U.S. Attorney Announces Operation Broken Trust
Prosecution of Investment Fraud Charges in Three Oregon Cases Charges Relate to Over $20,000,000 in Losses Affecting Approximately 140 Victims
|U.S. Attorney’s Office December 06, 2010|
PORTLAND, OR—Following an announcement today by Attorney General Eric Holder in Washington, D.C., representatives of the Financial Fraud Enforcement Task Force in Portland, including U.S. Attorney Dwight C. Holton, announced the regional results of Operation Broken Trust, a nationwide operation which targeted investment fraud in the District of Oregon and throughout the country. Operation Broken Trust is the first nationwide operation of its kind to target a broad array of investment fraud schemes that directly prey upon the investing public.
The interagency Financial Fraud Enforcement Task Force was established by the President to lead an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. Starting on Aug. 16, 2010, to date Operation Broken Trust has involved enforcement actions against 343 criminal defendants and 189 civil defendants for fraud schemes involving more than 120,000 victims throughout the country. The operation’s criminal cases involved more than $8.3 billion in estimated losses and the civil cases involved estimated losses of more than $2.1 billion. The District of Oregon cases highlighted in today’s announcement relate to charges filed since August 16, 2010 in fraud schemes that caused over $20,000,000 in losses to approximately 140 victims.
“With this operation, the Financial Fraud Enforcement Task Force is sending a strong message,” said Attorney General Holder. “To the public: be alert for these frauds, take appropriate measures to protect yourself, and report such schemes to proper authorities when they occur. And to anyone operating or attempting to operate an investment scam: cheating investors out of their earnings and savings is no longer a safe business plan—we will use every tool at our disposal to find you, to stop you, and to bring you to justice.”
U.S. Attorney Holton stated, “Those who engage in fraud by using lies and deceit to cheat investors out of their hard-earned savings need to know that the United States Attorney’s Office and federal law enforcement will find them and bring them to justice. Our mission is to use all available prosecution tools to hold the criminals responsible.”
The President’s Financial Fraud Enforcement 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. For more information on the task force, visit StopFraud.gov.
Holton commended that work of federal law enforcement, in particular the Federal Bureau of Investigation and the Internal Revenue Service who investigated the three cases highlighted in this announcement. They, along with the Postal Inspection Service, the Securities and Exchange Commission, the Oregon Department of Finance and Corporate Securities and the Oregon Department of Justice work hand in hand with Holton’s office to identify, investigate and prosecute investment fraud cases. Holton noted that a substantial number of investigations are continuing and additional federal indictments relating to investment fraud schemes can be expected.
Operation Broken Trust cases in the District of Oregon included:
United States v. Louis Borstelmann
10-CR-60123-HO (United States District Court (USDC) - Eugene)
Approximate Loss: $20,000,000
Approximate Number of Victims: 100
Investigating Agencies: FBI, IRS
Prosecutor: Assistant U. S. Attorney (AUSA) Scott Bradford
On October 26, 2010, an indictment was unsealed charging Louis J. Borstelmann, 68, of Thousand Oaks, California, with mail fraud, wire fraud and money laundering in connection with a Ponzi scheme that reached Florence, Oregon. Defendant solicited approximately 100 individuals to invest in real estate through his company, Sunburst Associates, Inc., a California corporation, and investors lost more than $18 million. It is alleged that defendant offered hardmoney loans through his company that were secured by real estate deeds of trust. The indictment alleges that defendant solicited individuals to invest in the deeds of trust by falsely promising high rates of return and a security interest in the property allegedly pledged to secure the investment.
In order to perpetuate the scheme, the indictment alleges that defendant sent investors fraudulent investment materials, including fraudulent deeds of trust. It is further alleged that the alleged investments never existed, and defendant used new investor money to pay existing investment obligations. According to the indictment, defendant also spent investor money on personal items, including a car and a home.
Trial is currently scheduled for April 6, 2011.
United States v. Robert Calvert
10-CR-00363-JO (USDC – Portland)
Approximate Loss $1,200,000
Approximate number of Victims: 21
Prosecutor: Assistant U. S. Attorney (AUSA) Hannah Horsley
Investigating Agency: FBI
On October 6, 2010, a federal grand jury in Portland indicted Robert Todd Calvert, of Henderson, Nevada, on 19 counts of wire or mail fraud for operating an investment scheme that defrauded more than 15 Oregon investors. The indictment alleges that Calvert lured investors to transfer their individual retirement accounts and other trust accounts to the Trust Company of the Pacific, where he worked as a trust executive at the time. Calvert allegedly promised investors a guaranteed rate of return of approximately eight percent at the end of a maturation period. It is alleged that unbeknownst to the investors, Calvert diverted the trust account funds to a purported real estate investment scheme that failed because the real estate projects were fictitious. All investor funds were lost. Calvert was not licensed to sell securities in Oregon.
Trial is scheduled for December 21, 2010.
United States v. Tamara Sawyer & Kevin Sawyer
10-CR-60122-AA (USDC - Eugene)
Approximate Loss: $4,400,000
Approximate Number of Victims: 23
Investigating Agency: FBI, IRS
Prosecutor: Assistant U. S. Attorney (AUSA) Scott Bradford
On October 21, 2010, a federal grand jury sitting in Eugene, Oregon, returned an indictment naming defendants Tamara Sawyer, 47, and Kevin Sawyer, 58, of Bend, Oregon, alleging several charges, including conspiracy, wire fraud, bank fraud, and money laundering.
According to the indictment, defendants Tamara Sawyer, a licensed real estate broker, and her husband, Kevin Sawyer, used three companies, Starboard LLC, Starboard Indiana LLC, and Synergyz LLC, to solicit individuals to invest more than $7 million in real estate. Defendants enticed investors by falsely promising high rates of return, typically 12 percent, and security in the form of promissory notes. The indictment alleges that instead of investing the money as promised, defendants used it to fund other companies and ventures and to pay personal expenses, including cars, credit cards, and the construction of their vacation home in Mexico.
The indictment also alleges that as the scheme progressed and investors began to demand a return on their investment the defendants used new investor money to pay promised returns to older investors. According to the indictment, defendants caused investors to lose more than $4.4 million. Defendants are also charged with mortgage-fraud related charges for allegedly submitting fraudulent home loan applications to financial institutions to secure financing to purchase homes. The indictment alleges that defendants misrepresented the source of down payments and assets.
Trial is currently scheduled for January 11, 2011.
As a part of Operation Broken Trust, the task force is making the public aware of resources available to protect against these types of fraud and how to report fraud when it occurs. To learn more about investment scams, how to take steps to protect yourself from scams, or how to report investment fraud if you believe you have been victimized, the task force recommends that you visit its website, StopFraud.gov, which includes links to a wide array of task force member resources. Anyone with information about investment fraud, or who is a victim of such fraud should contact the FBI at 503-224-4181.