Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.
+1 212 318 2000
Europe, Middle East, & Africa
+44 20 7330 7500
+65 6212 1000
A Texas man convicted of bilking investors from North Dakota and elsewhere out of millions of dollars was sentenced to five years in prison Monday after asking a federal judge to give him probation.
Verlin Swartzendruber, 68, of Laredo, Texas, pleaded guilty in May to wire fraud, after he was originally charged with 11 felony counts. Court documents accuse Swartzendruber of soliciting between $14 million and $16 million from more than 500 investors in a bank trading scheme.
Swartzendruber apologized to his victims during Monday's hearing. He said he believed the trading programs were "truly legitimate" and lawyers signed off on most of his decisions.
"With my limited banking experience, I simply bit off more than I could handle," Swartzendruber said. "I feel like I'm a good man with high ideals.
"I ask the court for leniency and probation so I can be useful to society," he said.
U.S. District Judge Ralph Erickson said several investors lost their life savings and one person committed suicide as a result of the conspiracy.
"This scheme preyed on the most vulnerable of society," Erickson said.
Prosecutors said Swartzendruber told investors he had unique access to international trading programs that would generate high rates of returns, when he knew that such funds did not exist. He recruited investors through promoters, who often received bonuses, court documents show.
One of the promoters, Minot commodities broker Frederick Keiser Jr., was convicted in March 2007 on 22 counts and sentenced to 12 years in prison. One of Keiser's associates, Neville Solomon, was convicted earlier this year and sentenced to more than seven years in prison.
Prosecutor Brett Shasky said Swartzendruber had a "much bigger role" in the conspiracy than Keiser and recruited investors from a wider geographic area. Unlike Keiser, Swartzendruber hired a lawyer and negotiated with prosecutors, Shasky said, so he deserved a lighter sentence.
Swartzendruber's wife, Lois, pleaded for probation for her husband of 48 years and introduced about a dozen friends and relatives who were in court to support him. She described Verlin as "a man of integrity, honesty and good moral character" and said he would never hurt people.
Erickson and Shasky said Verlin Swartzendruber used his religious affiliation to take advantage of investors.
"I believe his greed did get the better of him, and this is why we are here today," Shasky said.
Defense attorney Clinton Broden denied that Swartzendruber was motivated by greed and said other people used him. He said Swartzendruber did not get any of the $10 million that was lost in the scheme.
"He was incredibly naive, incredibly stupid, incredibly reckless," Broden said. "He was not . greedy."
Shasky responded that it was impossible for investigators to determine what happened to a lot of the money.
Erickson noted during Broden's argument that Swartzendruber left the country, changed his name to Joseph Severin, and kept gathering money after the North Dakota Securities Commission told him 10 years ago to stop.
"This is not the conduct, generally speaking, of an innocent man," the judge said.