Independence Man Sentenced for Investment Fraud Scheme
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that an Independence, Mo., man has been sentenced in federal court for an investment fraud scheme in which he stole $724,000 from 13 victims.
Richard J. Gumerman, 67, of Independence, was sentenced by U.S. District Judge Gary A. Fenner on Tuesday, Jan. 21, 2014, to three years and 10 months in federal prison without parole. The court also ordered Gumerman to pay $722,326 in restitution.
On July 26, 2013, Gumerman pleaded guilty to one count of mail fraud and one count of filing a false income tax return. Gumerman admitted that he stole at least $724,000 from investors from 2007 through December 2011. Gumerman used investor funds for personal living expenses, to pay other investors, to give money to Hooters’ restaurant waitresses and in other businesses he owned.
Gumerman did business as Gumerman Trading Company (GTC). Gumerman is not registered as a broker-dealer agent, investment adviser representative, or issuer agent in the state of Missouri, nor has he ever been. Despite not being registered to sell securities, Gumerman sold investments with the GTC Trading Fund.
Between January 1992 and December 2010, individuals and groups invested more than $948,000 in the GTC Trading Fund. Gumerman told investors that the GTC Trading Fund pooled investor funds to trade in the commodities futures market. Prior to opening the GTC Trading Fund, Gumerman had only traded commodities for one year in a personal account, and lost money in that personal trading account. Gumerman did not disclose this material fact to investors.
Gumerman mailed statements, sometimes monthly (with the December statements showing yearly totals), to investors. The statements listed a fictional ending balance, fictional “interest” earned and a fictional rate of return on investment. The account statements did not reflect actual balances in the accounts, actual interest earned, or an actual rate of return. Gumerman sent to investors Internal Revenue Service Forms 1099 which reflected that they had earned interest from their investment accounts, when in fact they had not earned interest. Investors used these forms to pay taxes on interest they had not earned.
Gumerman also admitted that, when he filed his tax return in April 2011, he stated that his taxable income was $42,534 in 2010. Gumerman failed to declare income he had obtained by fraud; his taxable income was actually $248,350. The total tax loss from Gumerman’s false tax returns was $96,635.
This case was prosecuted by Assistant U.S. Attorney Kathleen D. Mahoney. It was investigated by IRS-Criminal Investigation, U.S. Secret Service and the Lee’s Summit, Mo., Police Department.