An East Millcreek man has been charged with securities fraud and theft in an investment operation that involved more than $400,000.
Between June 1989 and November 1995, Terrance L. Hansen Jr., 48, East Millcreek, mislead about a dozen investors into believing that they were investing in nationally known mutual funds or in small viable companies, according to documents filed in 3rd District Court.Hansen represented himself as an "investment adviser" without a Utah license to perform in that capacity, deposited investors' checks in a personal account and used money from that account for personal use, the documents say.
Among the investors is an 86-year-old East Millcreek woman who is blind and asked that her name not be published. The woman said she invested her life savings of about $30,000 because of her trust in Hansen, who at the time was a member of the bishopric in her LDS ward.
The woman's daughter, Sandra Madsen, said Hansen had taught classes in securities and investments during Relief Society meetings, and her mother did not check his background as a securities agent because of that trust.
"She had lots of dealings with him and liked him a lot," Madsen said. "That level of betrayal has been devastating to her."
Hansen instructed investors to make checks payable to the alleged funds saying he would forward the checks and purchase their shares, the court documents say. But instead he endorsed the names of the respective funds on the checks and deposited them into a personal account.
"Subsequently Hansen would issue checks from this account to himself for his personal use," the documents say.
Hansen sent the investors computerized quarterly statements which he "created on his personal computer," the documents say. The statements contained the name and logo of Royal Alliance Securities, a real brokerage firm with which Hansen had no affiliation.
"There were quite a number of us getting those bogus reports," said Bruce Humberstone, who lost about $60,000 in the operation. "They showed, very officially, a complete investment report."
Humberstone first became suspicious when he noticed the statements were coming from Hansen's office and not the alleged company. But he trusted Hansen as a reputable investment consultant.
"I still didn't suspect enough to do anything about it," he said. "I had substantial recommendations about his character and so I just went along. He put up a real good front - a meticulous office with all sorts of certificates on the walls. He seemed like a pretty straight guy."
Investors who wished to withdraw funds were issued redemption checks from Hansen's account, the court documents say, but the checks were changed to display the names of the alleged investment fund or company.
"He gave us money when we asked for it," Humberstone said.
The operation came to an end when a suspicious investor checked into the company with which Hansen was supposed to be affiliated, Humberstone said. When it was found that the account did not exist, the matter was reported to authorities who have conducted a ten-month investigation that has resulted in the charges.
Madsen's mother said she has received back a large amount of her investments. But others have not fared as well. Humberstone has yet to recuperate the money he invested out of his wife's inheritance, he said.
"We borrowed money to add an addition to our house thinking we had this additional collateral to back us up if something happened," Humberstone said. Meanwhile, Hansen allegedly used the money to add an addition to his own house and to take the family on expensive trips, he said.
"To me it's just like armed robbery - maybe even worse - because you don't know what's happening and you can't defend yourself," Humberstone said.
Neither Hansen nor his attorney could be reached for comment. Hansen faces charges of sales by an unlicensed investment adviser, four counts of securities fraud and five counts of theft, all felonies under Utah law.