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Draper man accused of Ponzi scheme faces criminal charges

By Dennis Romboy  |  Posted Dec 8th, 2016 @ 7:24pm


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SALT LAKE CITY — A federal grand jury has indicted a Draper man on felony fraud charges in connection with an alleged $3 million investment fraud scheme through his company Blackbird Capital Partners.

Andrew D. Kelley, 41, faces seven counts of securities fraud and four counts each of wire fraud and money laundering. Kelley pleaded not guilty Thursday in U.S. District Court.

The Securities and Exchange Commission filed a civil complaint against Kelley and his partner, Paul H. Shumway, 47, of Lehi, last week, accusing them of orchestrating a Ponzi scheme. Shumway has not been charged criminally.

Prosecutors say Kelley told investors that he developed an algorithmic software program for Blackbird to invest its own funds to profit the company and investors. Kelley claimed he spent millions of dollars and thousands of hours developing the program that made up to 300 percent returns, the SEC says.

Kelley also told investors he was a family man and faithful member of the LDS Church, according to court documents.

Blackbird was supposed to invest money in various security and futures instruments, but investor funds were used to pay returns to earlier investors and for other personal and business expenses, authorities say.

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Kelley told one investor in October that he had "screwed up" and lost $6 million, according to court documents. He initially blamed the loss on Brexit but then told the investor he used his money to "plug old holes" and pay other investors due to trading losses.

When the investor confronted Kelley about his "pattern of fraud," Kelley told him, "I am delusional. I am a compulsive liar," the complaint says. Kelley told the investor he could "trade his way out of it" to repay him if he wouldn't report him to authorities, according to the complaint.

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