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Used New Investor Funds to Pay Off Earlier Investors, Committing Wire Fraud and Money Laundering

March 21, 2008

JOSEPH C. LAVIN, 42, of Woodinville, Washington, was sentenced today in U.S. District Court in Seattle to 54 months in prison, 3 years of supervised release, and $11.6 million in restitution for Wire Fraud and Money Laundering in connection with an investment fraud scheme. LAVIN operated a series of investment funds known as the Global Asset Management Short Term Fund, Medium Fund, and Long Term Fund. The funds were offered to high wealth investors by a company LAVIN established in 2001, Global Asset Partners, LLC. LAVIN claimed investments in the funds were backed by assets such as foreign currency, bonds or liens, and were making consistent, high rates of return. In fact, investors’ money was used for LAVIN’s personal expenses, to pay off earlier investors or to invest in business ventures that had not been approved by investors. The amount of fraud is estimated at $13,000,000. At sentencing Chief U.S. District Judge Robert S. Lasnik noted, “it was not just money that was lost, but people’s hopes, people’s dreams, people’s lives.”

LAVIN pleaded guilty on November 2, 2007. He admitted that over the course of the fraud he made numerous fraudulent representations. LAVIN claimed the funds would make between 1.5 and
2.5 percent each month, and he claimed in written materials that he would only be compensated if the fund exceeded these targeted returns. LAVIN represented to investors that he was an accomplished financial executive who was responsible for having consistently earned for many years returns in excess of 2% per month in the Funds. In fact, LAVIN was not a successful financial executive and entrepreneur. In 1998, he had filed for personal bankruptcy. LAVIN also never made the promised targeted returns. LAVIN obtained $13 million from 176 investors. Prosecutors dubbed LAVIN’s fraud “a garden-variety ponzi scheme” that payed off early investors with money from later investors.

The victims who spoke at sentencing talked about losing their life’s savings to LAVIN. In one case $1.9 million, money the couple had planned to use for an early retirement. “You took advantage of honest, trusting people,” Joanne Lake told LAVIN. “You lived your high life at other people’s expense.”

Victim Robert Garneau told the court how LAVIN had taken 30 years of his savings. “My years of hard work have been erased and my dreams have been shattered,” Mr. Garneau said. “The emotional hell will linger making me unable to trust any financial planner.”

Some of LAVIN’s supporters asked Chief Judge Lasnik to forego a prison sentence. Judge Lasnik rejected that option saying the victims “were not sophisticated investors who lost money they could not afford to lose. Some lost their health, some lost their trust in other people.... They thought Joe Lavin was a good Christian man.” Judge Lasnik noted that LAVIN’s fraud had damaged relationships between parents and children, husbands and wives, brothers and sisters. “This is real damage to real lives,” Judge Lasnik said.

The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI) and the FBI. The case is being prosecuted by Assistant United States Attorneys Katheryn Kim Frierson and Carl Blackstone.

For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, at (206) 553-4110.

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