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SALT LAKE CITY -- Federal investigators say they're seeing a substantial increase in investment fraud cases in Utah, and victims are being fleeced out of sums of money that were unheard of just a few years ago.
Bernie Madoff is the national symbol of fraud. He was the operator of what's considered the largest investment fraud in Wall Street history -- a Ponzi scheme costing investors an estimated $18 billion.
But top white-collar crime investigators in Utah say they've seen a sharp spike in fraud cases here too.
"It used to be that a $100 million Ponzi scheme was huge. Now we're not even thinking that they're big unless they get to have a billion or above," says Ken Israel, Salt Lake City regional director for the U.S. Security and Exchange Commission.
FBI supervisory special agent Jim Malpede says the amount of fraud his agency is seeing is unprecedented.
"In the past, a $3-to-$5 million case would be a significant case for us to work. Today, many of our cases exceed $75 [million] or $100 million," Malpede says.
Utah County businessman Rick Koerber is estimated to have duped Utah investors of roughly that sum in bogus real estate investments. In the unrelated, $18 million case of Jeffrey Mowen, of Lindon, investigators say one investor was promised a 33 percent return each month on a $100,000 investment. Both men pleaded not guilty.
Investigators say investors and operators of fraud schemes often develop a trust due to religious, social or neighbor affiliation.
"We refer to it as affinity fraud. That's what we see as a common thread," Malpede says. [CLICK HERE for a list of common fraud schemes from the FBI]
USA Today reports federal prosecutions of financial crime plummeted before the financial crisis. Now, the Obama administration is making it a top priority.
Utah's FBI office has doubled its capacity to pursue white-collar crime. Most troubling are white-collar crime victims who can't afford their losses.
"We see a lot of cases where people who cannot afford to lose money, lose it in these schemes. That's the biggest concern," Israel says.
Perhaps the best tip to avoid getting conned is this: Do your due diligence. If something looks too good to be true, it probably is.
If you would like to report a case of investment fraud, call the FBI's tip line at 801-579-1400.
E-mail: jdaley@ksl.com
