On December 15, 2010, Thomas Repke, 57, of Salt Lake City, Utah and James Jeffery, 58, of Belleville, Ontario, Canada were indicted. Repke was arraigned on December 27, 2010, in federal court in Atlanta, GA on multiple counts of mail fraud, wire fraud and conspiracy, relating to his operation of the Utah-based investment company, "Coadum Capital." Jeffery has not yet been arraigned. According to the Indictment, in 2006 and 2007, Defendants Repke and Jeffery operated Coadum Capital, which at its height attracted over 100 investors and over $30 million in investments. Coadum offered shares in hedge funds and advertised monthly returns of 5 percent. In its sales pitch to investors, Coadum represented that funds would remain protected in an escrow account and would therefore not be at risk. Several investors were provided marketing materials which read:
Cash Deposit ALWAYS remains in escrow in your name
Cash Depositor's principal deposit NEVER at risk.Monthly account statements sent to investors described their investments as "Principal Preserved Alternative Investments for Growth Oriented Clients," and these account statements reported the investors' "Ending Principal Balance in Escrow Account." The monthly account statements also stated that the monthly rate of interest earned by the fund was generally between three to five percent.
In case you missed that -- On the one hand, we're told that the Defendants transferred the investors' funds overseas to accounts over which they had no control and about which they received little or no information. Hmmm, yeah...sure, that makes sense to me. Perfectly professional way to handle investors' funds.
On the other hand, we're told that the Defendants became "frustrated." Oh, poor babies -- imagine that, they were frustrated! And what exactly frustrated Repke and Jeffery? They couldn't get a handle on where the funds were, how they were being traded, and what profits were being earned. Of course, I'm not sure why the Defendants were particularly frustrated by not knowing how the dollars were being worked when they had sent the investors' funds to accounts over which they lacked control and couldn't get the time of day. But, then again, maybe I'm just overly fussy with these things?Through 2007, Repke and Jeffery generally honored requests by investors for distributions of supposed earnings. Allegedly, these payments were merely a device that the Defendants used to give Coadum the appearance of a legitimate, profitable fund. Because Coadum had received little or no earnings from its investments during this period, Repke and Jeffery were only able to make these payments by diverting newly invested funds from other investors. The investors were not told that newly-invested monies, and not actual "earnings," were a principal source of the distributions they received. Can anyone spell P-O-N-Z-I?
The Indictment alleges that investors lost approximately $30 million with Coadum. The Defendants are charged with 22 counts of mail fraud, wire fraud and conspiracy, which carry a maximum sentence of 20 years in prison and a fine of up to $250,000 each. In determining the actual sentence, courts will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.
NOTE: The Indictment contains only allegations. Defendant Repke and Defendant Jeffery are presumed innocent of the charges and it will be the government's burden to prove the Defendants' guilt beyond a reasonable doubt at trial.