Grand Jury Returns Indictment Charging Pair With Fraud, Money Laundering In Connection With Alleged Investment Fraud Scheme
SALT LAKE CITY – A federal grand jury returned a 48-count indictment late Wednesday afternoon charging Wayne LeMar Palmer, age 60, and Julieann Martin, age 47, both of West Jordan, with wire fraud, mail fraud and money laundering in connection with an alleged investment fraud scheme that raised more than $140 million from more than 600 investors.
According to the indictment, Palmer established National Note of Utah (NNU) about Dec. 30, 1992. NNU was located in West Jordan. Palmer owned and operated NNU and made all business decisions, including decisions regarding the use of investor funds. Martin began working at NNU in about 1993. Among other duties, she functioned as a client relations manager, which allowed her to interact with many of NNU’s investors and gave her access to information about investors’ investments with NNU, the indictment alleges.
The indictment alleges NNU solicited and sold investments, generally in the form of fixed rate promissory notes at a rate of 12 percent per year. NNU purported to be in the business of purchasing existing real estate loans and funding new real estate loans. NNU supposedly used investor funds to purchase discounted mortgage notes and deeds of trust and to originate real estate loans at above-market rates. NNU engaged in a variety of other business activities during its existence in an effort to generate revenue, the indictment says, including acquiring and operating rental properties, developing properties it obtained through foreclosures, purchasing real estate for development, buying and operating a mint, and seeking to extract precious metals from previously processed mine tailings.
The indictment alleges Palmer and Martin recruited and retained investors using fraudulent and misleading statements. According to the indictment, Palmer traveled around the country to recruit individuals and entities to invest in NNU. Martin also had contact with potential and existing investors over the phone, in person, and by email communications. For some investors, Martin was their only contact with NNU.
The indictment alleges Palmer and Martin solicited investors with false and fraudulent statements, which included among others, that the investments were safe and guaranteed; NNU was profitable and generated sufficient income from its business operations to pay investors a 12 percent annual return; NNU’s business activities were generating 18 percent or more per year; investments in NNU were secured by real estate assets which exceeded NNU’s investor liabilities; and that NNU had a perfect payment record and had never been late on a single investor payment.
According to the indictment, Palmer and Martin did not tell investors that new investor funds were being used to make payments to older investors and to pay NNU operating expenses. They also were used to pay Palmer’s personal expenses, the indictment alleges.
They also did not tell investors that the vast majority of NNU investments were with affiliated entities Palmer controlled, rather than arms-length investments with third parties. They also did not disclose, among other things, that beginning around 2007, NNU and its affiliates had, on aggregate, reported net losses and negative equity every year and that NNU had insufficient operating revenues to pay investors and operating expenses.
Between 1995 and 2012, according to the indictment, Palmer and Martin raised more than $140 million from more than 600 investors. Many investors, the indictment alleges, lost all or part of their money invested in NNU. Some of the investors utilized self-directed retirement funds to make their investments. When investors complained about late or missing payments, Palmer and Martin typically did not disclose the true state of affairs at NNU but told investors to be patient and payments would be forthcoming.
The indictment includes 14 counts of wire fraud. Palmer is charged in each of the 14 counts and Martin is charged in 11 counts. Palmer is charged in all 17 counts of mail fraud included in the indictment and Martin is charged in nine counts. They are both charged in 17 counts of money laundering in the indictment.
The defendants will receive a summons to appear in federal court for an initial appearance on the charges. The potential maximum penalty for each count of wire and mail fraud is 20 years in prison. The money laundering counts in the indictment carry potential maximum sentences of 10 years in prison.
An indictment is not a finding of guilty. Individuals charged in indictments are presumed innocent unless or until proven guilty in a court.
The case is being prosecuted by the U.S. Attorney’s Office in Utah. Special agents of the FBI and IRS Criminal Investigation are investigating the case. The U.S. Department of Labor, Employee Benefits Security Administration has also contributed to the investigation.