Jon Harder, Former CEO of Sunwest Management, Indicted on Federal Fraud Offenses
PORTLAND, Ore. - Jon Michael Harder, 47, a resident of Oregon and North Dakota, voluntarily surrendered to U.S. Marshals yesterday, after an arrest warrant had been issued on a 56-count indictment returned by a federal grand jury in Portland. The indictment charges Harder with defrauding more than 1,000 investors out of approximately $130 million during the period 2006 - 2008. He is scheduled to be arraigned in the District Court in Portland at 1:30 today.
The indictment alleges that Harder controlled a network of companies which bought, constructed, and managed a nationwide collection of assisted living facilities. At its height, the corporate organization that Harder controlled, Sunwest Management and related companies, owned approximately 300 assisted living facilities, serving over 15,000 residents with an average age of 85.
"Investors should be able to rely on the honesty of the promises made to them when they decide to invest," said U.S. Attorney Amanda Marshall. "The allegations in this indictment describe a massive fraud affecting over 1,000 investors around the country. This office is determined to vigorously pursue financial fraud whenever it occurs."
The alleged scheme to defraud was based on materially false promises made to investors, including that they would be investing money in specific assisted living facilities and that the Sunwest enterprise was a successful business. However, the money that investors thought was going into specific facilities was commingled with money coming in from all investors and banks. It's alleged that at least as far back as 2006, Sunwest was losing millions of dollars.
Harder is accused of essentially running a Ponzi scheme, taking in millions of dollars from both investors and banks, supposedly to acquire new assisted living facilities. In reality, the funds were used to pay guaranteed returns to earlier investors. Harder laundered the proceeds of this fraud by diverting large amounts of money to support his lavish lifestyle.
"The FBI is committed to investigating alleged corporate fraud schemes and protecting the interests of investors and lenders," said Greg Fowler, Special Agent in Charge of the FBI in Oregon.
"The U.S. Postal Inspection Service is committed to aggressively investigating anyone who knowingly utilizes the U.S. Mail to intentionally defraud and deceive the American Public," said Brad Kleinknecht, Inspector in Charge of the Seattle Division.
"It can be devastating when the financial well-being of an individual falls into the wrong hands through trickery and deceit," said Steven Bellis, the Acting IRS Special Agent in Charge of the Pacific Northwest. "The days of freedom could be numbered for those who allegedly peddle false hopes and dreams and prey on investors for their own financial benefit."
As a result of this alleged conduct, Harder was charged with 25 counts of mail fraud, 11 counts of wire fraud, and 20 counts of money laundering. Each count of mail and wire fraud carries a potential sentence of 20 years in prison and a $250,000 fine, or both. Each count of money laundering can result in a sentence of 10 years in prison and a fine of $250,000.
An indictment is only an allegation and not evidence of guilt. The defendant is presumed innocent unless and until proven guilty in court.
This case was investigated by the United States Postal Inspection Service; Federal Bureau of Investigation; Internal Revenue Service, Criminal Investigation; and the United States Bankruptcy Trustee's Office. The case is being prosecuted by Allan M. Garten, Senior Litigation Counsel and Assistant United States Attorney, District of Oregon.
United States Attorneys across the nation are launching an Investor Fraud Initiative and hosting regional Investor Fraud Summits during the first two weeks of October in Walnut Creek, Calif.; Denver, Colo.; Nashville, Tenn.; Miami, Fla.; Cleveland, Ohio; and Stanford, Conn. U.S. Attorney Amanda Marshall will be attending the Walnut Creek summit on Oct. 9, 2012. The primary goal of the Investor Fraud Initiative is to raise public awareness about investor fraud by identifying the types of schemes and schemers prosecuted by the Justice Department, educating investors on ways to protect themselves from becoming victims of fraud, and encouraging individuals to report suspicious activity.
For additional information, the attached indictment can be found at this link.