DENVER—David Helm Taylor, a/k/a David
Andrew Taylor, age 44, of Albuquerque, New Mexico, was sentenced earlier this
week by U.S. District Court Judge John L. Kane to serve 70 months in federal
prison, followed by three years of supervised release, for wire fraud in
connection with implementing a fraudulent private investor trading scheme, U.S.
Attorney John Walsh, U.S. Immigration and Customs Enforcement (ICE) Homeland
Security Investigations (HSI) Special Agent in Charge Kumar Kibble, and FBI
Special Agent in Charge James Yacone announced today. Judge Kane also ordered
Taylor to pay $2,500,000 in restitution to the approximately 40 victims of his
crime. Taylor appeared at the sentencing hearing in custody and was remanded at
the conclusion of the hearing.
Taylor was indicted by a federal grand
jury in Denver on May 4, 2011. He pled guilty before Judge Kane on October 13,
2011. He was sentenced on June 8, 2012.
According to the stipulated facts
contained in the plea agreement, from November 2001 through June 2009, Taylor
held himself out to be the manager of a private investment currency hedge fund
trading in foreign currency futures. He first began soliciting investments
during the 1990s in Orange County, California. He solicited money from a
network of friends and acquaintances and their relatives to invest in the fund
that he managed under several names, including Sierra Pacific, Dawai
Management, Dawei Capital, Aspen Peak Fund, and Acme Group. Investors were to
share in profits earned from the funds’ investment activity, in accordance with
their respective contributions to the funds. The defendant represented that
profits for the funds would be realized through his trading of investor money
in foreign currency futures and that he would base trading decisions on his own
analysis of market conditions. He operated his business as a sole
proprietorship primarily from his home in downtown Denver and, earlier, in
Boulder, Colorado. During this time frame, the defendant solicited, either
directly or indirectly, approximately $2,200,000 from approximately 40
investors in Colorado and throughout other parts of the United States.
The defendant induced individuals to
invest money with him through a series of false and misleading representations
about his background and experience as an investor and investment advisor, his
track record as a hedge fund operator, and the nature of his investment
activity. Taylor corresponded with some investors by e-mail about trading
activity. He also e-mailed periodic newsletters to investors describing the
funds’ success that included, for example, a representation that the funds’
profitability grew by as much as 24 percent during a nine-month period in 2006.
These correspondences also included the amount of investor assets the defendant
claimed to have under his control, for example, $9,317,013.62 in 2006. The
documents the defendant sent also represented the funds’ cumulative
performance. For example, at the conclusion of a 12-month period in 2006, the
funds purportedly realized a gain of 40 percent
None of these representations were
accurate, and the defendant’s assurances were false. Taylor did not have any
demonstrated success in managing investors’ funds, and he never had millions of
dollars of investor funds under management, as he claimed. He also ever have
funds under his management equal to the collective amounts of money he claimed
to have in monthly statements to investors. In fact, during 2006 and 2007, the
defendant had scarcely any assets under his control. Nor did he ever realize
consistent trading profits on either his own behalf or on behalf of others.
Contrary to his representations
throughout the period of his solicitations, the defendant did not handle
investors’ funds as he promised. While the defendant did make occasional
deposits of investor funds into brokerage accounts, these deposits were quickly
dissipated by the defendant’s consistent trading losses with investor funds.
Most investor funds that the defendant obtained were not deposited into
brokerage accounts.
The defendant diverted a significant
portion of the investor funds that were not dissipated through trading losses
in the brokerage accounts for his own purposes such as visits to restaurants
and vacations at resorts in Aspen and Snowmass. He had few, if any, sources of
income from November 2001 through June 2009 other than investor money. He,
instead, used investors funds for his own personal purposes.
As part of an effort to conceal his
trading losses and diversions of investor funds, the defendant sent investors
monthly statements indicating their account balances and rates of return. The
statements received by investors almost always indicated that their respective
investments benefitted from a positive return at the end of the month
regardless of market conditions.
In 2006, the Commodities Futures Trading
Commission (CFTC) became aware of the defendant’s purported investment fund
activities and began an investigation to determine whether the defendant was
engaging in retail foreign currency transactions through false and misleading
claims. The CFTC ultimately ceased its investigation due to lack of
jurisdiction and referred the matter to U.S. Immigration and Customs
Enforcement.
As the defendant’s trading losses and
diversion of investor funds mounted, the defendant began to engage in a Ponzi
scheme with the remaining investor funds that he had on hand and the new
investor funds he continued to solicit and receive to the funds. A significant
portion of the investor funds that the defendant did not transfer into
brokerage accounts or divert for his own purposes were used by the defendant to
fund payments to investors who either sought periodic distributions of their
share of the fund’s purported profits or a return of all or part of their
principal investment. As the defendant’s losses continued, the assets under his
control became too depleted for him to make Ponzi payments. Thereafter, around
2006, he started refusing requests by investors to issue funds. During 2007 and
2008, the defendant began to cease communications with investors and departed
the Denver area, his whereabouts being unknown. At least two investors, one in
California and one Colorado, obtained civil judgments against the defendant for
their losses that they have been unable to collect.
On June 14, 2011, ICE-HSI agents from
the Resident Agent in Charge office in Albuquerque, New Mexico, as well as
Albuquerque Police Department officers, located the defendant at an Internet
café in Albuquerque, New Mexico, at which time he was arrested. At the time of
his arrest the defendant stated, “How did you find me? Nobody knows I’m here.”
“Financial schemers who prey on family,
friends, and acquaintances will face the consequences of their actions,” said
U.S. Attorney John Walsh. “The nearly six-year sentence in this case was just
and appropriate.”
“There are risks to investing, and this
significant prison sentence also shows there are risks for fraudulent private
investors like David Taylor,” said Kumar Kibble, Special Agent in Charge of HSI
Denver. “Homeland Security Investigations works closely with our law
enforcement partners to identify and prosecute these con artists who think
swindling others is an effective way to get rich quick.”
“The FBI, in conjunction with our law
enforcement partners, will continue to aggressively investigate investment
fraud cases and work to ensure that investors and victims are dealt with
honestly and fairly,” said FBI Special Agent in Charge James Yacone.
This case was investigate by the ICE
HSI, and the Federal Bureau of Investigation with assistance from the
Commodities Futures Trading Commission, the Albuquerque ICE-HSI, and the
Albuquerque Police Department.
Taylor was prosecuted by Assistant U.S.
Attorneys Ken Harmon and Lillian Alves.
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