Alleged Business Scammers Indicted After Nationwide Scheme to Defraud Investors, Including Elderly, of More than $30M
SALT LAKE CITY – Wayne LeMar Palmer, age 60, of West Jordan, indicted in August 2015 in connection with an alleged investment fraud scheme that raised more than $140 million from more than 600 investors, pleaded guilty Tuesday afternoon to wire fraud and money laundering.
Julieann Palmer Martin, age 47, also of West Jordan, a co-defendant in the case, pleaded guilty to misprision of felony in the case. The pleas were entered in U.S. District Judge Clark Waddoups’ courtroom.
In admissions filed as a part of the plea agreement, Palmer admitted that from 2009 through June 2012, acting through his company National Note of Utah and affiliated entities (collectively referred to as NNU), he solicited investors to invest in NNU’s business of loaning funds to real estate based companies. As a part of his solicitations to investors, he admitted he falsely represented that their investment in NNU was safe and guaranteed, and that NNU was profitable and generated sufficient income from its business operations to pay investors a 12 percent per annum return. Palmer admitted that he failed to inform investors that NNU had insufficient operating revenues to pay investors and operating expenses. He also admitted he failed to inform investors that new investor funds were being used, in part, to pay prior investors’ return of principal and interest payments. These omissions were material to investors and their decision to invest with NNU, he admitted as part of the plea agreement.
While the fraud scheme raised more than $140 million from 600 investors, some of the money was used to make payments to earlier investors. Prosecutors believe the actual loss in the case is approximately $60 million.
Martin, who is Palmer’s cousin, was employed as a bookkeeper at NNU from 1995 until a receiver took it over in 2012. In admissions made as a part of her plea agreement, Martin admitted she was the primary contact person for NNU investors and prospective investors when Palmer was not available. She also had online access to two NNU bank accounts. Because she monitored the accounts, at any given time she knew whether NNU had adequate funds in these two bank accounts to meet its obligations and frequently updated Palmer on the status of the accounts.
She admitted that, beginning in March 2010, she knew that NNU was having difficulty returning principal to investors whose notes had matured. She also recognized that NNU was unable to bring in new investor funds sufficient to pay its operating expenses and began updating Palmer nearly every day regarding the funds needed to pay the promised returns to investors and to cover operating expenses. She admitted knowing that Palmer continued to solicit new investors after NNU developed financial problems and after it stopped making investor payments.
Martin admitted she did not notify law enforcement or any regulatory agency about Palmer’s fraud. Instead, she took steps to conceal the crime by lulling both new and prior investors into a false sense of security that NNU’s business was turning a profit and making timely returns to investors.
Palmer’s plea agreement includes a stipulated sentence of 0-120 months, subject to approval and acceptance by the Court. He also agreed to a $290,000 money forfeiture judgment for his scheme to defraud. The total amount of restitution and the payment schedule will be determined at sentencing.
Martin’s plea agreement includes a stipulated sentence of 0-24 months, which is subject to the approval and acceptance by the Court. Restitution and the payment schedule for Martin will also be determined at sentencing.
Sentencing for both defendants is set for Sept. 11, 2017. They are not in custody.
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.