raymore man sentenced for $2.2 million investment fraud scheme
KANSAS CITY, Mo. – Beth Phillips, United States Attorney for the Western District of Missouri, announced that a Raymore, Mo., man was sentenced in federal court today for his role in a $2.2 million investment fraud scheme.
Carl R. Todd, 58, of Raymore, was sentenced by U.S. District Judge Gary A. Fenner to five years in federal prison without parole, which was the maximum statutory penalty. The court also ordered Todd to pay $2,233,411 in restitution to his victims and to forfeit $2,233,411 to the government, which represents the net proceeds obtained through the fraud scheme.
On March 9, 2011, Todd pleaded guilty to participating in a conspiracy to commit wire fraud. Todd admitted that he became involved in a nationwide Ponzi scheme in 2004. Todd convinced 31 victims, many of them elderly, to invest at total of $2,582,253 in what he called a “fractional lending” program. Approximately $348,842 of that amount was later returned to complaining investors, for a loss to Todd’s victims of $2,233,411.
This scheme was a variation of a well-known scam called a bank trading program. The promotional material for the scheme claimed that banks can take advantage of “fractional lending” to essentially create money. Fractional lending, it is explained, involves lending the same dollar out numerous times. The material claims that these programs are usually only available to the very rich, and that they have a high rate of return but no real risk of loss. In reality, bank trading programs of the type sold by Todd do not exist and have never existed.
Todd’s first sale of the program in May 2004 involved a victim, now deceased, who had been diagnosed with frontal lobe dementia. Todd, who knew of the diagnosis, convinced him to invest a total of $168,000 in the program.
The bank trading program sales were unregistered, non-exempt securities and Todd was not registered to sell securities in Missouri. On Oct. 31, 2006, Todd and his company, CRT Enterprises, were the subject of an injunctive action by the Missouri Secretary of State Securities Division ordering them to cease and desist from the sale of unregulated securities in Missouri.
Todd admitted that, despite the cease and desist order, he continued the fraud scheme. In late 2006, Todd repeated his false claims to an undercover investigator who was posing as a potential investor from Utah. Todd did not disclose the existence of the Missouri cease and desist order during his conversations with the investigator.
This case was prosecuted by Assistant U.S. Attorney Curt Bohling. It was investigated by the U.S. Postal Inspection Service.