From Deseret News archives:
Utah fraud cases down, but scams still around
The Utah Division of Securities filed fewer criminal charges and saw fewer convictions in its fiscal year ended June 30, but Wayne Klein, director of the division, said fraud remains a big problem in the state.
Criminal charges were filed against 19 individuals in the 12 months ended June 30, down from 35 charges in the previous fiscal year. The division reported nine convictions in fiscal 2006, down from 20 convictions the prior year.
Klein said the numbers were higher between 2002 and 2005 partly because of the bursting of the dot-com bubble in 2000, during which stock and Internet scams were common.
"The fact that the numbers are down, I wish I could say that meant that there was less fraud going on," Klein said. "Instead, I think it just reflects that the nature of fraud has changed and we just don't yet know what's out there that people are buying, and they just haven't lost their money yet."
In today's heated real estate market, property get-rich schemes appear to be on the rise.
"We're seeing an increasing number of oil ventures, but the biggest one we're seeing is real estate," Klein said. "It's where somebody will say, 'I'm going to flip houses, and so I need some money to buy a house and I'll split the profit with you."'
Klein said the division is investigating one situation in which promoters are buying homes with the money of one investor group and then selling the same homes to other investors.
"They're pyramiding home sales," Klein said. "They are providing the buyers and the sellers, and each time they have to come up with a higher price to justify a profit. I worry that it may lead to an overheating of the housing market and may be artificially inflating prices too much."
In fiscal 2006, the division reported $450,393.20 in paid fines, down from $880,333.27 in the prior year. Another $2.5 million was recovered or ordered in fiscal 2006, down from $63.6 million a year earlier.
The gap in revenues between fiscal 2006 and fiscal 2005 was due in part to Utah's share of fines paid out by the nation's largest brokerages, which agreed in 2002 to pay $1.5 billion to resolve conflict-of-interest allegations.
Also, in 2004, a Utah real estate developer, Michael Fitzgerald, agreed to pay back $18 million in money funneled from Utah investors to his Beverly Hills Development Co.
On Tuesday, felony charges were made against a Layton man, Glenn Allen Britt, for taking $139,000 from three investors, including Beth DeLaCruz, a 77-year-old Roy resident who gave Britt $38,000 after he promised her 20 percent returns on her money.
