A Utah man who claimed that he was conducting a "legal Ponzi scheme" is now facing twenty-three felonies on charges that his "legal" scheme nearly 700 people out of at least $72 million. Dee Randall, 63, was charged with one count of pattern of unlawful activity and twenty-two counts of securities fraud. Each of the securities fraud charges carries a punishment of 1-15 years in state prison as well as a fine of up to $10,000. The Salt Lake Tribune reported that a warrant has been issued for Randall's arrest and bond set at $100,000.
Randall operated several Utah businesses, including Horizon Mortgage & Investment, Horizon Financial & Insurance Group and Horizon Auto Funding. He advertised to potential investors, many of whom were retirees, that he could protect their retirement funds through investments in real estate, auto leases or insurance products through the purchase of "Horizon Notes" that offered annual returns of 9% to 17%. In touting the investments, Randall emphasized his reputation in the insurance industry and membership in the Church of Jesus Christ and Latter-day Saints. These investments were memorialized through private placement memorandums ("PPMs"), which are detailed disclosures to potential investors of a securities offering that often outline a myriad of potential risk factors. Apparently, included in these offering documents was language to the effect that, while not described as a"Ponzi scheme," Randall would be transferring investor funds from company to company to meet obligations.
After interest payments stopped in 2009, Randall filed Chapter 11 bankruptcy in December 2010, which allows a debtor to propose a plan of reorganization while holding creditors at bay. However, after allegations of fraud surfaced, authorities sought the appointment of an independent bankruptcy trustee to conduct an investigation and oversee the bankruptcy process. United States Bankruptcy Judge Joel Marker appointed a forensic accountant as the US Trustee, who has taken control of Randall's finances and is conducting an investigation. The Trustee noted Randall's lack of cooperation with the investigation, and even discovered that Randall had continued soliciting investments after the bankruptcy filing.
Ironically, a YouTube video posted by user "deearandal" on March 10, 2010 contains an endorsement from Garrett B. Gunderson, a noted financial author:
Randall filed bankruptcy later that year on December 20, 2010. Another testimonial from Kyle Bennett was uploaded on June 7, 2010. Bennett was later the subject of a regulatory action by the Idaho Department of Finance, Securities Bureau, accusing him of violations of Idaho's Uniform Securities Act for his role in soliciting investors for Horizon Auto Funding, LLC - a Randall entity that later filed for bankruptcy in 2011. Bennett later entered into a Stipulation and Consent of Judgment with Idaho regulators. The testimonial is below:
A website containing information and court pleadings for Randall's bankruptcy is here.