United States Attorney
Northern District of Texas

1100 Commerce St., 3rd Fl.
Dallas, Texas 75242-1699

Telephone (214) 659-8600
Fax (214) 767-0978

AMARILLO BUSINESSMAN SENTENCED TO
MORE THAN 12 YEARS IN FEDERAL PRISON, WITHOUT PAROLE

Phillip D. Phillips Operated a Sham Investment Company and
Defrauded Investors of More Than $1,000,000.00

Richard B. Roper, United States Attorney for the Northern District of Texas, announced that Phillip D. Phillips, an Amarillo, Texas, businessman, was sentenced today in federal court in Amarillo. The Honorable Mary Lou Robinson, United States District Judge, sentenced Phillips to 151 months imprisonment and ordered him to pay $1,437,032.83 in restitution. Phillips, age 62, pled guilty in April to one count of mail fraud related to his operation of a fraudulent investment company. Phillips has been in federal custody since his arrest in March on a bench warrant that was issued after he failed to appear for a scheduled court appearance.

U.S. Attorney Roper said, “I applaud Judge Robinson's decision to impose a sentence of 151 months without parole. This stiff sentence should serve as a clear warning to those who choose to misappropriate monies and securities placed in their trust — a lengthy stay in federal prison may well-be in your future.”

Phillips owned and operated American Heartland Sagebrush Securities Investments, Inc. (“Sagebrush Securities”), a bogus investment company, located on West 9th Street in Amarillo. Sagebrush was not registered as a corporation nor was it a securities broker-dealer registered with the Securities and Exchange Commission (SEC). Phillips was a registered representative of Ironstreet Securities, a legitimate broker dealer of securities which was registered with the SEC and headquartered out of Salina, Kansas. Phillips ran Ironstreet Securities out of the same office as Sagebrush Securities.

In March 2005, the President of Ironstreet Securities conducted a surprise inspection of the Amarillo branch. During that inspection, he discovered that in addition to the legitimate Ironstreet business, Phillips had been conducting a sham securities business under the name of “Sagebrush Securities, American Heartland, Inc.” The SEC and the FBI shortly began an investigation.

In documents filed in Court pursuant to Phillips’ guilty plea, he admitted that from January 2000 through March 2005, he schemed to defraud and obtain money from his friends, relatives, and acquaintances by persuading them that he could invest their money by purchasing registered securities and making other investments through Sagebrush Securities in a safe and profitable manner. He told some investors that their money was being invested in legitimate, registered securities such as Southwest Airlines, Motorola and Texas Instruments. However, Phillips would take the investors’ money and deposit it into a bank account he controlled, co-mingle the funds, not purchase any securities or make any of the investments he’d promised, and withdraw the investors’ money and use it for his own personal living expenses. Sometimes, Phillips would get “cash back” when he initially deposited the investors’ checks and would use that cash for his own use.

To keep his scheme going, Phillips would lull investors into believing they really did own stock or have legitimate investments by issuing checks to them which were purported to be dividends, but were merely withdrawals from the Sagebrush Securities bank account. He also sent false and fraudulent monthly account statements to the investors detailing the investor’s account number, the name of the security owned by the investor, the quantity, the market price of the security and the dividends earned by the security or investment. Phillips admitted that when he learned the SEC was investigating him, he made preferential payments to some of the investors, but not to the majority of the investors.

Between January 1, 2000 and March 31, 2005, Phillips collected approximately $1,735,629.28 of identifiable investor money and deposited it into the Sagebrush Securities account. Of that amount, only $650,972.01 was returned to investors from the account with the remainder, $1,084,657.27 kept by Phillips.

U.S. Attorney Roper praised the investigative efforts of the Federal Bureau of Investigation and the Securities and Exchange Commission. Assistant United States Attorney Vicki Lamberson of the Amarillo, Texas, United States Attorney’s Office, prosecuted the case.

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