A Utah businessman was sentenced to serve more than six years in federal prison for operating a Ponzi scheme that took in nearly $50 million from over 100 victims. Kenneth Case Tebbs, 42, received the sentence from U.S. District Judge David Sam after previously pleading guilty to a single count of wire fraud in February 2013. A hearing is scheduled for October to determine the amount of restitution Tebbs must pay to defrauded victims.
Tebbs owned and operated Twin Peaks Financial Inc. and MNK Investments Inc., which purported to purchase houses and undeveloped lots for resale or development. Beginning in 2005, the companies solicited investors by offering annual returns of up to 18%, as well as an origination fee of up to 5%. Ultimately, more than 100 investors entrusted nearly $50 million with Tebbs based on these promises.
However, while the companies did engage in some legitimate business, the operation morphed into a Ponzi scheme in 2006 when Tebbs' decision to pursue larger subdivision projects resulted in insufficient funds to satisfy investor obligations. As a result, Tebbs began falsifying documents and made Ponzi-style payments to existing investors. When Tebbs was no longer able to fulfill interest payments and redemption requests, the scheme collapsed and Twin Peaks declared bankruptcy in November 2007. Of the nearly $50 million taken in by Tebbs, approximately $37 million was returned to investors, and investors suffered losses of about $17 million when including the payment of profits to long-time investors.
Tebbs must report to prison by 12:00 P.M. on October 28, 2013.