Kevin Lawrence Wright, 39, Washington County, Utah and Michael Stephen Hurst, 44, Davis County, Utah, were sentenced in connection with their operation of an equity-skimming investment scheme. Wright was ordered to serve 20 days in jail and both men were placed on probation for 2 years and ordered to work 500 hours of community service. The two have already paid $143,410 in restitution and were each ordered to pay a $1,000 fine. Wright and Hurst both pleaded guilty on July 17 to one third-degree felony count of securities fraud.
"Utah's housing market is booming and unfortunately con artists are eager to take advantage of people during this boom. We are grateful that the prosecutors and investigators in this case did everything possible to make sure this crime did not pay," said Utah Attorney General Mark Shurtleff.
"We urge all citizens to beware of investment opportunities involving real estate; there are many schemes being offered where the only ones to benefit are the crooks," added Utah Department of Commerce Executive Director Francine A. Giani.
According to court papers, Wright and Hurst persuaded Brad Nielsen to purchase a home in Bluffdale, Utah for $590,000 but obtain loans for $810,000. Nielsen was told he would then be given $75,000 as a reserve for making house payments. Wright claimed that the remaining equity would be invested into a mutual fund called the Capital Enhancement Club. Wright and Hurst told the investor that he could earn 8-10% profit on the mutual fund and as much as 30% in a high-yield fund.
After the home was purchased, the investor did not receive the $75,000 to put into savings and no money went to the Capital Enhancement Club. Instead, Wright used part of the money to pay off a debt and Hurst used some of the funds for a diamond investment scheme. The investor was never told that Wright had 3 unpaid judgments totaling $327,000 and also owed $56,000 for delinquent state income taxes.
"They are both very dishonest individuals and I am hoping that other victims will come forward to make sure they are held accountable," says Nielsen.
Rachel Dollar, the editor of Mortgage Fraud Blog is an attorney and Certified Mortgage Banker who handles litigation for lending institutions and secondary market investors.