Wednesday, June 21, 2017

FBI joins probe of trust company accused of taking clients’ funds

The FBI has joined the investigation into the alleged diversion of millions of dollars in assets, including clients’ Social Security deposits, held by the Desert State Life Management trust company in Albuquerque for elderly and mentally or physically incapacitated clients.

The FBI on Thursday filed a petition seeking the civil forfeiture of two properties owned by Desert State CEO Paul Donisthorpe and his wife, Liane Kerr.

The allegations contained in the 17-page petition contend Donisthorpe engaged in an illegal scheme to defraud the clients of his nonprofit trust company, conducting “financial transactions involving the proceeds of that scheme in a manner so as to conceal the nature, source, location, ownership or control of the proceeds of that scheme to defraud,” all in violation of federal wire fraud, bank fraud and money laundering laws.

Included in the forfeiture petition is a “luxury lodge” in Angel Fire that the couple has been actively trying to sell. The price was reduced just last weekend to $725,000 from $899,000, according to internet real estate listings. The assessed value in 2016 was $925,000.

The federal government also seeks the forfeiture of Desert State’s business office, at 1011 4th St. NW. That’s the same address for Kerr’s law office. She is a criminal defense attorney.

Both properties, the petition alleges, were purchased at least in part with Desert State client funds.

The forfeiture action filed by the U.S. Attorney’s Office in Albuquerque and signed by FBI Special Agent Grant Nixon is a civil matter, and no criminal charges have been filed in the case. Neither Donisthorpe, a certified public accountant who reportedly has medical issues, nor his wife returned Journal requests for comment.

The state Financial Institutions Division has been attempting to conduct a financial examination of Desert State since February, despite what state officials said were numerous stalling attempts by Donisthorpe. He has reportedly suffered some sort of brain damage, either from a stroke, a fall or a suicide attempt, according to a petition filed May 31 by the state agency.

The state petition, which seeks to assume control of the trust company via receivership, contends that so far examiners have found more than $4.1 million in client assets missing after being transferred into bank accounts associated with Donisthorpe and his other business interests. Donisthorpe hasn’t yet responded to the state’s allegations in court. An estimated 70 clients have been identified as suffering losses, state officials say.

The Santa Teresa family of one client has been informed that their disabled son’s $1 million account at Desert State has been drained to zero.

The federal petition states that FBI agent Nixon reviewed a March 10, 2015, financial statement signed by Donisthorpe and his wife showing their joint income to be about $100,000. The couple had obtained a mortgage on the four-bedroom, four-bathroom Angel Fire home, with $130,128 as the principal amount of the loan.

At least $49,000 of client funds were diverted from Desert State client accounts and applied to the mortgage on the Angel Fire property, the forfeiture petition states. Another $37,870 in clients funds were applied to the mortgage on the 4th Street property in Albuquerque after being diverted to Donisthorpe’s Spectrum Capital account. More than $10,000 in what the FBI believes were client funds was also applied to the 4th Street property from two other accounts that Donisthorpe controls.

The petition alleges that client funds were “laundered” through Spectrum Capital Markets LLC and into Donisthorpe’s Corazon Cattle and Paul A. Donisthorpe LLC accounts.

According to the forfeiture filing, the state Financial Institutions Division on May 17 provided the FBI with an Excel spreadsheet showing bank information for Desert State and three of Donistorpe’s other business ventures: Paul A. Donisthorpe LLC, Spectrum Capital Markets LLC and Corazon Cattle LLC. The funds came from various sources including client Social Security deposits and client accounts at financial institutions like Charles Schwab or Vanguard, the petition says.

The financial records showed a pattern of client funds being transferred from client accounts at other financial institutions to Desert State before passing through Desert State accounts to an entity controlled by Donisthorpe, Spectrum Capital. “These transfers did not appear to be authorized by clients and are not consistent with legitimate operations at DSLM,” the petition states.

From Spectrum Capital, the funds were diverted to other entities Donisthorpe controlled: bank accounts, credit card accounts and mortgages, “none of which are associated with DSLM or legitimate business activities of DSLM,” according to the forfeiture filing.

From August 2013 to April 2016, the transfers from the Desert State account to Spectrum totaled about $2.2 million, it stated. “The analysis identified no funds returning to DSLM accounts once they enter the Spectrum Account.”

Full Article & Source:
FBI joins probe of trust company accused of taking clients’ funds

1 comment:

Lilly said...

I like it when the FBI gets involved!