SALT LAKE CITY — A Draper man who told investors he was a faithful member of the LDS Church has admitted to securities fraud in a plea deal with federal prosecutors.
A federal grand jury last December indicted Andrew D. Kelley, 41, on seven counts of securities fraud and four counts each of wire fraud and money laundering in connection with a $3 million investment scheme through his company, Blackbird Capital Partners.
In exchange for Kelley pleading guilty to one count of securities fraud, the U.S. Attorney's Office dropped the 14 other charges against him. Kelley faces up to 20 years in prison and a $5 million fine. Prosecutors agreed to recommend a sentence on the low end of the federal sentencing guideline range. He is scheduled to be sentenced in September.
Kelley admitted that in an effort to get investments and lull investors into a false sense of security, he falsely represented high returns in Blackbird's day-trading business when in fact he lost millions of dollars and diverted money for personal gain, according to court documents.
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, court documents say.
Kelley also told investors he was a family man and a faithful member of The Church of Jesus Christ of Latter-day Saints, 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.
Kelley told one investor last 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 him, Kelley said, "I am delusional. I am a compulsive liar," court documents say. Kelley told the investor he could "trade his way out of it" to repay him if he wouldn't report him to authorities.