“Largest Federal Fraud Case In Idaho History”
An Idaho attorney has resigned from the bar in the wake of his federal court conviction.
The web page of the Idaho disciplinary counsel notes
The Idaho Supreme Court accepted Mr. Ellison’s resignation in lieu of discipline. By the terms of the Order, Mr. Ellison may not make application for admission to the Idaho State Bar sooner than five years from the date of his resignation. If he does make such application for admission, he will be required to comply with all of the bar admission requirements in Section II of the Idaho Bar Commission Rules and shall have the burden of overcoming the rebuttal presumption of the “unfitness to practice law.”
The Order also provides that consistent with I.B.C.R. 512(d), if an appeals court vacates or reverses Mr. Ellison’s conviction, or if a trial court enters an order granting a motion for a new trial, a motion for judgment of acquittal, or a motion to withdraw a plea of guilty, that removes Mr. Ellison’s conviction of the crimes, which are the basis for this sanction, Mr. Ellison may file with the Clerk of the Idaho Supreme Court, a motion for dissolution or amendment of the sanction.
Law.com had this report on the underlying case
Douglas Swenson, former president of failed property management company DBSI, faces 20 years in federal prison. The company’s former general counsel, Mark Ellison, faces a sentence of up to five years.
A U.S. district judge in Idaho has sentenced Douglas Swenson, the president of failed southwest Idaho property-management company DBSI, to 20 years in federal prison without parole for defrauding investors, the Associated Press reports.
The judge, B. Lynn Winmill, also sentenced DBSI’s former general counsel, Mark Ellison, to five years in prison. Federal prosecutors have said they will seek at least $75 million in restitution, which will be set later. In April 2013, $1.5 million was seized from Swenson on the orders of a federal magistrate judge, the Associated Press reports.
This is the largest federal fraud case in Idaho history. Winmill told those in the courtroom that it was the toughest he had presided over in almost 30 years as a judge, as he believed that the defendants did not set out to defraud investors. He said he tried to weigh the descriptions of Swenson and Ellison as family men, churchgoers, and community leaders who had never before been in trouble with the law against the harm done to investors, some of whom lost hundreds of thousands of dollars, The Idaho Statesman reports.
In April a jury convicted Swenson of 44 counts of securities fraud and 34 counts of wire fraud. Ellison was convicted of 44 counts of securities fraud. Attorneys for Swenson and Ellison said they plan to appeal their convictions, the Associated Press reports.
Jeremy Swenson and David Swenson, Douglas Swenson’s sons and former company secretaries who were also convicted of securities fraud, were sentenced on Thursday to three years in prison followed by three years of supervised release and a $4,400 special assessment. They will also have to pay restitution, which will be set later, KTVB reports.
DBSI, founded in 1979, was once one of Idaho’s largest employers. Before it filed for bankruptcy in 2008, it managed 280 shopping centers, office buildings and other commercial buildings across Idaho and 33 other states. The company’s holdings were worth $2.7 billion, and many of them were owned by groups of investors to whom DBSI sold fractional shares. The company claimed to have a net worth of more than $105 million, when in fact it lost a total of $170 million in 2007 and 2008, The Idaho Statesman reports.
Swenson and Ellison concealed the company’s financial difficulties from investors and employees, and even continued to accept new investments when they knew there were not enough earnings to keep paying off investors.
University of Maryland Professor Jeffrey Mitchell told the court on Wednesday that he invested $113,000 in DBSI just 70 days before the company collapsed, and was given no indication that the company was in any financial trouble, the Associated Press reports.
However, other investors said that they understood the risks involved. Under federal regulations, DBSI investors had to have a minimum yearly income of $200,000 or a net worth greater than $1 million. They were also required to sign a document acknowledging that there was no guarantee of return and that they could afford to lose their investment, the Associated Press reports.
(Mike Frisch)