Colorado Springs Man Sentenced For Wire Fraud And Securities
DENVER – Daniel Coddington, age 64, of Colorado Springs, Colorado, was sentenced today by U.S. District Court Judge R. Brooke Jackson to serve 120 months (10 years) in federal prison for wire and securities fraud, U.S. Attorney Jason R. Dunn and FBI Denver Division Special Agent in Charge Dean Phillips announced. After serving his prison sentence, Coddington was ordered to spend 3 years on supervised release. He was also ordered to pay $18,021,669.74 in restitution. The defendant appeared at the hearing free on bond, and was ordered to report to a facility designated by the Bureau of Prisons. A co-defendant, Jesse W. Erwin, Jr., was previously sentenced for wire and securities fraud to serve 58 months in federal prison, followed by 3 years on supervised release.
Coddington and Erwin were indicted by a federal grand jury in Denver on October 5, 2015. Erwin pled guilty on April 25, 2017, and was sentenced on October 12, 2018. Coddington was found guilty following a jury trial on July 26, 2018. He was sentenced today, November 27, 2018.
According to court documents and evidence presented during the Coddington trial, from at least early 2010 through late 2011, Coddington held himself out to investors and intermediaries to be the principal and owner of a company called Golden Summit Investors Group Ltd. (“Golden Summit”). He operated Golden Summit from Colorado Springs, Colorado. From at least early 2010 through at least late 2011, he described to investors and intermediaries a program through which investor money would be used to purchase collateralized mortgage obligations or CMOs -- an investment consisting of a pool of mortgages organized by maturity and risk. Coddington told investors that the CMOs had face values exponentially larger than their purchase price and market value. According to the defendant, the CMOs would then be “hypothecated” to obtain loans in the amount of a percentage of the face value of the CMO. The amount of these loans would still be exponentially larger than the purchase price and market value of the CMOs (known as the “CMO Trade Program”).
Coddington told most of the investors that, from the proceeds of the loans, the investors would receive pre-trade distributions and that the remainder of the loan proceeds would be placed into an investment program that would yield high returns. From at least 2010 through late 2011, the defendant described to investors and intermediaries that investors who owned CMOs could transfer their CMOs to Golden Summit for the purpose of participating in the CMO Trade Program. In approximately April 2011, the defendant told an investor, who ultimately invested $9,000,000 dollars with Golden Summit that $60,000,000 of the loan proceeds obtained from “monetizing” the CMOs purchased with the investor’s money would be provided to the investor in the form of two non-recourse loans in the amount of $30,000,000 each (known as the “CMO Loan Program”).
Coddington falsely represented to investors and intermediaries that he had the experience and contacts necessary to successfully conduct and complete the CMO Trade Program and the CMO Loan Program. From at least 2010 through at least mid-2011, Coddington falsely told investors and intermediaries that all of the money provided by investors would be used to purchase CMOs that would be used in the CMO Trade Program and the CMO Loan Program. He also falsely told investors and intermediaries that any fees, commissions, compensation, and payments to Golden Summit and its affiliates would be taken only from the profits of the CMO Trade Program and CMO Loan Program and not from investor money placed into the CMO Trade Program and CMO Loan Program.
From at least November of 2010 through at least June of 2011, the defendant diverted substantial amounts of investor money placed into the CMO Trade Program and the CMO Loan Program for his own personal use and for purposes other than for purchasing CMOs. Further, the defendant did not successfully “hypothecate” or “monetize” any CMOs to obtain loans for either the CMO Trade Program or the CMO Loan Program.
From at least October 2010 through April of 2011, Coddington obtained from investors more than $17,000,000 for the CMO Trade Program and the CMO Loan Program. Despite his failure to successfully complete either the CMO Trade Program or the CMO Loan Program, the defendant did not return most of the investors’ money or any CMO purchased with the investors’ money.
From at least early 2010 through late 2011, the defendant also received CMOs from several investors for purposes of participating in the CMO Trade Program. Coddington kept most of the monthly interest that was paid out on those CMOs while the CMOs were in his and Golden Summit’s possession. For purposes of executing the Scheme, the defendant used, and caused to be used, a number of interstate wires, including emails and money transfers.
“Thanks to the hard work of the FBI, and with the cooperation of crime victims, my office was able to prosecute Coddington for devastating people’s lives by stealing their life savings,” said U.S. Attorney Jason R. Dunn. “Coddington has 10 years to contemplate his crime and think of the people he hurt.”
“The FBI is committed to investigating complex white-collar fraud schemes, and we will continue to pursue those who misuse their position of trust to exploit innocent investors.” said FBI Denver Special Agent in Charge Dean Phillips. “Today’s sentence of Daniel Coddington should send a clear message that exploitation of investors for personal gain will be vigorously investigated and prosecuted.”
This case was investigated by the Federal Bureau of Investigation (FBI).
The defendant was prosecuted by Assistant U.S. Attorneys Pegeen Rhyne and Anna Edgar.