A Montana man convicted of running an investment scam on the Internet was sentenced Tuesday to 25 years in federal prison and ordered to pay $13.2 million in restitution to more than 1,400 investors.
U.S. District Judge Larry Hicks in Reno told Rick Young, 52, of Lewistown, that the fraud carried out by his Nevada-based Global
One Group from 2006 to 2007 was "incredibly repulsive."
Many of the victims, the judge said, were vulnerable, "middle-class working people taking money out of accounts, trading out of their 401(k) plans, their pension plans, even off of their credit cards."
"Frankly, it was nothing more than a type of Ponzi scheme, but
it was incredibly sophisticated," he said.
Among other things, prosecutors said Young and his partner used
the money for their own gain in 2006 and 2007 partly by falsely
marketing the Global One as a licensed securities broker. A federal
jury in March convicted Young of one count of conspiracy to commit
mail and wire fraud, two counts of wire fraud, three counts of money laundering and one count of securities fraud.
Young appealed to the judge for "mercy and leniency" so that he might see his disabled 49-year-old wife again before one of them
"This case is a big cluster. It's all messed up," said Young, who denied any criminal wrongdoing and said he was a victim of overzealous law enforcement and a former business partners who stole from him.
"I never thought in 1,000 years I'd be sitting here. It shows the glaring injustice of the justice system," he said. "Maybe I was a bad businessman. Maybe I made some mistakes. But never did I step out to do something criminal."
Hicks said that he had to give Young credit for one thing - his "smooth" sales techniques on his webcasts.
"It's the court's view the defendant obviously was impressed with his own skills in salesmanship that he could tell his story to the jury just as successfully," he said. He said Young may have begun with some good intentions but "got carried away" in a "snowball" of greed.
"By the time it was at the bottom of the hill, he was so deeply mired in the fraud of these people that this court finds it,frankly, incredibly repulsive," he said.
Young's co-defendant, William Willard, 68, of Bozeman, Mont.,was sentenced later Tuesday to 15 months in prison. Prosecutors
recommended that penalty based on his cooperation in the investigation and in the prosecution of Young. Willard pleaded guilty in February to conspiracy to commit wire fraud.
Assistant U.S. Attorney Steven Myhre acknowledged it was a harsh
penalty to seek for white-collar crime but Young deserved 30 years
"Young molded and perfected a sophisticated and wide-ranging fraud perpetrated over a three-year period where he controlled all the money, manipulated information, drained the savings of victims,captivated and brainwashed others through repeated lies and false promises spewed over and over again through the Internet, defamed and denigrated those who dared challenge him and enriched himself n the process without a care for those who suffered enormous loss," Myhre wrote in a sentencing brief.
Hicks also rejected a defense request that Young be allowed to serve the sentences for various counts concurrently instead one after another, which have put his sentence somewhere between 17 and 20 years.
"I feel this case is so aggravated it calls for something more
than a concurrent sentence," the judge said.
"This is such a massive fraud with so many victims who suffered such real loss and whose lives are still affected," said Hicks, who's been on the federal bench 10 years but said he couldn't recall a case where the criminal activity had adversely affected so many people so seriously.
Prosecutors said Young, Willard and others marketed Global One,
which wasn't a licensed broker, as a company that provided educational opportunities on trading techniques on the foreign exchange market. Investors were charged $500 annual memberships for access to Global One's website, conference calls and Web-based seminars, and instructed to open accounts with foreign exchange brokers recommended by Global One.
In presentations, investors were told that Young made 8,000 successful trades in a year without suffering one loss, and that the company had a software program that could automatically execute trades.
Prosecutors said the claims were not true and there was no automatic trader, even though Young could be seen on webcasts telling investors it was "working its magic."
"Go Auto! Go Auto!" Young would say while three people manually executed the trades.
Prosecutors said they could not confirm it was a record, but that the 25-year sentence was one of the most significant ever for white-collar crime in that district of Nevada. The added length was due in part to Young portraying himself as a "man of God" and appealing to investors religious faith, they said.
Myhre said in a statement after the sentencing that the case shows consumers should be suspicious of so-called investment experts who offer above-average rates of return, as well as those who "appeal to your personal status, such as your religious beliefs, need for financial security and sense of belonging."