kC man sentenced for attempted $100 million fraud scheme
KANSAS CITY, Mo. B Beth Phillips, United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., man was sentenced in federal court today for creating false obligations and for mail fraud as part of an attempted $100 million fraud scheme.
Denny Ray Hardin, 52, of Kansas City, was sentenced by U.S. District Judge Gary A. Fenner to 10 years in federal prison without parole.
“Hardin willfully ignored repeated warnings from officials that his worthless financial documents were fraudulent,” Phillips said. “Instead, he continued to cheat people with false promises of debt relief while he profited from their desperation.
“Today’s tough sentence sends a clear message that we will not tolerate such nonsense and will aggressively prosecute criminal behavior inspired by ‘sovereign citizen’ ideology,” Philips added. “Those who attempt to undermine the legitimate function of the government and the courts by filing frivolous legal and financial documents will be held accountable for their actions.”
On Sept. 14, 2011, Hardin was convicted at the conclusion of a bench trial. Hardin was found guilty of 11 counts of creating fictitious obligations and 10 counts of mail fraud.
Hardin produced and issued numerous ABonded Promissory Notes@ (BPNs), which are completely fictitious financial instruments that Hardin claimed to be backed by an account with the U.S. Department of Treasury. Hardin falsely claimed that he was authorized by the U.S. Department of Treasury to produce and issue the worthless documents, which he claimed had monetary value and could be used to eliminate debt.
Hardin claimed to have produced and issued more than 2,000 bonded promissory notes, totaling more than $100 million, from September 2008 to September 2009, for himself as well as for his girlfriend, his daughter, and more than 50 customers who paid a fee. Hardin created the notes on his computer and used them to attempt to discharge student loan debts, to purchase a car and a house, and for other personal items and debts. Hardin charged purchasers of the notes a fee B initially $100 per note, which was later increased based on the amount of debt Hardin falsely claimed to be discharged by the note.
Hardin falsely claimed that he was authorized to issue the bonded promissory notes because he was a private banker. As part of his scheme to defraud both the individuals for whom he created BPNs and the creditors to whom he issued BPNs, Hardin claimed that he had created his own private bank B The Private Bank of Denny Ray Hardin, which operated out of his residence.
Hardin defrauded customers by selling them BPNs with the false promise that these fictitious instruments can discharge debts. Hardin defrauded creditors by presenting them with worthless BPNs.
Hardin operated a Web site for the purpose of marketing BPNs to potential purchasers. On his Web site, Hardin claimed that BPNs had been accepted by various institutions, which was false. Hardin marketed this scheme by spreading false stories to make his fraud sound legitimate and to try and force creditors into accepting BPNs through threats of legal action.
As part of the fraud scheme, Hardin would mail a BPN to creditors, along with various other documents that included a letter from Hardin stating that the account had been paid in full by the note. When he was notified that the BPN had been refused as payment, Hardin threatened the creditor with a lawsuit.
This case was prosecuted by Assistant U.S. Attorneys Brian P. Casey and Patrick D. Daly. It was investigated by the FBI, the U.S. Department of Education B Office of Inspector General, the Kansas City, Mo., Police Department and the U.S. Postal Inspection Service.