GREAT FALLS, Mont. (CN) – A money lender faces up to 20 years in federal prison after squabbling with a crony and pleading guilty in an $800,000 investment fraud that promised victims quick 100 percent returns on “risk-free” investments in government securities, the U.S. Attorney’s Office said.
Terrence Ezekiel Paulin, 47, of Ashland, Ky., could also be fined up to $250,000.
He pleaded guilty before U.S. District Judge Sam E. Haddon.
Prosecutors said Paulin, Dan Oaheyoh Two Feathers and mortgage broker Shawn Swor formed DTF Consulting Group in 2008. Paulin created a phony $1.5 billion letter of credit, purportedly from Wachovia Bank, to show investors that DTF had a negotiable instrument to make their trading program work.
Paulin admitted that he created the phony document, but accused Two Feathers of directing and the scam. Two Feathers denied this, but admitted knowing about it, the U.S. Attorney’s Office said in a statement.
Paulin said he understood the letter would be used to entice investors to the company’s trading program, but that Two Feathers used the letter in other ways, such as telling a real estate agent it was genuine, to try to buy property.
Prosecutors said Paulin and Swor had a falling out with Two Feathers and stopped promoting the scheme after the Realtor discovered the truth and turned the letter over to local law enforcement.
Eight investors were defrauded in the original scheme, and three more were caught in a second, advance-fee scheme in which they paid money up front for a loan. Between February and June of 2008, the eleven investors lost approximately $800,000. The money was wired to a DTF account controlled by Two Feathers; Paulin received more than $278,000, prosecutors said.
Paulin will be sentenced on Sept. 14.
Swor and Two Feathers also have pleaded guilty and await sentencing.