Walkersville Man Sentenced To 9 Years In Prison In $9.2 Million Investment Scheme
Caused Approximately $4 Million in Losses to Investors
Baltimore, Maryland - U.S. District Judge J. Frederick Motz sentenced Larry Michael Parrish, a/k/a Michael Parrish, age 49, of Walkersville, Maryland today to nine years in prison, followed by three years of supervised release, for wire fraud arising from an investment scheme in which investors lost approximately $4 million by relying on Parrish’s false representations concerning his company IV Capital, Ltd. Judge Motz also ordered Parrish to pay restitution of $4 million.
The sentence 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; had established a minimum gross profit margin each month of 5%, which would be equally divided between the company and its individual investors; and employed a number of other traders and staff. In fact, the company had no employees aside from Parrish and one other trader hired as an independent contractor.
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 in Bermuda 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% 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 the other trader, 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 more than $1 million 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.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
United States Attorney Rod J. Rosenstein thanked the FBI for its work in the investigation and praised Assistant U.S. Attorney Jefferson M. Gray, who prosecuted the case. The United States Securities & Exchange Commission (SEC) also conducted a civil securities fraud investigation of Parrish, and obtained a default judgment against him in a civil action filed in federal court in Denver, Colorado in September 2012.