New York Securities Lawyer Blog
On April 10, 2013, the United States Attorney filed an indictment in the United States District Court for the District of Ohio against DBSI Inc. (“DBSI”), a Boise, Idaho real estate company and one of the largest syndicators of fake private placements, as well as four of DBSI’s top executives, with 83 charges, including but not limited to, conspiracy to commit securities fraud, wire fraud, mail fraud and interstate transportation of stolen property. See United States of America vs. Douglas L. Swenson, Mark A. Ellison, David D. Swenson, Jeremy S. Swenson, CR. No. 13-0091-SBLW. The DBSI executives named in the indictment are Douglas Swenson, co-founder and former president, Mark Ellison, co-founder and general counsel, and David and Jeremy Swenson, Douglas Swenson’s sons and assistant secretaries. According to the indictment, DBSI was operating like a Ponzi scheme by using new investor funds to pay returns to other investors. DBSI would raise new investor funds by two fraudulent schemes: one involved defrauding investors of $89 million through sales of high yield notes in 2008; the second involved the fraudulent sale of securities known as tenant-in-common 1031 exchanges. According to the indictment, DBSI lost most of investor funds through loans to technology startups from 1999 through 2008, as well as through the sale of the tenant-in-common 1031 exchanges, which lost DBSI approximately $3 million per month. From January 2007 through November 2008, DBSI and its executives misrepresented the firm’s financial strength and profitability when they knew that DBSI was unprofitable. Notably, DBSI raised a significant amount of funds through independent small to midsized broker-dealers, two of which were Medical Capital Holdings Inc. and Provident Royalties LLC.
Lax & Neville LLP effectively assists investors, on both a regional and national level, that may have suffered losses as a result of their broker and broker dealer’s sales practice abuses, including fraud. Furthermore, Lax & Neville LLP effectively assists investors that may have suffered losses as a result of their broker dealer’s breaches of fiduciary duties and/or disregard for their investment interests, including losses suffered in Ponzi schemes. Please contact our team of attorneys for a consultation at (212) 696-1999.