United States Attorney Jenny A. Durkan
Western District of Washington
SEATTLE MAN SENTENCED TO PRISON FOR ‘PONZI’ SCHEME
Cheated Neighbors and Friends with Phony Business Opportunities
JAMES LIDDELL, 57, of Seattle, Washington, was sentenced today in U.S. District Court in Seattle to 57 months in prison, three years of supervised release and $1,175,518 in restitution for wire fraud. LIDDELL was indicted in April 2010, and pleaded guilty in June 2010. LIDDELL was taken into custody, and his bond was revoked earlier this year when he continued to promote an investment scheme regarding real estate in Eastern Washington. At sentencing U.S. District Judge Ricardo S. Martinez told LIDDELL “you have no empathy for the feelings of others... Any violation of supervised release and you can add another three years to your prison sentence.”
According to the indictment and other records in the case, LIDDELL induced thirteen different investors to provide him with more than $3,000,000 for his alleged business. Between 2003 and 2009, LIDDELL claimed his business was rehabilitating point of sale machines and selling them to a large area drug store chain. LIDDELL represented to the investors that they would “own a series of contracts” with the machine purchasers. LIDDELL provided promissary notes to investors outlining high rates of interest on the loans and promising investors would receive up to 50% of the profits from the sales of the machines. However, no machines were ever bought or sold to the Seattle retailer, and there were no contracts for any such sales. Some of the money was used to pay “returns” to earlier investors, but LIDDELL used $1.2 million for his own benefit.
LIDDELL has previous convictions in King County Superior Court for ten counts of theft. In 1987, he was sentenced to nearly four years in prison on those charges.
In their sentencing memo prosecutors described the damage from LIDDELL’s scheme. LIDDELL “stole over a million dollars from victims whom he conned into believing he was a friend and experienced business person who could be trusted with their money. Mr. Liddell met many of his victims through contacts in his neighborhood and through school connections with his children. He preyed on his victims by gaining their respect as a friend and neighbor prior to soliciting loans for a business he knew was a total sham. In order to further his scheme, he repeatedly fabricated documents and provided bogus reasons to explain away bounced checks and missed payment deadlines until he found a new victim to supply him with funds needed to pay off his last victim. As a result of his fraud, several victims are facing severe financial hardship including the possibility of bankruptcy,” prosecutors wrote in their sentencing memo.
One victim told the judge that LIDDELL “was pressuring me for more and more money, even when he knew it would have put us over the brink.”
The case was investigated by the FBI White Collar Crime Section with significant assistance from the Washington State Department of Financial Institutions (DFI) and the Seattle Police Department.
The case was prosecuted as part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
The case was prosecuted by Assistant United States Attorney Norman Barbosa.