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Wednesday
Dec122012

Convicted $195 Million Ponzi Schemer Offers $19 Million Check For 364-Day Sentence

A Minnesota man trying to avoid a likely-lengthy prison sentence for his role in a $195 million Ponzi scheme took the rather unorthodox approach of offering to deliver a $19 million check to the scheme's victims, but with a large catch - that he receive a one-year prison sentence.  Jason "Bo" Beckman, 42, filed a 68-page sentencing memorandum earlier this week containing the typical pleas for leniency: his wife was sick at home, his role in the scheme was insignificant, and he was a generous giver to charities. But Beckman did not stop there.  Additionally, in exchange for a 364-day sentence followed by a multi-year probation term and community service, Beckman would "arrange for the immediate delivery of a check for $19 million for payment to victims."  

Beckman is the latest to be sentenced for playing a role in the $194 million Ponzi scheme masterminded by Trevor Cook.  The scheme, ranking as the second-largest financial fraud in Minnesota state history, duped investors with the promise of extravagant returns through purported trading in commodities and futures.  Investors were told that Cook was able to achieve such above-average returns because one of his partner companies, Crown Forex, could take out interest-free loans by virtue of its Jordanian operators' adherence to Islamic sharia law that forbade charging interest.  Two of Cook's co-conspirators used their influence as Christian radio talkshow hosts to pitch the investment, while Beckman used his position as a money manager to recruit investors.

Unsurprisingly, the "investment" was too good to be true, and was instead a massive Ponzi scheme.  In total, over $200 million was raised from investors.  However, only half of that amount was actually used for currency trading, and rather than achieving exorbitant gains, resulted in massive trading losses of nearly $70 million.  The remainder was used for the payment of fictitious returns to investors, as well as to maintain extravagant lifestyles.  Cook was sentenced to twenty-five years in prison in August 2010.  

Unsurprisingly, prosecutors scoffed at the offer.  Instead, they took issue with Beckman's "breathtaking" conduct, alleging that 

"Mr. Beckman is the worst and most culpable of all of the criminals who participated in the currency program Ponzi scheme, including Trevor Cook.

Calling him a "very dangerous individual who is certain to hurt people if he is ever released," prosecutors argued that Beckam deserved a life sentence.  

Besides the obvious ethical problems with trying to buy sentencing leniency by offering money to his defrauded victims, the offer also raises questions as to the source and legitimacy of Beckman's apparently newfound riches.  While the nature of the offer suggested the money was in Beckman's possession, Beckman and his wife had earlier been forced to borrow several thousand dollars from the court-appointed receiver for living expenses after the court imposed an asset freeze.  Additionally, both the court-appointed receiver and federal authorities are likely to raise questions about the source of the money, as the receiver is tasked with locating and recovering assets traceable to the scheme and would likely take issue with Beckman's use of scheme proceeds to secure a favorable sentence.  

Ironically, this is not the first time that money has played a factor in the sentencing of a convicted Ponzi schemer.  Former boy band mogul Lou Pearlman, one-time manager of groups 'N Sync and Backstreet Boys but later found guilty of a $300 million Ponzi scheme, found himself on the opposite end of such a proposal in May 2008 at his sentencing before United States District Judge G. Kendall Sharp.  There, Judge Sharp handed down a 300-month sentence, but with the caveat that she would reduce the sentence by 1 month for each $1 million that Pearlman could pay back to investors.  With investor losses pegged at $300 million, Pearlman could have theoretically avoided jail time entirely had he come up with $300 million. Ultimately, Pearlman did not cooperate, and the Federal Bureau of Prisons currently estimates his release date as March 24, 2029.  

Beckman is scheduled to be sentenced on January 3, 2012.  

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References (9)

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