- Associated Press - Tuesday, April 15, 2014

BOISE, Idaho (AP) - A federal jury has convicted four officials at a failed southwest Idaho property management company of fraud for bilking investors out of billions of dollars.

The Idaho Statesman reports (https://bit.ly/1n8Ob7T) the jury deliberated three days before returning the guilty verdicts Monday in the trial involving real estate company DBSI of Meridian.

Prosecutors say the company used money from new investors to make payments to earlier investors. But when new investors stopped putting in money, the company couldn’t meet obligations. Prosecutors said company officials, despite mounting problems, continued to tell investors, brokers and due diligence firms that the company was doing well. It filed for bankruptcy in 2008.

Prosecutors described the fraud as a Ponzi scheme, but were not allowed to use that term in court.

Company President Douglas Swenson was found guilty of 44 counts of security fraud and 34 counts of wire fraud.

Company secretaries Jeremy Swenson and David Swenson, sons of Douglas Swenson, were convicted of 44 counts of security fraud. Company attorney Mark Ellison was also convicted of 44 counts of security fraud.

“The jury’s verdicts show that the jurors listened carefully and thoughtfully to the evidence that was presented, the attorneys’ arguments and the court’s instructions,” Wendy Olson, U.S. attorney for Idaho, said in a written statement.

Douglas Swenson faces up to 20 years in prison on each of the wire fraud convictions. He and the other three defendants face up to five years on the securities fraud convictions. All remain in custody.

U.S. District Court Judge B. Lynn Winmill did not set a sentencing date.

More than 22,000 claims have been filed with the bankruptcy trustee by investors, property owners, vendors and state and local governments seeking to recover more than $102 billion from DBSI’s collapse.

DBSI ran into trouble when the housing crisis began to hit the country. Investors, including former Republican U.S. Rep. Rick Hill of Montana, accused DBSI of fraud in a billion-dollar class action lawsuit.

DBSI at one time managed 280 shopping centers, office buildings and other commercial buildings in Idaho and 33 other states, with the holdings worth $2.7 billion. DBSI sold fractional shares to groups of investors.


Information from: Idaho Statesman, https://www.idahostatesman.com

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