Texas Securities Fraud: Houston Investment Advisor Gets Five Years for Defrauding Investors and Prison Sentences are Rendered in $6.4M Diamond Investor Fraud Case

Lawrence Allen DeShetler will serve 60 months in federal prison for Texas investor fraud. The Houston man pleaded guilty to mail fraud earlier this year after he fraudulently solicited $1.9M from five clients.

Starting in 2014, the former investment advisor, certified planner, and head of DeShetler & Company started persuading clients that if they let him invest their funds they would make higher returns. These clients took money from their investment accounts and gave them to him. Unfortunately, DeShetler used the money on himself.

He has since admitted to using some of investors’ funds to build a house abroad. DeShetler also admitted that he persuaded one widow who was an octogenarian to liquidate a trust and transfer nearly $190K to him. He even stayed in her home while she went away. Upon her return DeShetler was gone and so were her investment documents.

Earlier, the Texas State Securities Board accused the Houston financial adviser of recommending that one client cash out an IRA. DeShetler then used these funds on restaurant expenses, country club costs, and other bills. The state has since revoked his registration as an investment adviser in Texas.

In addition to prison time, DeShetler must pay almost $927K in restitution.

Texas Sentences Two Men In $6.4M Diamond Investment Fraud
In other Texas securities fraud news, the U.S. Attorney for the Northern District of Texas announced that Craig Allen Otteson and Jay Bruce Heimburger have been sentenced over their involvement in a $6.4M diamond investment scam. The two men pleaded guilty to mail fraud earlier this year.

Otteson, who was CCO of Stonebridge Advisors LLC and General Partner of Worldwide Diamond, will serve 121 months in prison and pay over $4.7M in restitution. Heimburger, who was a Worldwide Diamond Principal Partner, as well as registered as a JBH Securities agent, received a 97-month sentence. He too must pay over $4.7M in restitution. A third defendant, Houston resident Christopher Arnold Jiongo, will be sentenced later this month.

According to the indictment, Jiongo generated $50K diamond notes that he and the other two defendants turned into vehicles for bringing in investors’ money. They made it appear as if the money would go toward buying and reselling diamonds and that each dollar was totally secured.

However, once the men realized that their plan was not working and they would not be able to honor their commitments to investors, they allegedly failed to notify American Safe Retirements that none of the investors’ money was secure. They also deceived investors by not telling them that the investment strategy was a bust.

The indictment contends that from ’11 through ’13, the three defendants “fraudulently collected” more than $6.4M from 77 investors. They also are accused of causing letters with false statements to be sent to the Texas State Securities Board and American Safe Retirements.

As part of his plea deal, Otteson signed documents stating that he and Heimburger took part in the diamond investment fraud to bilk investors through their false promises and fraudulent representations, as well as by fraudulently hiding from investors that their money was used for purposes other than buying and reselling diamonds. Also, Otteson admitted that he and Heimburger caused a sales agent to fraudulently sell nearly $1.9M of promissory notes to 23 California investors.

Our Texas securities fraud law firm works with investors throughout the state. Contact Shepherd Smith Edwards and Kantas, LTD LLP today. We also represent investors throughout the US.

Houston Adviser Who Preyed on Elderly Sentenced to 5 Years, Texas State Securities Board, November 2, 2017

Two North Texas men sentenced for roles in a $6.4 million diamond investment fraud scheme, Justice.gov, November 9, 2017

More Blog Posts:
Texas-Based Oil and Gas Company CEO Accused of Misappropriating Investor Funds, Stockbroker Fraud Blog, August 4, 2017

Expanded Texas Securities Case Indicts Six in Multimillion Dollar Pump-and-Dump Scam, Stockbroker Fraud Blog, July 21, 2017