Walkersville Man Pleads Guilty in $9.2 Million Investment Scheme
Caused Approximately $4 Million in Losses to Investors
|U.S. Attorney’s Office May 28, 2013|
BALTIMORE—Larry Michael Parrish, a/k/a Michael Parrish, age 49, of Walkersville, Maryland, pleaded guilty today to wire fraud arising from an investment scheme.
The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation.
According to his plea agreement, Parrish operated IV Capital Ltd., which from November 2005 to October 2009, he described to potential investors as an investment and trading company. Parrish made a number of false representations to encourage potential investors to make investments with IV Capital. For example, Parrish falsely represented that IV Capital traded stocks, bonds, currencies precious metals, and other instruments on international exchanges; had $20 million or more under management; employed a number of other traders and staff, when in fact, the company had no employees aside from Parrish; and had established a minimum gross profit margin each month of 5 percent, which would be equally divided between the company and its individual investors.
Parrish also falsely represented that he and several partners had invested substantial funds of their own with the company; that all invested funds would be deposited in an escrow account and used solely to secure a line of credit from a financial institution, which would provide the actual working capital for IV Capital’s trading activities; and that IV Capital’s management of its accounts would be evaluated by top licensed professional third parties. In fact, Parrish had no partners and had not invested any of his own funds with IV Capital. The investors’ funds were directed to an offshore bank where they were not kept in an escrow account but were instead used to generate funds for risky and highly unsuccessful trading activity, to make the “profit” payments of roughly 2.5 percent monthly back to the investors and to supply funds for the personal use of Parrish and his family.
Out of the approximately $9.2 million in investor funds that were placed with Parrish and IV Capital between February 2006 and October 2009, Parrish allocated approximately $2.938 million to trading activity conducted by himself and another individual, almost all of which was lost in making risky and unsuccessful investments in options and futures contracts. Another $5.2 million was used to make “profit” payments to IV Capital investors, and almost all of the remainder was used by Parrish for personal expenses, including purchases of clothing, furniture, electronics, and other items; paying bills for rent, food and utilities; as well as paying for entertainment and vacation expenses, including a golf outing for himself and a number of friends in May 2008; and the purchase of a 2009 Harley Davidson FXDF motorcycle in September 2008.
Parrish faces a maximum sentence of 20 years in prison for wire fraud. U.S. District Judge J. Frederick Motz scheduled sentencing for November 15, 2013, at 10:00 a.m.
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.
United States Attorney Rod J. Rosenstein thanked the FBI for its work in the investigation and praised Assistant U.S. Attorney Jefferson M. Gray and Harry M. Gruber, who are prosecuting the case. The United States Securities and Exchange Commission (SEC) also conducted an investigation of Parrish and obtained a default judgment against him in a civil action filed in federal court in Denver, Colorado, in September 2012.