Cedar Rapids Man Sentenced For Million Dollar Investment Fraud
A man who defrauded investors out of more than $1,000,000 was sentenced today to more than four years in federal prison.
Jeffrey J. Kinseth, age 58, from Cedar Rapids, Iowa, received the prison term after a July 11, 2013, guilty plea to one count of wire fraud.
In a plea agreement, Kinseth admitted he was the president and principal shareholder of Virtual Vision, Inc. Kinseth admitted that, between March 2008 and September 2009, he solicited and accepted hundreds of thousands of dollars from at least eleven individual investors. Kinseth admitted falsely telling the investors all of their money would be invested through Virtual Vision as a purported pooled investment vehicle. Kinseth admitted he told the investors this, knowing he would, at least at times, fail to invest all of the investors= money and use some of the money to make payments to earlier investors and for other purposes. Kinseth also admitted that, of the investor funds actually traded, he consistently sustained losses. Kinseth admitted fraudulently concealing his misappropriation and trading losses by creating and issuing false account statements to investors that falsely reflected purported profits from their trading.
According to information disclosed at sentencing, Kinseth operated a Ponzi scheme that stretched from about October 2006 to about March 2010.
Kinseth was sentenced in Cedar Rapids by United States District Court Chief Judge Linda R. Reade. Kinseth was sentenced to fifty-one months’ imprisonment to be followed by a three-year term of supervised release. Kinseth was also ordered to make $1,107,414.51 in restitution to the victims of his offense. There is no parole in the federal system.
Kinseth was released on the bond previously set and is to surrender to the Bureau of Prisons on a date yet to be set.
The case was prosecuted by Assistant United States Attorney Peter Deegan and was investigated by the Federal Bureau of Investigation in cooperation with the Commodity Futures Trading Commission, the Securities and Exchange Commission, and the Office of the United States Trustee.
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is 13-51 LRR.