PROVO — Freeze! Nobody move (that property).
That's the order 4th District Judge Fred Howard gave last week as prosecutors pursue charges in an alleged $59 million Ponzi scheme.
In an unusual pre-emptive strike, investigators moved to block suspects from selling or transferring real estate and vehicles valued at almost $2.3 million. It is a tactic normally employed when charges are filed in a white-collar criminal probe, which typically takes years to complete.
But by that time, the assets are often long gone.
Prosecutors want to do all they can to prevent that in what has become one of the largest scams Utah County has ever seen, said Jeff Robinson, chief investigator for the Utah County Attorney's Office.
"This will be one of the bigger ones," he said. "At this point, we have the documentation. Because there are hundreds of victims, we're still trying to catch up on those, and it's so big."
An affidavit filed by investigators Sept. 30 names five people being investigated for securities fraud: Larry O. Bosh, of St. George; D. Shawn Benson, of Ivins, Washington County; Michael Smith, of Mona, Juab County; David Q. Poulsen, of Salem, Utah County; and Gale Robinson, of San Jacinto, Calif.
According to the affidavit, Bosh set up Evolution Development in June 2007 to solicit funds for the investment arm of Money & More, a payday lending company with several branches in Southern California. Gale Robinson is the founder and president of Money & More.
Investigators believe Bosh, Benson and Smith offered 10 percent monthly returns to middlemen such as Poulsen, who allegedly recruited more "downline" investors. They ultimately gathered $59 million from their alleged victims, roughly 90 percent of whom are Utah County residents.
All payouts stopped in November 2008, leading to lawsuits and the investigation.
Fraud probes such as this are keeping investigators busy. Victims of fraud in Utah County alone lost $64 million in 2008 and have lost $76 million so far this year. That's a spike from $45 million in the previous two years combined.
"With the recession, we seem to see an uptick in the cases coming to us," said Utah County Attorney Jeff Buhman. "People are looking for a place to put their money other than the stock market right now, and so it drives fraud into other areas. If your nest egg has already shrunk, you're looking for a way to rebuild that."
Life savings gone
That's what happened to Orem resident Robert Clark, a 57-year-old X-ray technician at Utah Valley Regional Medical Center. He said co-worker David Poulsen showed off the checks he was receiving from Money & More and asked if Clark was interested.
"I had my savings in money market funds and I was losing every month. I had lost about $3,000 recently and it was going down, down, down," Clark told the Deseret News. "He said I would make that much back in one month, and so finally I decided to give it a chance. I was very skeptical for a long time because my money's not come to me very easily."
Clark asked a bank for advice and was told the deal sounded similar to the alleged $100 million Ponzi scheme in which Alpine businessman Rick Koerber has since been indicted.
"I was being pretty risky, going out and doing it anyway," Clark said. "Seeing all those checks come in, I thought 'maybe this isn't a scam.' I didn't even know what a Ponzi scheme was at the time."
He wrote Poulsen a check for $100,000 in March 2008, to be invested through Bosh with Money & More at a return to Clark of 3 percent each month. Three months later, with his checks rolling in, he gave Poulsen $50,000 for an unrelated investment that he says he believes ended up in the hands of drug dealers.
Clark received $18,000 back from the first investment, just 13 percent of what he was owed. From the second, he got nothing.
His three children's college savings gone, Clark demanded in December that Poulsen go with him to the county attorney to file a complaint. That led investigators to a meeting at Thanksgiving Point in Lehi where investors said they had invested a total of $59 million.
At about the same time, 33 companies and individuals who had invested roughly $43 million in Money & More filed a lawsuit in federal court. Under "factor agreements" signed with Evolution, investment capital was to be used only to fund Money & More's payday loans, described by Bosh as "extremely profitable and lucrative," according to the lawsuit.
Investors say they were promised 10 percent monthly returns, but according to the lawsuit, Evolution circulated phony financial records to show profits when Money & More was really losing millions. For example, June 2008 records showed a $170,000 profit when the company really lost more than $9 million that month, the lawsuit states.
In early October 2008, Evolution told investors it would soon stop accepting investments because Money & More was to become a "self-funded company," according to the lawsuit. However, investors say they were encouraged to pump in more money during a "short and final window of opportunity."
The payments stopped after that month and never resumed, they say.
The lawsuit states that no one associated with Money & More or Evolution was registered to sell securities, and that all requests by investors to have their money refunded were ignored.
Money & More recently settled in August with most plaintiffs for roughly $24 million, according to court filings, but claims against Bosh and his associates are still outstanding.
In addition, one other federal lawsuit and two separate ones in 4th District Court have been filed in recent months by investors seeking over $2.2 million.
Bosh declined to comment on the investigation or the lawsuits, saying only that he believes ongoing legal proceedings will "clear the air."
According to Clark and others, Bosh was elders quorum president of Poulsen's LDS ward in Mona and also enticed the ward's bishop into the alleged scam.
Bosh pleaded guilty to securities fraud in 4th District Court in 2000 and was ordered to pay $863,157 in restitution, but investigators say he has only paid "a token Utah state income tax garnishment."
In a Chapter 13 bankruptcy filing in May 2007, Bosh said he only had $300 cash on hand and about $2,000 in two checking accounts. But last December, he stated he could pay back his creditors in a $65,400 lump sum because his "income has increased substantially over the last year."
Among the assets frozen this past week are two Jaguars and a Chevrolet Suburban owned by Bosh. Investigators believe Benson bought four vehicles with investor funds, including a Jaguar and an Infiniti. Seven houses and lots in Juab and Washington counties are also listed in the order.
According to the investigator's affidavit, the state Division of Securities opened a case against Bosh and Money & More earlier in 2008 but closed it because the victim in the case refused to cooperate.
Even when confronted with evidence, victims are often reluctant to cooperate with authorities.
"They always think that police are the bad guys because they're stopping this great thing," Jeff Robinson said. "They don't want us involved because they're afraid they're not going to get their money."
The county created an informal threshold two years ago that no case with losses under $100,000 would be investigated, but that limit has turned out to be much too low.
"Most of our cases now are million-dollar cases," Robinson said.
The jump in fraud cases comes at a time when resources are stretched.
"The honest truth is we're barely scratching the surface," Buhman said. "We could double or triple our department easily, and we would still be extremely busy."
And even when white-collar criminals are convicted, investors are rarely made whole. Court-ordered restitution totaled only $408,000 in 2006 and 2007 in Utah County, with no guarantee it would actually be paid.
"Really, it's pennies on the dollar," Robinson said. "People live high on the hog when they have the money."
Ripe for fraud
Prosecutors say their focus on white-collar crime reinforces Utah County's reputation as fertile ground for fraud, one they concede it has earned in its trusting, tight-knit towns.
"We just happen to be a very religious community here in Utah County, and so it's a prime target," Buhman said.
"The key to a great scheme," Robinson said, "is to get people in the community that people trust."
Robert Clark has advice for people confronted with an offer like the one that came his way.
"Stay as far away from it as you can," he said. "Don't trust church members, don't trust elders quorum presidents or whatever position they have in the church. Stick with something that's a bona fide investment where you know your money's going to be pretty safe."
Still, he doesn't bear a grudge toward Poulsen, a Vietnamese immigrant adopted by American parents who Clark says is also a victim because he lost everything he owns.
"He's to blame from my standpoint … but I think he did it naively because he's not an educated person in financial matters," Clark said. "For him it was a big adventure."
Poulsen referred questions to his uncle and attorney, Mark Poulsen, who called his nephew an "innocent little guy" who simply got caught up in an "awful scam."
Smith could not be reached for comment: He is serving a 36-month federal prison sentence in Colorado for a March 2008 conviction for tax evasion and making false statements in a bankruptcy filing. He was ordered to pay $470,697 in restitution in the case, which included allegations he tried to hide a residence he bought in Mona by titling it in a dead relative's name.
Gale Robinson did not respond to questions sent via e-mail. In court filings, Money & More has said it stopped making payments in late 2008 in part because information on the company's payday loans was stolen by a computer software consultant.