POCATELLO - David Hansen, 48, of Idaho Falls, pleaded guilty today to wire fraud, U.S. Attorney Bart M. Davis announced. Pursuant to a written plea agreement filed with the court, Hansen pleaded guilty to count 16 of the superseding indictment. The trial set for January 21, 2020 was vacated.
According to court records, Hansen was the Chief Executive Officer and a 90-percent partner in Yellowstone Partners, LLC, an investment management firm headquartered in Idaho Falls. Clients of Yellowstone Partners entrusted their monies to Yellowstone Partners to invest and manage on their behalf. In exchange, Yellowstone Partners earned fees for its services. Yellowstone Partners’ fees were set forth in investment agreements between Yellowstone Partners and its clients.
According to court records, Yellowstone Partners’ clients’ monies were kept in accounts at third party custodians. Yellowstone Partners directed how the monies in client accounts were invested and how they were disbursed. This included submitting email billing requests to a third party custodian to take fees from client accounts and to deposit them into Yellowstone Partners’ own accounts.
According to court records, from 2008 through April of 2016, Hansen knowingly and intentionally devised a scheme to defraud clients of Yellowstone Partners by obtaining money or property by means of false and fraudulent pretenses, representations, and promises. Specifically, the scheme was to fraudulently bill clients for fees to which Yellowstone Partners was not entitled under the terms of the investment agreements or otherwise. Through this overbilling scheme, Hansen fraudulently obtained client funds from a third party custodian and used them to enrich himself and to fund Yellowstone Partners’ operations. For certain identified victims, Hansen personally submitted, or was carbon-copied, on 50 fraudulent overbilling requests to a custodian, which resulted in a loss of $2,675,856. For each of the overbillings, Hansen acted with the intent to deceive or cheat the victims.
As part of the plea agreement, Hansen agreed to pay full restitution to the victims of the wire fraud scheme, in an amount to be determined by the court at the time of sentencing. Further, Hansen agreed to a forfeiture judgment in the amount of restitution ordered by the court at the time of sentencing. Finally, Hansen agreed to cooperate with an Internal Revenue Service civil tax examination and assessment, and pay any unpaid tax due and owing, and accrued interest for his 2012 and 2013 Form 1040 joint income tax returns.
“Mr. Hansen was entrusted with other people’s money. He breached their trust. And his conduct over a prolonged period of time undermines the confidence of everyone who entrusts their money with others to invest,” said U.S. Attorney Davis. “By this prosecution and guilty plea, we hope to strongly deter others in Hansen’s position from engaging in the same behavior, and assure the investing public that those who do will be held fully accountable.”
“High-ranking corporate officials, such as Mr. Hansen, hold positions of trust not only in their companies, but also in the eyes of the public,” said IRS-CI Special Agent in Charge Andy Tsui. “IRS Criminal Investigation is committed to investigating individuals who abuse that trust by fraudulently using their corporations as personal piggy banks.”
For the wire fraud count, Hansen faces a statutory maximum of 20 years in prison, a $250,000 fine, and up to 3 years of supervised release.
Sentencing for Hansen is currently set for March 31, 2020, before Chief U.S. District Judge David C. Nye at the federal courthouse in Pocatello.
The case was investigated by Federal Bureau of Investigation and Internal Revenue Service-Criminal Investigation Division.
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BOISE - David Hansen, 47, formerly of Idaho Falls, was indicted yesterday, by a federal grand jury sitting in Boise on 17 counts of wire fraud and six counts of tax fraud, U.S. Attorney Bart M. Davis announced.
Hansen was the 90 percent owner and chief executive officer of Yellowstone Partners, LLC, an investment management firm headquartered in Idaho Falls. The indictment alleges the following: Yellowstone Partners managed its clients’ investment funds pursuant to management agreements that provided for Yellowstone Partners to collect fees for its services. The actual client funds were kept in accounts at national brokerage firms. Yellowstone Partners would receive its fees by submitting billing requests to the brokerage firms. Those requests were supposed to comply with the fees set forth in the management agreements between Yellowstone Partners and its clients.
The indictment furthermore alleges that: From 2008 to 2016, Hansen systematically and intentionally overbilled many of his clients’ accounts. He personally submitted fraudulent billing requests to a brokerage firm, and he also directed certain of his employees to do the same. The fraudulent billings resulted in the transfer to Hansen and Yellowstone Partners of client funds in amounts far in excess of what was allowed for under the management agreements. It is estimated that Hansen defrauded his clients of at least $9,448,941 through his overbilling scheme.
The indictment furthermore alleges that: In 2012 and 2013 Hansen aided and assisted in the preparation of false and fraudulent income tax returns for Yellowstone Partners and himself. Specifically, as part of the overall fraud at Yellowstone Partners, Hansen caused Yellowstone Partners’ revenue and his own income to be significantly underreported.
The indictment finally alleges that: if convicted of wire fraud, Hansen shall forfeit $9,448,941.
The charge of wire fraud is punishable by up to 20 years in prison, a maximum fine of $250,000, and up to five years of supervised release.
The charge of aiding and assisting in the presentation of a false and fraudulent tax return is punishable by up to 3 years in prison, a maximum fine of $250,000, and up to one year of supervised release.
This case is being investigated by the Federal Bureau of Investigation and the IRS-Criminal Investigations Division.
An indictment is a means of charging a person with criminal activity. It is not evidence. The person is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.