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Press Release

Two Colorado Financial Services Executives Sentenced in Multimillion-Dollar Fraud Scheme

For Immediate Release
Office of Public Affairs

A former CEO and a former corporate counsel of a Colorado financial services company were sentenced on June 19 and June 20, in Denver, Colorado, for their participation in a multimillion-dollar investment scheme in which they falsely told investors that they could access substantial financing, including hundreds of millions in cash in an overseas bank account, in exchange for up-front fees.

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, Inspector in Charge Craig Goldberg of the U.S. Postal Inspection Service’s Denver Division, and Acting Inspector in Charge Bill Hedrick of the U.S. Postal Inspection Service’s Chicago Division, made the announcement.

Brian G. Elrod, 59, of Buffalo Creek, Colorado, formerly the CEO of a financial services company known as Compass Financial Solutions Ltd. (CFS), was sentenced to serve 38 months in prison, followed by three years of supervised release.  Additionally, Elrod was ordered to pay restitution in the amount of $2,440,051.29. William E. Dawn, 80, who was CFS’s corporate counsel, was sentenced to time served.  U.S. District Judge William J. Martinez handed down the sentence for Elrod, and U.S. District Judge Robert E. Blackburn sentenced Dawn and ordered him to pay restitution in the amount of $366,752.01. 

Elrod pleaded guilty on Feb. 19, 2015, in the District of Colorado to one count of conspiracy to commit mail fraud and wire fraud.  As part of his plea agreement, Elrod admitted that from approximately 2005 to 2011, while he served as the CEO of CFS, he marketed and sold to investors promissory notes that were purportedly guaranteed by CFS and others.  With respect to the notes that were guaranteed by CFS, Elrod promised investors high returns through monthly interest payments and represented to investors that the proceeds from the notes would be used to operate CFS.  However, Elrod instead used the investors’ funds for, among other things, payments to other investors and to himself.  After Elrod defaulted on the notes, he conspired with Kenneth Brewington, who purported to be a wealthy financier, and told investors that Brewington would assume CFS’s obligations on these notes.  To induce CFS’s investors to sign these assumption agreements, Elrod showed investors fraudulent documents that falsely claimed Brewington had 500 million euros in an overseas bank account.  Elrod also sold additional promissory notes that were guaranteed by Brewington personally.  To induce investors to purchase the notes guaranteed by Brewington, Elrod again showed investors similar fraudulent documents purporting to show Brewington’s wealth and told some of the investors that their investments would be used to release Brewington’s money overseas.  Elrod acknowledged that his scheme resulted in over $2.5 million in losses to investors.

Dawn pleaded guilty on Feb. 25, 2015, in the District of Colorado, to one count of conspiracy to commit mail fraud and wire fraud.  As part of his plea agreement, Dawn admitted that from approximately 2002 to 2010, he served as in-house counsel at CFS.  Dawn also admitted that he drafted promissory notes sold by Elrod and Brewington in order to solicit investor funds.  In doing so, Dawn knew that the proceeds from these notes were going to be used by CFS to make payments to other investors, which had not been disclosed to the purchasers of these notes.  To disguise from investors the fact that the proceeds from the notes were not in fact going to be used to release the millions of euros supposedly held by Brewington overseas, the defendant allowed his attorney-client trust account to be used to receive the investors’ money.  Dawn acknowledged that his scheme resulted in over $200,000 in losses to investors.  He also acknowledged that he owes $366,752.01 in restitution.        

Brewington, 55, of Corona, California, was convicted on multiple counts of fraud and money laundering on May 18, in the District of Colorado, following a two-week jury trial.  Brewington’s sentencing is set for Aug. 17, before U.S. District Court Judge Philip A. Brimmer, who presided over the trial of the case.

The investigation was led by the U.S. Postal Inspection Service.  The U.S. Attorney’s Office for the District of Colorado and the U.S. Securities and Exchange Commission also provided substantial assistance in this matter.  Trial Attorneys Anna G. Kaminska, Kyle C. Hankey, and Jennifer G. Ballantyne, as well as Assistant Chief Henry P. Van Dyck of the Criminal Division’s Fraud Section prosecuted the case. 

Updated June 20, 2018

Financial Fraud
Press Release Number: 18-815