Architect of Fraudulent Gold Futures Trading Investment Scheme Sentenced to Nearly 10 Years in Federal Prison
|U.S. Attorney’s Office March 05, 2013|
TAMPA—U.S. District Judge James D. Whittemore sentenced Terry Vernon Koontz (56, Apollo Beach) yesterday to nine years and seven months in federal prison for conspiracy to commit mail fraud and wire fraud. The court also ordered the forfeiture of a $50,000 cashier’s check, which is traceable to proceeds of the fraud scheme, and a money judgment in the amount of $3,771,701.88, the proceeds of the fraud scheme.
According to court documents, from about December 2010, through November 2011, Koontz and a co-conspirator developed a plan to use false and fraudulent representations, pretenses, and promises to solicit victim-investors to wire funds into bank accounts that they controlled. The accounts were for investment in a purported gold futures investment program supposedly run by an existing New York-based investment firm called Paulson & Co. Inc. To facilitate the scheme, conspirators utilized an unincorporated Florida entity (CK&K) in Tampa. Koontz was the primary architect of the fraud scheme.
In late January 2011, conspirators opened a bank account in the name of CK & K to be used to receive victim-investors’ funds. During the same time frame, Koontz and co-conspirators began soliciting prospective victim-investors to invest in the purported gold futures investment program. Once convinced to participate, Koontz or co-conspirators directed the victim-investor to transmit his or her funds, via wire and other means, to the CK & K account.
In an effort to enhance the appearance of the fraudulent investment program, Koontz created false and fraudulent documents, including promissory notes and assignments of collateral, which supposedly evidenced and guaranteed the victim-investors’ participation in the investment program. In preparing these documents, Koontz used the names and signatures of various existing foreign and/or domestic entities, without such entities’ and individuals’ knowledge or consent. The promissory notes also guaranteed a rate of return, usually ranging between three and six percent, each month. After a victim-investor wired his or her investment funds, Koontz and/or co-conspirators caused a false and fraudulent promissory note and assignment of collateral to be sent, via FedEx, from either Tampa or Ft. Myers, to the victim-investor. Most of the victim-investors resided outside of Florida.
As the fraudulent investment program grew, Koontz and co-conspirators organized and hosted live presentations, conducted via conference call, to solicit more prospective victim-investors. Some of the presentations were recorded for later access by other prospects. At times, Koontz falsely posed as a satisfied investor and gave a testimonial touting the success of the fraudulent investment program. He also portrayed himself as a close personal friend and professional associate of the founder of the existing New York-based investment firm Paulson & Co. Inc. to persuade the prospective victim-investor to participate in the purported gold futures investment program.
Koontz and co-conspirators used the victim-investors’ funds to perpetuate the fraud scheme and for the personal enrichment of themselves, their family members, and friends. Specifically, they purchased motor vehicles, real property, home furnishings, jewelry, and other goods and services. Funds invested by later victim-investors were used to make interest payments to earlier victim-investors in order to make it appear that the investment program was performing as represented. Other such funds were used to pay expenses associated with operating the fraud scheme, including, but not limited to, office rents, wire transfer fees, and FedEx fees.
On January 30, 2013, U.S. District Judge Susan C. Bucklew sentenced co-conspirators John Henley Fowler (64, Ft. Myers) to 70 months in federal prison for conspiracy to commit mail fraud and wire fraud, and Jeffrey Robert Fowler (35, Ft. Myers) to 37 months in federal prison on a similar charge. The court also ordered the Fowlers to forfeit bank accounts, vehicles, real property, computer equipment, a big screen television, iPad, and iPhone, which are traceable to proceeds of the fraud scheme, and the court entered a money judgment in the amount of $3,771,701.88, the proceeds of the fraud scheme.
This case was investigated by the Federal Bureau of Investigation and the United States Secret Service. It was prosecuted by Assistant United States Attorney Rachelle DesVaux Bedke.