Three Utah Cases Included in Operation Broken Trust, Targeting Investment Fraud
|U.S. Attorney’s Office December 06, 2010|
SALT LAKE CITY—Three Utah cases are included in "Operation Broken Trust," a nationwide operation targeting investment fraud announced today by Attorney General Eric Holder in Washington, D.C. Operation Broken Trust is the first nationwide operation of its kind to target a broad array of investment fraud schemes that directly prey upon the investing public.
The interagency Financial Fraud Enforcement Task Force was established by the president to lead an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. Starting on Aug. 16, 2010, to date Operation Broken Trust has involved enforcement actions against 343 criminal defendants and 189 civil defendants for fraud schemes involving more than 120,000 victims throughout the country. The operation’s criminal cases involved more than $8.3 billion in estimated losses and the civil cases involved estimated losses of more than $2.1 billion.
"With this operation, the Financial Fraud Enforcement Task Force is sending a strong message," said Attorney General Holder. "To the public: be alert for these frauds, take appropriate measures to protect yourself, and report such schemes to proper authorities when they occur. And to anyone operating or attempting to operate an investment scam: cheating investors out of their earnings and savings is no longer a safe business plan. We will use every tool at our disposal to find you, to stop you, and to bring you to justice."
U.S. Attorney Carlie Christensen also emphasized the importance of aggressive prosecution of investment scams coupled with education efforts targeting potential investors. "We will vigorously investigate and prosecute these matters to the full extent of the law, but widespread education about the way these crimes work accomplishes our most important goal—prevention of crimes before there are victims."
Christensen encourages individuals to act with caution when considering investments. "A prudent investor will always do appropriate due diligence before investing money. Report investment offers that promise an unrealistic rate of return to law enforcement agencies. Investment opportunities that promise high rates of return with guarantees of little or no risk should be a huge warning sign," Christensen said. She added that even savvy investors can become victims of fraud. Investors should document and keep all records related to their investments.
The president’s Financial Fraud Enforcement 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. For more information on the task force, visit StopFraud.gov.
Operation Broken Trust cases in the District of Utah included:
United States vs. Bruce S. Frank
Bruce S. Frank, age 54, of New York, is charged with wire fraud and money laundering in a 13-count indictment unsealed in November following an investigation by the FBI. According to the indictment, Frank was a resident of New York and a licensed attorney. The indictment alleges Frank devised a scheme to induce individuals to invest money with him for purported use in a Swiss-based loan program, knowing full well that investor funds would be diverted and used for his personal benefit and for purposes other than the Swiss loan program, including wire transfers to bank accounts held by third-party entities or individuals in China, the United Kingdom, Spain, and Canada. Frank made one or more representations to investors about the Swiss loan program, including telling them it was safe and secure; investors’ principal would remain in the Swiss account throughout the loan period; and that he would pledge his law license on the security of the Swiss account and the investment. Frank also told investors they would receive a 10 or 15 percent monthly return on their investment. The indictment alleges Frank’s financial arrangement was a Ponzi scheme. Frank used new investors’ principal to pay old investors returns for a few months. Some investors rolled their "returns" back into their investment. Many investors received no returns and virtually all investors lost their principal. From around April 2007 to around November 2007, more than $1.5 million was invested with Frank for use in the Swiss loan program.
United States vs. Christopher David Hales
Christopher D. Hales, age 29, of Midvale was charged in a 10-count indictment unsealed in September with mail, wire, and bank fraud, and money laundering, in connection with an alleged mortgage fraud scheme. The indictment involves two properties, one in Lindon and one in Salt Lake City. The indictment alleges Hales and other unindicted co-conspirators executed a scheme to produce income from false appraisals to artificially inflate the purchase price of residences. Hales arranged to purchase the homes through straw buyers, and took the false equity proceeds stemming from those sales for himself and his co-conspirators, according to the indictment. The case is being investigated by the U.S. Department of Housing and Urban Development - Office of Inspector General, the FBI, and the U.S. Postal Inspection Service. A six-day jury trial is set for Feb. 22, 2011, before U.S. District Judge Ted Stewart.
United States vs. Jolee Tibbitts
Jolee M, Tibbitts, 42, whose last known address was in Florida, was sentenced to 48 months in federal prison on Oct. 27, 2010, after pleading guilty to wire fraud in connection with an investment scheme involving property she claimed to own on the Island of Molokai"s in Hawaii. Tibbitts told investors the land had been divided into five-acre parcels and that the parcels included beach front and interior properties at a price of $15,000 per parcel. She described a scheme to investors which would allow them to make a quick profit of $30,000. During the scheme period, approximately 42 investors paid her about $1.2 million. Tibbitts owned no property on Moloka’i. She used approximately $187,000 of investor funds to pay back about eight investors. She used the remaining investor funds for her personal use, including purchasing a new truck, domestic travel and various other expenses. She lulled investors into a false sense of security through a series of excuses, including real estate sales take longer in Hawaii; investor money had been stolen from escrow and she needed time to sort the matter out; and sales proceeds can only be paid in small amounts. Tibbitts was ordered to pay $1,012,500 in restitution in the case. The Tibbitts case was investigated by the FBI.
Utah residents who would like to learn more about investment scams, how to take steps to protect themselves from scams, or how to report investment fraud if they believe they may have been victimized can visit StopFraud.gov, which includes links to a wide array of resources. Anyone interested in learning how to spot fraud can also visit the Salt Lake City FBI’s web page at http://saltlakecity.fbi.gov to watch a six-minute educational video about fraud and to learn warning signs of many common fraud schemes.