Grand Prairie Man Faces 10 Years in Federal Prison after Pleading Guilty to Felony Offense Stemming from his Work with FAIM Economic Development Corporation
For Immediate Release
U.S. Attorney's Office, Northern District of Texas
Co-defendant Kevin Kenard Howard Pleaded Guilty to Related Offense Last Week
DALLAS — Ellis Wamsley, IV of Grand Prairie, Texas, appeared in federal court today, before U.S. Magistrate Judge Irma C. Ramirez, and pleaded guilty to a felony offense stemming from his work with Kevin Kenard Howard and the FAIM Economic Development Corporation, announced U.S. Attorney John Parker of the Northern District of Texas.
Wamsley, 46, pleaded guilty to one count of engaging in a monetary transaction with property derived from specified unlawful activity and aiding and abetting. He faces a maximum statutory penalty of 10 years in federal prison, a fine not to exceed $250,000, or twice any pecuniary gain to the defendant, and restitution. He will remain on bond pending sentencing, which is set for September 8, 2016, before U.S. District Judge Jane J. Boyle.
Co-defendant Kevin Kenard Howard, 34, of Dallas, pleaded guilty last week to one count of wire fraud. He faces a maximum statutory penalty of 20 years in federal prison a fine not to exceed $250,000 or twice any pecuniary gain to the defendant, and restitution. He, too, will remain on bond pending sentencing, which is set for September 1, 2016, before Judge Boyle.
According to documents filed in the case, Wamsley formed FAIM in 2003, and in 2010, as its CEO, hired Howard to work as a financial consultant to assist in recruiting investors for FAIM. In summer 2010, while trying to recruit these investors to supply additional cash revenue for FAIM, Howard and Wamsley recruited “M.R.,” the owner/operator of “Company R,” in Flower Mound, Texas. They advised M.R. that a proposed joint venture between FAIM and Company R would generate funding for FAIM economic development projects in the southern sector of Dallas and throughout the U.S. FAIM and Company R signed a joint venture agreement in July 2010 that represented to investor M.R. and Company R that FAIM would provide a monthly financial report regarding the performance of the trading. Wamsley and Howard told M.R. that M.R.’s funds would only be invested in certain types of investments identified in the agreement and that all investment profits would be split equally between FAIM and M.R.
In August 2010, M.R. wired $2 million to a FAIM brokerage account at Charles Schwab. Approximately one month later, Wamsley transferred $1,791,703 in Company R’s investment funds from that account to a FAIM Merrill Lynch brokerage account that he had established and to which M.R. did not have access.
Wamsley told Howard that Howard would be FAIM’s primary point of contact with M.R. After the first few trades, the joint venture began to lose money. Wamsley told Howard to hide the investment losses from M.F. Howard agreed to, and did, lie to M.R. about the trading losses and the true balance of the investment account.
Howard, with Wamsley’s knowledge and consent, knowingly participated in the fraud scheme by sending lulling emails to M.R. that contained false information about the true balance and value of the account. In November 2010, Howard sent an email to M.R. falsely assuring M.R. that profits in the investment account had increased. In December 2010, Howard sent an email to M.R. in which he falsely represented that the account balance was $2,436,611. In January 2011, Howard sent another email saying the total account balance was $2,500,000. In fact, from October 2010 to August 2011, Howard, at Wamsley’s instruction, sent several emails to M.R. with the specific intent to deceive, mislead and confuse M.R. about the account’s true balance. Wamsley and Howard also concealed that fact that Wamsley was diverting some of the funds in the account for his own personal benefit and use.
For instance, from October 2010 through April 2012, Wamsley fraudulently transferred more than $1.7 million of Company R investment funds to FAIM’s business accounts, and he unlawfully spent those funds for his, Howard’s and others’ personal benefits. For example, in November 2010, Wamsley used $40,024 in Company R investment funds to purchase a 2008 Cadillac Escalade for Howard; $41,764 of investment funds to purchase a 2008 Cadillac Escalade for a family member; and $125,477 in investment funds to purchase a 2007 Aston Martin for himself. Wamsley also used more than $200,000 in investment funds to host a Super Bowl fund-raising event in 2011.
This case is one of several felony prosecutions of bankruptcy-related crimes generated by the Bankruptcy Fraud Initiative in the Northern District of Texas. Wamsley is the 14th defendant convicted since July 2014 as part of that initiative.
Internal Revenue Service Criminal Investigation investigated the case. Assistant U.S. Attorney David Jarvis is in charge of the prosecution.
Updated May 24, 2016