Paul Donisthorpe, pictured here in 2003, pleaded guilty in federal court on Monday to wire fraud and money laundering. (Randy Siner/For the Journal)
During a surprise hearing in federal court Monday, Paul Donisthorpe,
former CEO of Desert State Life Management, pleaded guilty to bilking
dozens of New Mexico’s most vulnerable residents out of more than $4
“This was a heartbreaking case. An individual was trusted
by the elderly, disabled and other New Mexicans with special needs to
make sure their rent, medical bills and living expenses were covered,”
Terry Wade, the special agent in charge of the FBI in Albuquerque, told a
news conference Monday afternoon announcing the guilty plea. “Instead,
he stole a great deal of money from all of them so he could support a
lavish lifestyle, like a lodge in Angel Fire.”
The federal charges against him and the agreement, in which he
pleaded guilty to wire fraud and money laundering, were not made public
until hours after Donisthorpe, 62, left the courthouse. The U.S.
Attorneys Office then held what it called a “law enforcement
announcement” and refused to take any questions.
in his plea agreement that he used his ill-gotten gains to pay mortgages
on his home in Albuquerque and vacation home in Angel Fire. He will be
sentenced to eight to 12 years in prison, according to the
recommendation in his plea agreement.
He also must pay $4,812,857 in restitution to the victims of his crimes.
ran a decadelong scheme in which he stole more than $4.8 million from
many of the 70 of his nonprofit trust company’s clients, acting U.S.
Attorney James Tierney said Monday.
At the end of 2016, the
company should have had more than $5 million in client assets, excluding
real estate and insurance policies. But it had only $926,000, according
to a search warrant affidavit unsealed on Monday.
who currently lives in Bloomfield, was released on standard conditions
of release after his court appearance before Magistrate Judge Laura
Fashing. His sentencing hearing hasn’t been scheduled.
Ahmad Assed, Donisthorpe’s attorney, could not be reached for comment Monday.
this year, state financial regulators accused Donisthorpe of siphoning
client money, the FBI filed for forfeiture of some of his property and
the state put his nonprofit company into receivership. About 40 of his
clients had been notified by the state that their trust money was
But federal charges – in the form of a criminal information – were
not filed until Monday, at the same time as the plea agreement.
criminal information revealed more details about the case. It said that
from 2006 through 2016, Donisthorpe on numerous occasions liquidated
his clients’ investments and then had their money transferred to
accounts that he controlled, which he used for his own personal
expenses. He then concealed the theft by causing his accounting staff to
falsely record the clients’ balances in Desert State accounting
records, according to the criminal information.
He presented those
false records to his company’s board of directors, the Financial
Institutions Division and his clients, according to the information.
96-year-old lost $32,000
Donna Burk, of Texas, still hasn’t told her 96-year-old mother her $32,000 savings held at Desert State was stolen.
Burk said Monday that she hopes enough money will be recovered to help compensate victims for their losses.
“It’s one step out of the way. It’s tremendous. It’s great. But I’m still just going to pray.”
the plea deal, Donisthorpe agreed to the forfeiture of the company’s
headquarters in Albuquerque, an Angel Fire vacation home and his
interest in a Texas cattle ranch, in addition to the restitution.
was no prior notice of Monday’s plea by Donisthorpe, who hasn’t been
seen for months since state regulators filed their case alleging the
theft. Burk said she hopes to appear at Donisthorpe’s sentencing.
love for him to be able to see faces of victims,” said Burk, who has
been in contact with other victims, some of whom are being hounded by
creditors. She has already had to adjust her work schedule starting in
January because she’s had to reduce the hours she can pay an in-home
sitter for her mother.
The two search
warrants unsealed Monday show that in January 2017, the state Financial
Institutions Division contacted Desert State and Donisthorpe to
schedule an examination of the company the next month.
As the date
of that examination approached, the state agency was unable to reach
Donisthorpe or receive records it had requested from him.
Institutions Division employees went to Desert State multiple times in
late February and early March, and no one was working there, according
to the warrants.
Liane Kerr, Donisthorpe’s now ex-wife, contacted
the division in early March and said her husband had a stroke and was
hospitalized. She said several Desert State employees and board members
had recently quit or were out of the country. She said the people
working there at the time would be unable to assist with the
examination, according to the warrants.
In late March, Helen
Bennet, an attorney and Desert State board member, told the Financial
Institutions Division that Donisthorpe had recently tried to commit
suicide by overdosing on prescription medication. She said he told her
that he couldn’t remember whether he embezzled money but that if money
was missing he must have done it, according to the search warrants.
Mayor Scott Kominiak was appointed acting CEO of Desert State in
mid-March, and he took possession of a computer that Donisthorpe used
while operating the company. FBI agents obtained a search warrant for
that computer in early June.
Full Article & Source:
Guardianship firm’s former CEO admits stealing $4 million