Warren Man Sentenced to 10 Years in Prison for $15 Million Ponzi Scheme
A Warren man was sentenced to 10 years in prison for his role in operating a $15 million Ponzi scheme, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, and Stephen D. Anthony, Special Agent in Charge of the Federal Bureau of Investigation's Cleveland Office.
Keelan Harris, 38, was convicted earlier this year on charges of conspiracy, wire fraud, and money laundering. U.S. District Judge Christopher A. Boyko also ordered Harris to pay $15,596,345 in restitution to over 300 victims of the investment fraud scheme conducted by Harris, his brother Kevin Harris, and Karen Starr, who is a federal fugitive.
The sentence follows Harris’s pleas of guilty to conspiracy to commit wire fraud, seven counts of wire fraud and four counts of money laundering. These crimes arose out of Harris’s role in operating a Ponzi-style investment fraud from 2006 through on or about November 23, 2009, under the business names of Complete Developments LLC (CDL) and later, Investment International Inc. (I3). Offices for these businesses were maintained in Warren, according to court documents.
Kevin Harris is currently serving an 87-month term of imprisonment following his earlier conviction for this same scheme. He and Karen Starr recruited investors, while Keelan Harris opened and managed the business bank accounts. Investors in CDL expected profits from foreign currency exchange trading, and I3 was to generate profits from commercial real estate, high-yield investments, start-up companies, and inventions, according to court documents.
Investors were promised returns of 7 to 12 percent per month, over short-term periods, and were also assured that 80 percent of each investment would be held in secure accounts, and returned at the end of the contracted periods, according to court documents.
Kevin Harris and Karen Starr conducted limited foreign exchange currency trading, and lost money. Thereafter, CDL and I3 were operated as a Ponzi scheme, with Keelan Harris sending purported interest payments to early investors from funds obtained not from profits, but from later investor victims. Over $20 million was raised from over 400 investor victims, and ultimately approximately $15.6 million was lost, according to court documents.
More than $1.9 million was withdrawn from the CDL and I3 accounts in cash by Kevin and Keelan Harris. Approximately $400,000 was used by Kevin and Keelan Harris for personal expenditures, at stores, restaurants, for mortgage payments, car leases, and cell phone bills. Approximately $306,000 was diverted to low-value rental properties in the Warren area, and $308,000 was transferred to Starr in Canada. Approximately $760,000 was diverted to UCAN, another shell company for CDL, and $3.5 million was allegedly invested in a business in the United Arab Emirates. Additional investor funds were used for salaries and commissions, travel expenses, diversions to other investments by the Harrises, and payments to friends and family members, according to court documents.
This case was investigated by the Youngstown Resident Agency of the Federal Bureau of Investigation. The case was prosecuted by Assistant U.S. Attorneys Lauren Bell, James V. Moroney, and David Toepfer.