Four Utah residents have been indicted by a federal grand jury on charges claiming the men operated a Ponzi scheme in the guise of a charitable organization to help provide education to disadvantaged communities around the world.
The 23-count indictment charges Thomas J. Robbins, 52, Fillmore; Douglas L. Litster, 58, Salt Lake City; Clair W. Cox, 60, Centerville; and Richard Bybee, 46, Salt Lake City, with counts of conspiracy, wire fraud, securities fraud and the sale of unregistered securities.
The indictment issued Thursday alleges the four founded TEK Corp. as a charitable organization in which people could invest their money and turn a profit while helping the disadvantaged. Prosecutors allege TEK Corp. actually had no "discernible charitable operations" but rather functioned as a Ponzi scheme.
Beginning in November 2001, investors were told that their money would be invested in a lucrative day-trading program that would see 25 percent returns per month. However, the indictment states that while the day-trading activity resulted in a loss of more than $50,000 investors were told it was making money.
In August 2002, investors were told by the group that their money would be re-directed to high-yield European bank bonds. The indictment states investors were promised returns of 100 percent per month. TEK officials created fraudulent account statements and used the funds for their own personal use. During this time the group collected more than $3 million from investors.
Prosecutors claim the group floated their scheme by returning about $2 million of the investors' own money back to them as investment profits.
All four have been summoned to appear in federal court. Robbins was arrested in Miltenberg, Germany.
If convicted the four faces up to five years for conspiracy, up to 30 years in prison for the wire fraud counts, up to 20 years for the securities fraud counts and up to 10 years for the sale of unregistered securities.
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