Granbury Man Sentenced to 51 Months in Federal Prison and Ordered to Pay Nearly $1 Million in Restitution for Running Fraud Scheme
|U.S. Attorney’s Office December 18, 2012|
DALLAS—Karl G. Pratt, 53, of Granbury, Texas, was sentenced yesterday by U.S. District Judge David C. Godbey to 51 months in federal prison and ordered to pay approximately $979,000 in restitution, following his guilty plea to one count of wire fraud, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
Pratt has been in federal custody since he was arrested in January 2012 on a federal criminal complaint stemming from the fraud scheme he ran from January 2009 to the date of his arrest, in which he enticed approximately 50 individuals to invest in his company, Safety Sentry Inc. (SSI), based on fraudulent statements he made. According to plea documents filed in the case, Pratt falsely represented to investors that he had patented and produced a safety device that prevented a trailer hitch from slipping off a trailer ball while towing a recreational trailer and deterred theft of a trailer while parked and unattended. Pratt, however, failed to advise potential investor that while he had applied for a patent, his applications had been denied.
Pratt admitted that he solicited investors by promising Master Distributor (MD) rights with SSI for $12,000 per MD. Investors were told that they would receive approximately 270 devices per MD to sell to distributors and retailers. For every MD owned, investors would receive 20 cents for every device sold within SSI.
Pratt also falsely represented to investors that he was finalizing negotiations with major companies, such as Hertz, U-Haul, and Ryder that would result in large purchases of SSI’s devices. According to Pratt, these companies were going to buy 60,000 to 250,000 devices from SSI. Investors were led to believe that their investments would almost immediately double. These promises were false; Pratt never had any serious negotiations with these companies.
Pratt continued to perpetuate the fraud by sending lulling letters and e-mails to investors to delay or remove any suspicions that his representations and promises were untrue. Pratt admitted that he used investors’ money for personal expenditures.
The case was investigated by the FBI and prosecuted by Assistant U.S. Attorney Christopher R. Wolfe.