PROVO — The aftermath of a massive Ponzi scheme that may have affected hundreds in Utah County has turned into a nasty tangle of overlapping court cases.
The questions are as basic as who is a victim and who is a perpetrator. And the answers likely won't come any time soon.
Prosecutors last October secured a temporary restraining order from 4th District Judge Fred Howard freezing over $2 million in assets belonging to several people connected with the California payday lending company Money & More.
Those assets — six parcels of property in Washington and Juab counties, seven vehicles and a bank account — were just the tip of a $59 million iceberg, prosecutors said.
That's how much they believe hundreds of investors, mostly from Utah County, lost by buying into the investment arm of Money & More, which promised monthly returns of up to 10 percent and offered bonuses for bringing in new recruits.
All payouts stopped in November 2008, and a meeting of angry investors at Thanksgiving Point in Lehi the next month sparked an investigation by the Utah County Attorney's Office.
Prosecutors in April filed an array of securities fraud and money laundering charges against five people: Larry O. Bosh, of St. George; D. Shawn Benson, of Ivins, Washington County; Michael J. Smith, of Mona, Juab County; David Q. Poulsen, of Salem; and Gale Robinson, of San Jacinto, Calif., the owner of Money & More.
Similar charges followed against Daniel Maynard and Timothy Provost, described by prosecutors as the next level down in the tree of investors.
Poulsen pleaded guilty last week to two class B misdemeanor counts of participating in a pyramid scheme. He was given a suspended six-month jail term and was ordered to pay a $555 fine and do 60 hours of community service.
The others are set for first court appearances in June.
Meanwhile, a group of 330 investors has reached settlement agreements with Robinson, Bosh and Benson. But to finalize those agreements, they need Howard to agree to partially lift the restraining order.
Prosecutor Curtis Larson is vigorously opposing those efforts, saying the terms of the agreements show that some assets have already been moved in violation of the order.
Larson wrote in one court filing that the investor group's lawyers will "exact an exorbitant fee" in connection with any settlement.
"Leaving the preserved properties under the court's control assures that the true victims are not re-victimized," he wrote.
And Larson argues that many of the investors trying to get paid back probably took part in the alleged fraud. Drawing the line between victims and perpetrators in a Ponzi scheme is a dilemma.
"That's a real difficulty, and the investigation continues into that aspect and the aspect of who actually has criminal liability in this case," Larson said. He is now seeking the identity of all 330 people and how much they invested.
The point of freezing the assets, Larson argues in court filings, was to preserve them for restitution payments once the criminal cases are complete.
But Bosh, described by prosecutors as one of the key figures in the alleged fraud, says the criminal prosecutions are unnecessary since he says most or all of the parties involved have agreed to settle out of court.
"They ought to let the parties resolve this among themselves," Bosh said.
Bosh, a former construction contractor, says he sought advice from two different lawyers before investing in Money & More and was told it was a "gray area."
"Securities are a tricky thing," Bosh said, adding he believes bank records will show Gale Robinson simply ran the company poorly and the investors did nothing wrong. "I'm hopeful at the end of the day when the whole truth comes out I will be exonerated."
Robinson seems to have disappeared without a trace — and without paying her employees for two months of work. A former district manager for the company, Amie Aguilar, says the last time she saw her boss, in February, Robinson said she would flee to avoid any criminal charges.
"She led us to believe it was just something she got caught up in," Aguilar said. "She really just strung us along for so long."
Although Bosh had a separate agreement with the company rewarding him for referring new investors — allowing him to buy luxury cars and large houses — he says he lost everything and is "in the same boat" as any other victim.
Bosh had to drop an appeal of the freezing of his assets when he ran out of money to pay his attorneys.
"(The restraining order) took away my ability to defend myself and put me in no-man's land," he said.
Bosh says he did not actively solicit others but simply shared an opportunity to join in an investment that seemed to be working out well.
"Here's where I screwed up," he added. "I gave people information based on my experience. And that may hang me from a tree."
e-mail: pkoepp@desnews.com