Carl Lawrence Estep Pleads Guilty in U.S. Federal Cour
The United States Attorney's Office announced that during a federal court session in Missoula, on October 22, 2010, before U.S. Magistrate Judge Jeremiah C. Lynch, CARL LAWRENCE ESTEP, a 66-year-old resident of Belgrade, pled guilty to wire and mail fraud. Sentencing has been set for January 27, 2011. He is currently detained.
In an Offer of Proof filed by Assistant U.S. Attorney Ryan M. Archer, the government stated it would have proved at trial the following:
In April 2003, ESTEP moved from Las Vegas, Nevada to the Bozeman area and shortly thereafter engaged in a far-reaching, multi-state investment fraud scheme. The scheme defrauded numerous investors out of significant amounts of money by promising them large returns from overseas investments that were allegedly realized by leveraging "gold ore" as collateral for overseas trading.
In 2003 ESTEP met K.L. who allowed him to store 200 barrels of rock and sand in a Belgrade barn. Along with the barrels, ESTEP obtained an "assay" that purported to show that the rock and sand in the barrels contained large amounts of gold and/or platinum. K.L. provided this assay to ESTEP, which was allegedly done by a company called Rogers Research. Rogers Research was contacted in the investigation and stated that the assay is a forgery.
Nonetheless, when ESTEP obtained access to the 200 barrels, he used them as the basis for his scheme to defraud. He enticed potential investors, often over singles dating web sites, by claiming that he used to work for the Howard Hughes Corporation and operated their mining division. He claimed that he was paid in barrels of gold ore that was worth millions, and often gave them the Rogers Research assay report as proof. He further solicited investors by stating that he owned a gold refinery in Montana and was trying to build others in the area that could refine the gold and investors stood to make large profits by investing in the gold barrels and refinery operations. ESTEP stated that the barrels were in a "warehouse" that was guarded by a private security guard and investor money would be used for business operating expenses and building refineries. He claimed to use the gold barrels as collateral for a unique overseas investment that would make huge profits. He also told investors that the money never left the accounts because the "gold" was being leveraged.
ESTEP gave investors a contract that allowed them to "call" their investment which would be returned in full within 6 months. But when investors did not see their money again, ESTEP made elaborate excuses as to why they could not be paid. He claimed that "Homeland Security has tied the money up overseas due to terrorist related activities around the world." In reality, ESTEP did not own any refineries. He did not own the barrels of rock and sand. He did not make any expenditures to develop refineries, and he did not invest money overseas. He simply used the money for numerous personal expenditures, including cars, overseas travel, daily expenses, and unreasonably large expenses on his hunting dogs. Agents confirmed that ESTEP never worked for the Howard Hughes Corporation.
V.H. was a victim-investor based out of Florida who was defrauded out of $220,000 in 2008 and 2009. V.H. wired $100,000 to ESTEP to invest in his scheme on December 30, 2008. V.W. was an investor based out of Texas, and she mailed a $100,000 investment to ESTEP on February 6, 2008. Both V.H. and V.W. met ESTEP over the Internet on a church-related dating website.
Through additional investigation, the FBI recorded numerous calls with ESTEP and visited the barn with the 200 barrels of rock and sand. Agents subsequently executed a search warrant and seized several of the barrels and other documentary evidence. Analysis on the barrels indicate that there is no gold value in the barrel samples that were seized, and it would be more profitable to use the rock and sand as road grade rather than attempt to extract any gold.
In speaking with agents, ESTEP acknowledged that he spent investor money on personal items and his statements to investors were not 100% true since they did not know their money was used for his personal gain. ESTEP told investors their funds would be used for operating expenses and trading overseas, and were safe in his account. Although he acknowledged that he pushed the truth and spent money inappropriately, ESTEP said that Count Ugo Di Carpegna from Geneva, Switzerland, will be sending him millions of dollars very soon and he will pay investors back. This has never happened.
ESTEP faces possible penalties of 20 years in prison, a $250,000 fine and 3 years supervised release.
The investigation was a cooperative effort between the Federal Bureau of Investigation and the Criminal Investigation Division of the Internal Revenue Service.
A copy of the Offer of Proof can be obtained by contacting Sally Frank at (406) 247-4638.