securities Commission displayed in this case. “Being able to work well with our state partners is critical to achieving our shared goal of prosecuting criminals and seeking justice for victims in Alabama,” said Brown. “These con men came to Alabama and preyed on victims after gaining their trust. Their actions were motivated by greed and are reprehensible. Defrauding investors will never be tolerated, and this office will continue to tirelessly prosecute white-collar criminals. The U.S. Attorney’s Office looks forward to continuing the successful partnership with the Alabama Securities Commission in the future.”
Alabama Securities Commission Director Borg joined in these sentiments: “Fraud involving investment securities is a scourge that causes incalculable damage to individual financial security and to public confidence in the integrity of our financial markets. The ability of federal and state authorities to work together is a vital tool in bringing scam artists to justice. We are proud of the hard work of the federal and state law enforcement authorities in this case.”
FBI–Mobile Special Agent in Charge Stephen Richardson added, “Fraud of this magnitude will simply not be tolerated. Mr. Daleiden and Mr. Mabey robbed the community and Alabama investors of valuable investment capital during an extremely difficult financial period. The FBI and our partners are committed to aggressively pursuing these subjects and ensuring they are held accountable for their actions. I am hopeful these convictions and sentences will serve as a deterrent to future criminals looking to enact fraudulent schemes in Alabama.”