An Oregon CPA has been sentenced to 48 months in prison for defrauding clients of his former business, Summit Accomodators Inc.
Under a plea agreement, Brian D. Stevens, 56, pleaded guilty to conspiracy to commit wire fraud and conspiracy to commit money laundering violations.
Stevens admitted that he and others defrauded customers of his Bend, Ore.-based business from 1999 through 2008, misused over $44 million of customer funds, and caused 91 Summit customers to lose $13.7 million.
Stevens’ alleged co-conspirators included another CPA, Mark A. Neuman, along with attorney Lane D. Lyons and Timothy D. Larkin, who are charged with the same offenses and are expected to go to trial in February 2013.
Stevens, a CPA, acknowledged he and others created Summit to help customers take advantage of lawful federal income tax deferral transactions. In a typical transaction, a customer would sell income producing property, allow Summit to hold the proceeds of the sale, then buy another income producing property within 180 days.
Federal income tax laws then allowed the customer to defer paying taxes on the profits from sale of the first property. Summit eventually opened affiliate offices in Texas, Washington, Utah, Montana, Wyoming, Nevada, and Lake Oswego, Ore.
At Stevens’ sentencing hearing before Judge Michael Mosman last Friday, two of the 91 victims testified about their experience with Summit and about how the loss of their money affected their lives. One victim described how she and her husband worked for years to improve their small cattle ranch so they could sell it and buy their dream ranch. They entrusted Summit with the proceeds from the sale of their business headquarters, and she said the loss of those funds stopped their plans to expand this local small business.
Stevens admitted that through Summit, he and his co-workers promised Summit’s customers their money would be deposited in a bank, where it would remain for the 180-day period until used to purchase another income producing property. Stevens acknowledged that from 2004 through October 2008, Summit held between $49 million and $109 million of its customers’ money in a typical month.
Stevens acknowledged that contrary to Summit’s representations to customers, he and his colleagues used Summit customers’ money to invest in more than 100 real estate projects and that he and his colleagues had direct personal interests in most of these projects. Stevens also admitted they loaned a portion of this money to individuals and businesses, and to themselves.
Stevens admitted he and his colleagues concealed this fraudulent activity, in part, by creating a company called Inland Capital Corporation, loaning Summit customer money to Inland Capital, then causing Inland Capital to loan the money to small corporations they created to own each real estate investment.
He also admitted that he and the other defendants further hid the fraud scheme by concealing from most of Summit’s employees and from most of the owner-operators of Summit’s affiliates that the conspirators were using Summit customer money to invest in real estate and to loan to themselves and others. When Summit’s customers and affiliate owner-operators began to express concern about the safety of Summit customer money, the alleged co-conspirators used statements in emails and other media to convey the false impression that all Summit customer money was deposited and maintained in financial institutions.
“The sentencing of Mr. Stevens to four years in prison should tell every licensed professional there are serious consequences for misusing client funds,” said U.S. Attorney Amanda Marshall in a statement.
Judge Mosman ordered that Stevens report to federal prison in early September. He plans to conduct a restitution hearing in approximately 90 days to determine how much money he will order Stevens to repay to Summit’s clients.
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