LANDLORD CONVICTED OF FRAUD AND FORGERY

FROM:  U.S. JUSTICE DEPARTMENT 
Department of Justice
U.S. Attorney’s Office
District of Massachusetts
FOR IMMEDIATE RELEASE
Monday, December 22, 2014
Springfield Landlord Convicted of Fraud and Forgery Charges

SPRINGFIELD - A Springfield landlord was convicted in federal court today of fraud and related charged in connection with fires at two of his Springfield properties.

Wilkenson Knaggs, 43, was convicted by a jury following a five-day trial of three counts of mail fraud,  two counts of negotiating checks with forged endorsements, and two counts of spending the mail fraud proceeds.   U.S. District Judge Mark Mastroianni scheduled sentencing for March 20, 2015.

Following a Nov. 16, 2008 fire at 376-378 Franklin Street in Springfield, Knaggs submitted a fraudulent contract for rehabilitating the three-family house in order to obtain a payout on his homeowner’s policy.  He also forged the endorsement of the City of Springfield on a second check, cashing the check at a Boston check cashing company, and using the proceeds to buy a two-family house at 99 Central Street.  In addition, Knaggs recorded the title to 99 Central Street in the name of a relative and used the relative to make a claim on the insurance policy after a March 7, 2010, fire at the Central Street property.

The charging statutes provide for a sentence of no more than 20 years in prison, three years of supervised release and a $250,000 fine on each mail fraud count with lower maximum sentences on the other charges.  Actual sentences for federal crimes are typically less than the statutory maximum penalties.  Sentences are imposed by a federal district court judge based on the U.S. Sentencing Guidelines and other statutory factors.

United States Attorney Carmen M. Ortiz; William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in Boston; Shelley Binkowski , Postal Inspector in Charge, United States Postal Inspection Service; and Vincent Lisi, Special Agent in Charge of the Federal Bureau of Investigation’s Boston Field Division made the announcement today.  The case is being prosecuted by Assistant U.S. Attorneys Karen Goodwin and Deepika Shukla of Ortiz’s Springfield Branch Office.

USAO - District of Massachusetts
Updated December 22, 201

SEC CHARGES RETIREMENT PLAN ADMINISTRATOR WITH DEFRAUDING INVESTORS WITH IRA ACCOUNTS

FROM:  SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission today announced fraud charges and an asset freeze against a Utah-based retirement plan administrator who defrauded investors in self-directed individual retirement accounts (IRAs), causing them to lose millions of dollars of savings.

The SEC alleges that American Pension Services Inc. (APS) and its founder, president and CEO Curtis L. DeYoung squandered more than $22 million of investor funds on high-risk investments.  DeYoung hid the losses by issuing inflated account statements, allowing him to continue collecting fees and further victimizing his customers.

“This misconduct jeopardized retirement security for thousands of APS customers,” said Karen L. Martinez, director of the SEC’s Salt Lake Regional Office.

According to the SEC’s complaint unsealed yesterday in federal court in Salt Lake City,  DeYoung’s scheme dates back to at least 2005 and targeted customers with retirement accounts holding non-traditional assets typically not available through traditional 401(k) retirement plans or other IRA custodians.  Although APS has no authority to direct customer trades, DeYoung allegedly used forged letters and signatures to invest on behalf of customers, including in promissory notes issued by a friend whose businesses never turned a profit.  DeYoung continued to recommend that APS customers invest in the notes, and he sent customer funds to the friend until at least April 2013 without disclosing to investors that the friend had defaulted on the notes in 2010 and DeYoung had forgiven the debt.

The SEC further alleges that investments in other bankrupt ventures, including an office building in Wichita, Kan., caused APS customers to lose more money.  APS concealed those losses and issued account statements that inflated the value of customer holdings, allowing APS to levy fees based on the full value of the holdings even when they were worthless.

According to the SEC’s complaint, when DeYoung was questioned by the SEC about a $22 million gap between actual holdings and those showing on account statements, he invoked his Fifth Amendment privilege against self-incrimination and refused to answer.

The Honorable Robert J. Shelby granted the SEC’s request for a temporary restraining order to freeze the assets of APS and DeYoung.  The court appointed Diane Thompson of Ballard Spahr LLP as the receiver in this case to recover investor assets.