A Montana man who became a fugitive after being charged with operating a $5 million Ponzi scheme has been located and arrested in Kansas. Richard F. Reynolds, also known as Richard F. Adkins, taken into custody last week in Overland Park, Kan. after being on the run since February 2012. Reynolds had been charged with twenty felonies in Gallatin County District Court after a former employee alerted authorities due to concerns over the legitimacy of his operation. After announcing the charges against Reynolds, Montana authorities issued a $10 million arrest warrant that was thought to be the largest ever issued in Montana. The charges carry a maximum combined sentence of two hundred years in state prison.
According to authorities, Reynolds and his wife, Lori, operated and managed eight corporations from 2008 to 2011 under the several companies, including United Consultant Investment Corporation ("UCIC"), Buffalo Exchange, and Buffalo Extension. The two solicited investors for a purported foreign currency trading platform through Buffalo Extension and Buffalo Exchange, and in a gold investment opportunity through Buffalo Investment. Importantly, none of these investments were approved or registered with any state securities department or the Securities and Exchange Commission ("SEC"). Investors were provided with marketing materials and promised quarterly returns of 100 percent. In one instance, Reynolds communicated with a promoter for a mining entity who provided him with offering documents after Reynolds offered to help raise money for the operation. However, even after the promoter discovered that Reynolds had securities problems with Missouri and Montana authorities and ceased communication with Reynolds, it was later discovered that Reynolds still solicited several individuals to invest in the mining operation.
Additionally, Reynolds also used his close relationship with area pastors to identify and solicit investors. At least eight pastors introduced investors to Reynolds, and in return became employees of Reynolds and received 10% of all investor funds directed to Reynolds' operations While the pastors thought that Reynolds was truly investing in the foreign currency and gold opportunities being promoted, they later became suspicious when Reynolds failed to meet investor principal redemptions and made promises he could not keep. In total, Reynolds and his umbrella of entities raised approximately $5.4 million from over 140 investors in 21 states and six countries.
After the Montana Committee of Securities and Insurance was contacted by several former employees who had become suspicious of Reynolds, an investigation revealed that Reynolds and his wife did not make the gold and foreign currency investments they purported to make. Instead, the two maintained thirty-one separate bank accounts at Bank of America and Wells Fargo, where they used at least $4.4 million of the $5.4 million they raised to live a lavish lifestyle and make Ponzi-style interest payments and principal redemptions. Additionally, through investigative subpoenas served to E*Trade, the CSI learned that of a total of $725,000 of investor funds transferred in, approximately $314,015 was lost in speculative penny stock trading. The CSI also learned that the Reynolds were a 49% owner in a pre-production movie being produced about an Indian heroine.
As Reynolds was arrested in Kansas, Montana authorities will now seek to have Reynolds extradited back to Montana. Under federal extradition laws, Reynolds must be delivered to an agent of Montana authorities within thirty days of his arrest or he may be discharged.
A copy of the arrest affidavit filed is here.
A copy of the criminal Information is here.