Here's a story that you may have overlooked recently amid the recent headlines about Steven Cohen, SAC Capital, Fabrice Tourre, Sandeep Aggarwal, and the other defendants du jour. Perhaps, yet another drop in a flood of stories about financial fraud, but it's not quite garden variety; for starters, it involves a suicide and planned murder.
Paul S. Kruse, Jacksonville, FL, and his brother had apparently been providing financial advisory services for decades; however, starting in 2010, the two brothers, now unlicensed advisors, conspired to recruit and defraud a number of their clients. Of course when you got two unlicensed advisors hawking their services, it shouldn't come as a particular surprise that they set up a sham investment firm.
Yorkshire . . . as in the pudding
The Kruse brothers operated behind the bogus "Yorkshire Financial Services," which they told anyone who was willing to listen that the company had been in business over 30 years, was staffed by experienced securities traders; and traded stocks, bonds, and currencies as part of an IRA program. Among victims of this scam were a number of retirees, who the Kruses convinced to move their Individual Retirement Accounts ("IRAs") to Yorkshire. At the end of this carnage, 21 victims had been defrauded out of $931,844. Sadly, some IRAs took a beating.
Yeah, you know how this one goes. The investors' funds went to pay for luxury cars, home improvements, personal items, and funded hundreds of thousands of dollars in cash withdrawals by the con artists.
In early 2011, Kruse hired a personal assistant, who got a first-hand view of Kruse's operations, which included forging investor signatures and the conversion of investors' money. At a point in time, when Kruse was out of town, the assistant blew the whistle to the Federal Bureau of Investigation. By early 2012, perhaps sensing that the jig was up, Kruse approached the FBI and provided a voluntary written confession of his guilt in running an investment fraud scheme.
From Bad To Worse And Beyond
After Kruse's FBI confession, his co-conspirator brother committed suicide; thereafter, Kruse was held in pre-trial detention.
They say confession is good for the soul. Of course, inherent in that wisdom is the existence of a soul.
While in jail, Kruse hired hitmen to murder his former personal assistant, who was scheduled to be a government witness. In hiring the killers, Kruse wanted to silence the potential government witness and also to avenge his brother's death. Oh, and for good measure, along with taking out the witness, Kruse also hired the hitmen to rob and kill two former business partners, whom he believed had cheated him.
Turns out that those two hitmen - the ones supposed to kill the assistant and the former partners -they were undercover federal agents.
Wheels of Justice
Kruse was first indicted in April 2012 and then again pursuant to a November 1, 2012, Superseding Indictment. On February 11, 2013, a federal jury in the Middle District of Florida found him guilty of:
attempting to murder a government witness, and
At sentencing, Kruse faced a maximum penalty of:
30 years in prison for attempting to kill a government witness;
20 years in prison on the conspiracy conviction and for each wire fraud conviction; and
10 years in prison for his murder-for-hire plot.
On July 31, 2013, Kruse, aged 60, was sentenced to 30 years in prison; five years of supervised release; and ordered to pay a money judgment of $897,960, which represents the net proceeds of the charged criminal conduct.