Willamette Development Services Executives Indicted for Securities Fraud

EUGENE, OR—Joseph Anthony LaCoste, 46, former chief executive officer of Willamette Development Services, LLC (WDS), and Angela Marie McCoy, 43, former investment relations manager for WDS, were arraigned in federal court on May 2, 2011 on an indictment returned by a federal grand jury on April 20, 2011. LaCoste, McCoy, and WDS were charged with committing securities fraud, bank fraud, mail fraud, and wire fraud. In addition, the indictment seeks forfeiture of all proceeds traceable to the fraud. Trial is scheduled for January 25, 2012.

The indictment alleges that from April 2006 through December 2007, through misrepresentations by LaCoste and McCoy, WDS obtained approximately $5,272,300 from investors for the ostensible purpose of developing at least 10 profitable real estate projects, and that WDS incurred $14,115,825 of additional indebtedness from lenders. By January 2008, none of the projects were completed and WDS was insolvent. The investors lost their entire principal of $5,272,300. Secured lenders recovered portions of their loans through foreclosure actions.

The indictment also alleges that LaCoste lied about his academic background and that he failed to tell investors he had previously been fired from a financial institution for engaging in fraud and that he had previously filed bankruptcy. LaCoste and McCoy made various misrepresentations which caused people to invest with WDS. One of the misrepresentations was that investors were told their money would be used for specific projects, although in every project, investor proceeds were diverted to non-project purposes without investor consent. Investors were also told that WDS would receive no compensation for managing specific LLC projects, although in every project, substantial “management” and “consulting” fees were paid to WDS. Furthermore, the indictment alleges that investors were told that WDS would receive no fees or commissions for selling WDS securities, although in every project, sales fees and commissions were paid to WDS personnel for selling WDS securities.

On February 8, 2011, former WDS Chief Financial Officer Anthony James Tuomi pled guilty to conspiring with LaCoste and McCoy to commit securities fraud. He is scheduled to be sentenced on August 9, 2011 before U. S. District Judge Michael R. Hogan.

The maximum statutory penalty for securities fraud is a 20-year term of imprisonment and a $5,000,000.00 fine, followed by a three-year term of supervised release. The maximum statutory penalty for mail fraud and wire fraud is a 20-year term of imprisonment and a $250,000.00 fine, followed by a three-year term of supervised release. The maximum statutory penalty for bank fraud is a 30-year term of imprisonment and $1,000,000.00 fine, followed by a five-year term of supervised release.

A criminal indictment is only an allegation and not evidence of guilt. The defendants are presumed innocent unless and until proven guilty.

The case is being investigated by the Federal Bureau of Investigation, the Oregon Division of Finance and Corporate Securities, and the Internal Revenue Service Criminal Investigation Division. The case is being prosecuted by Assistant U.S. Attorney Sean B. Hoar.