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Thursday
May052016

Utah Company Now Faces Criminal Charges Over Alleged $28 Million Ponzi Scheme

Nearly four months after being accused by the Securities and Exchange Commission of operating a $23 Ponzi scheme, a Utah company's founder has now been indicted on 19 criminal fraud charges.  Chad Roger Deucher, 43, the owner of Marquis Properties, LLC ("Marquis") is scheduled to make his first appearance later this month on eighteen counts of wire fraud and one count of fraud in the sale of securities.  Each charge carries a maximum 20-year prison term along with monetary penalties.  

According to authorities, Marquis held itself out as an experienced property-management company that specialized in acquiring and managing high-quality cash-flowing properties.   The company solicited potential investors by representing that it would manage various properties located in Indiana, Missouri, and Ohio, collect monthly rental income, and make annual distributions of up to 22% that were touted as passive investment income.  Potential investors were told that the various investments offered by Marquis were safe and risk-free because investment returns would be secured by a first deed of trust on property and that investments would be "over-capitalized."  From April 2010 to June 2015, Marquis raised at least $28.2 million from hundreds of investors.

However, authorities allege that Marquis operated a classic Ponzi scheme by making numerous misrepresentations to investors and using new investor funds to pay purported returns to existing investors. For example, while Deucher sought to assuage any concerns over risk by offering property as collateral for investments, he failed to disclose that Marquis did not own the property offered as collateral and that the property was already encumbered.  Further, rather than purchase real estate with investor funds, as had been represented to investors, the Commission charged that Marquis had diverted investor funds to pay returns to existing investors and to pay personal expenses including the transfer of nearly $400,000 to Mr. Deucher's wife.  While Marquis stopped paying returns to investors in June 2015, the SEC previously alleged that Mr. Deucher had recently represented to an investor that repayment would begin shortly. 

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