Four men convicted in 2014 of fraud stemming from the collapse of an Idaho property management company were finally sent to prison.
Douglas Swenson, the founder and CEO of bankrupt Meridian-based Diversified Business Services and Investments, or DBSI, was taken into custody July 10, the Idaho Statesman reported .
Swanson, convicted of 44 counts of securities fraud and 34 counts of wire fraud, was sentenced to 20 years.
Company attorney Mark Ellison and Douglas Swanson’s sons, Jeremy Swenson and David Swenson, were each convicted of 44 counts of securities fraud. Ellison was sentenced to five years. The younger Swensons were each sentenced to three.
DBSI managed office buildings and shopping centers throughout the nation and sold ownership in those properties to investors. As business slowed, the company began using money from new investors to make income payments to older investors.
There wasn’t enough money to cover those payments, and the company declared bankruptcy in 2008. The operation had become a Ponzi scheme, prosecutors said.
Assistant U.S. Attorney Ray Patricco argued that because the 9th U.S. Circuit Court of Appeals had upheld the four men’s convictions and last month the U.S. Supreme Court declined to hear the case, they should be taken into custody immediately.
The men had remained free while awaiting trial.
U.S. Magistrate Candy Dale said the policy of allowing defendants to remain free did not apply once they had exhausted all of their appeals. “There is no further recourse for the defendants,” Dale said.
Douglas Swenson was ordered to pay $180.6 million in restitution. The other three defendants were each ordered to pay $32.2 million.
More than 22,000 claims totaling $102 billion were filed in the bankruptcy. The 8,500 investors, and vendors who did work for the company, received pennies on the dollar.