DBSI founders sentenced to prison for defrauding investors

DBSI founders sentenced to prison for defrauding investors
BOISE, Idaho (KBOI) - The founders of the failed Meridian-based real estate company DBSI have been sentenced to prison after a jury found that they had defrauded hundreds of investors.

Douglas Swenson, 66, of Meridian, who was the company's CEO, was sentenced in federal court to 20 years in prison.

Mark Ellison, 66, of Meridian, who served as the company's general counsel, was sentenced to five years in prison.

The two were convicted in April off 44 counts of securities fraud, with Swenson also being convicted of 34 counts of wire fraud.

The United States Attorney's Office in Boise says that the company told possible investors that it operated a successful business model that minimized risk and paid fixed returns as high as 9.5 percent.

However, the attorney's office says those claims were false. The company was unprofitable and executives approved deliberate deceptive accounting practices that concealed its true financial condition.

Judge Lynn Winmill, at sentencing, concluded that Swenson and Ellison were responsible for $100 million in losses and that more than 250 were victims of the fraud.

“Today’s significant sentences for Douglas Swenson and Mark Ellison send the clear message that those who induce investors to trust them with their money, in some instances with their life savings, have a solemn and legal obligation to be honest and truthful,” said Wendy J. Olson, U.S. Attorney for Idaho in a press release.

Olson went on to say:

“The losses caused by these defendants’ criminal conduct represent the greatest losses in any fraud case every prosecuted in the District of Idaho. It is appropriate that the protagonist of that fraud, Douglas Swenson, also receive the most serious sentence. The U.S. Attorney’s Office extends its heartfelt sympathies to those who were victims of this fraud, including, of course, to those investors who appeared in Court today to describe the devastating impact these crimes have had on their lives. We will continue to make every effort to insure that as many of the proceeds of these frauds as possible are recovered and returned to the victims.”

“When you knowingly mix deceit and trickery into the financial well-being of individuals, you create a recipe for devastation that could last a lifetime,” said Stephen Boyd, IRS Criminal Investigation Special Agent in Charge for the state of Idaho. “Today’s sentencing demonstrates how federal law enforcement will band together to help put an end to the criminal behavior of those who prey on investors. IRS Criminal investigators will continue to use their financial expertise to identify and trace funds in these types of investor fraud schemes.”

Co-defendants David Swenson and Jeremy Swenson, who are Douglas' sons, were also found guilty of 44 counts of securities fraud. They are scheduled to be sentenced Thursday.