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Monday, June 14, 2010

Department of Justice

United States Attorney James R. Dedrick Eastern District of Tennessee


OOLTEWAH FINANCIAL ADVISOR SENTENCED IN FRAUD/TAX CASE

KNOXVILLE, Tenn-- Delbert Foster Blount, III, 41, of Ooltewah, Tenn, was sentenced by U.S. District Judge Thomas W. Phillips to serve 60 months in prison, followed by 3 years of supervised release. Judge Phillips also ordered Blount to pay $2,726,272.24 in restitution to Ameriprise and $467,169 in restitution to the Internal Revenue Service (IRS).

In April 2009 Blount pled guilty to one count of mail fraud, one count of wire fraud, and five counts of income tax evasion.

According to his plea agreement, from June 2000 until December 2006, Blount used his position as a financial advisor to encourage people to invest money in various savings and retirement vehicles that included, 401(k) accounts, IRA accounts, and brokerage accounts, but then misappropriated the money for his personal use. Blount admitted that he deposited checks received from investors into a nominee account to hide his theft. Blount then created false statements on his computer and posted them on the internet to lead his clients to believe that he had actually invested their money. If his clients requested any money from their non-existent investments, Blount would delay them until he stole funds from other investors to deposit into the victim's bank account.

Blount also admitted that he failed to report the proceeds from the theft of clients' funds on his federal income tax returns he filed for 2002 through 2004, and failed to file income tax returns for tax years 2005 and 2006. These actions resulted in a tax loss to the government of $469,592 for tax years 2002 through 2006.

This investigation was conducted by the IRS. AUSA Charles E. Atchley, Jr., prosecuted the case on behalf of the United States.

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