Jury Convicts Austin Lawyer in Relation to Butch Ballow Case and Stock Sale Scheme
|U.S. Attorney’s Office February 28, 2014|
HOUSTON—Patrick Lanier, 65, of Austin, has been convicted on 16 counts to include one count of harboring and concealing Harris “Butch” Ballow from arrest, announced United States Attorney Kenneth Magidson. Lanier was convicted of conspiracy to commit wire fraud arising from a stock sale scheme, 13 counts of wire fraud, one count of harboring and concealing Ballow from arrest, and one count of assisting a federal offender. The jury returned its verdicts last night following a 13-day trial.
Lanier is an Austin attorney who represented Ballow during proceedings before the Securities and Exchange Commission (SEC) in 2004 and also during the criminal case that led to Ballow becoming a fugitive. While a fugitive, Ballow controlled a corporation used to bilk hundreds of investors, many of whom lived in Canada, of millions of dollars. Lanier served as a lawyer for that corporation.
Evidence demonstrated that Lanier assisted Ballow in selling shares of stock in public companies acquired and controlled by Ballow while he was a fugitive from justice. Assisted by Lanier, Ballow and co-conspirators sold stock to unsuspecting investors by hiding Ballow’s true identity, disseminating false and misleading information to increase and maintain the value of stock, failing to fulfill promises to remove restrictions, which prevented investors from selling the stock and selling land and ownership interests in a real estate development that never materialized.
Ballow was a fugitive from justice in the United States for more than five years. He was indicted in federal court in Houston in 2003 for fraud and money laundering, which centered on misrepresentations made in connection with the purchase and sale of stock. Ballow pleaded guilty before U.S. District Judge David Hittner to money laundering in November 2003 and faced a maximum of 10 years’ imprisonment. At the time, Ballow, who had been in custody without bond for approximately a year, agreed to cooperate with an SEC investigation and was released on a $100,000 bond pending his sentencing. On December 16, 2004, the day of sentencing, Ballow failed to appear and a warrant was soon issued for his arrest. Ballow was arrested by Mexican authorities on July 13, 2010, in Nuevo Vallarta, Mexico, and extradited by Mexico to the United States on April 8, 2011. He was later sentenced to 10 years for money laundering and ordered to pay $10 million in restitution.
According to evidence presented in Lanier’s trial, Ballow lived under the names John Gel, Tom Brown, and Marty Twinley during his time as a fugitive and also acquired a British passport in the name of Melvyn John Gelsthorpe. Ballow used these names to take control of publicly traded corporations, including E-SOL International Corp., Medra Corp., Deep Earth Resources Inc., and Aztec Technology Partners Inc. (now known as Ultimate Lifestyles Corporation) and sold the stock to investors without revealing his true identity, his use of multiple names, his past convictions for fraud and money laundering, and his status as fugitive from justice in the United States. After Ballow fled, Lanier traveled to Mexico to meet him and provided legal work for Ballow under his various false names to consummate Ballow’s fraudulent transactions to bilk investors.
Several others have also pleaded guilty in relation to the scheme and are pending sentencing.
Lanier faces up to 20 years in federal prison on the conspiracy charge, as well as the substantive wire fraud charges. For the harboring and false statement charges, he also faces up to five years in prison, while the assisting a federal offender conviction carries a possible two-and-a-half years in prison. All counts of conviction also carry a possible $250,00 fine. Sentencing is set for August 2014.
Previously released on bond, Lanier was taken into custody upon the return of the verdicts yesterday. A detention hearing is set for 2:00 p.m. today before Judge Lee Rosenthal.
The case was jointly investigated by the United States Marshals Service and the FBI with substantial assistance of Internal Revenue Service—Criminal Investigation and the U.S. Postal Inspection Service. Valuable assistance was also provided by the Royal Canadian Mounted Police. Assistant U.S. Attorneys John R. Lewis and Belinda Beek prosecuted the case.