Willamette Development Services Chief Financial Officer Pleads Guilty to Securities Fraud
| U.S. Attorney’s Office February 08, 2011 |
EUGENE, OR—Anthony James Tuomi, former chief financial officer for Willamette Development Services (WDS), pleaded guilty today to conspiring to commit securities fraud. He is scheduled to be sentenced for sentencing on August 9, 2011 before U.S. District Judge Michael R. Hogan. Tuomi is 36 and resided in Albany, Oregon when he committed the offense. WDS was located at 110 3rd Avenue SE in Albany, Oregon.
The case arose in 2008 from an investigation into allegations of fraud involving the chief executive officer (CEO) of WDS. WDS was ostensibly operated to develop profitable real estate projects. The CEO was ousted by the WDS executive board in January of 2008 amidst allegations of financial improprieties. In pleading guilty, Tuomi admitted that helped facilitate the financial improprieties, and that in soliciting investors, a number of false statements were made which caused people to invest, and lose, over $5,260,000 in WDS securities.
Tuomi admitted that, among other things, he facilitated misrepresentations about the financial condition of WDS. As an example, in January 2008, he prepared financial summaries of WDS projects which were sent to all investors. The summaries accompanied a letter written by the WDS CEO which claimed that all WDS investments were secure. The project summaries indicated substantial financial value in each project and substantial profits for WDS, even though Tuomi knew WDS was insolvent and that little financial value could be obtained from the projects. Prior to that time, since WDS had insufficient income to pay monthly obligations to its investors, new investor proceeds were used to satisfy existing investor obligations, creating the perception of a successful business. Private placement memoranda furthered this perception by falsely representing the experience of the CEO, as well as project business plans, financial practices, the frequency and accuracy of reports to investors, and compliance with fiduciary obligations. Tuomi admitted that, contrary to representations made to investors, investor proceeds were often diverted from their intended purposes without investor consent.
"Over the past few years, we've watched as the U.S. economy has faltered on false promises of financial success," said Arthur Balizan, Special Agent in Charge of the FBI in Oregon. "Enough is enough. Those who target investors through fraud and manipulation are going to find us knocking at their door."
"The loss of over $5 million from this fraud shows how critical it is that statements made to potential investors be truthful," said Marcus Williams, the IRS Special Agent in Charge of the Pacific Northwest. "I look forward to the day when white collar criminals realize that law enforcement will always be there to hold them accountable for the suffering they cause."
WDS did business through various entities including 21st Avenue, LLC; 36th & Division, LLC; Blossom Crossings, LLC; CTJ, LLC; Elite Funding, LLC; Far Shore Enterprises LLC; Far Shore Imports, LLC; Fisherman's Wharf, LLC; Gibson Hill Estates, LLC; High Level Investments, LLC; Jasper Homes, LLC; Joe LaCoste, LLC; Joe's Run, LLC; LaCoste Enterprises, LLC; LaCoste Investments, LLC; Lebanon Airport Estates, LLC; Lincoln City Roads Ends, LLC; Lunceford and LaCoste Investments, LLC (subsequently renamed Greyson Financial, LLC); Martin Willamette, LLC; McCoy Acquisitions, LLC; McKenzie Aviation, LLC; McKenzie Construction, LLC; McMinnville Corners, LLC; Nuera; Nuera Realty; Newport Bridge View, LLC; North Albany Town Homes, LLC; North Point Estates, LLC; Pac First Financial, LLC; Pac First Mortgage; Property Options; Santa Clara Homes, LLC; Santiam Engineering, LLC; St. James, LLC; Strawberry Fields, LLC; Stoltz Hill Estates, LLC; Sunset Ridge, LLC; The Walston Building, LLC; Turner Road, LLC; Willamette Lee, LLC; Willamette Village Business Center, LLC; Willamette Wetlands, LLC; Wisteria Estates, LLC; Yates Estates, LLC; and www.wds-llc.com.
The maximum statutory penalty for conspiring to commit securities fraud is a five-year term of prison and a $250,000 fine, followed by a three-year term of supervised release.
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.