$70M Ponzi Scam Leads to 5-Year Prison Term

Stephen J. Hatch, the mastermind of a $70M Arizona Ponzi scam, has been sentenced to five years in prison. Hatch, who pleaded guilty to fraud, targeted Christian investors, causing many of them to lose their life savings.

As part of his plea deal, the Texas man agreed to pay back $1M to investors. Meantime, prosecutors agreed to not file criminal charges against Hatch’s children.

Many of his victims were family members and friends. Hatch persuaded 110 investors to back various real estate properties by promising double digit returns on land deals.

Hatch purchased empty land from an Arizona real estate speculator. He then sought investments using partnerships named after biblical verses. He also included biblical quotes in solicitation emails and told investors that he was helping them in God’s name.

Hatch commingled funds and used new investor money to pay earlier investors. In a complaint brought by investors, they accused him of using part of their funds to pay for the lavish salaries of Hatch’s friends and children, as well as to cover other personal expenses and investments.

Brad Heinrichs, who was a college friend of one of Hatch’s children, recruited a lot of the investors. His own grandmother was one of the investors.

In the plea deal, Heinrichs is accused of promising investors “fictitious” return amounts, paying some investors with other investors’ money, and “appropriating significant” investor funds.

Affinity Scam
This type of fraud often targets investors who belong to a particular affiliation or group possessing identifiable traits, such as a religious group, an alumni group, or a particular ethnic community. The fraudster may even be a member of the group and/or may ask the help of respected group leaders and others to bring in other investors. The connections among participants and the scammer can create a false sense of legitimacy and trust that is not warranted, which can make it easier to defraud members of the group.

At Shepherd Smith Edwards and Kantas, LTD LLP, our affinity fraud lawyers work with investor in trying to recoup their losses. Contact us today to request your free case consultation.

Real-estate investor gets 5-year prison term for $70 million Arizona land scheme, Arizona Central, June 14, 2017
Affinity Fraud, SEC