A federal jury in Virginia convicted an Arizona man and a California man in late February on charges of conspiracy to commit mail and wire fraud, wire fraud, and money laundering. The convictions stemmed from a nationwide investment scheme involving fraudulent wireless spectrum and dental franchise investments.
“They were immediately transferring 20% to 70% of the funds to other companies that they controlled in the form of purported fees.”
According to court records and evidence presented at trial, from approximately 2011 through 2017, David Alcorn, 78, of Scottsdale, Arizona, and Aghee William Smith II, 70, of Roseville, California, were part of an investment fraud conspiracy that operated in locations across the country.
Alcorn, Smith, and their co-conspirators—including Kent Maerki and his wife Norma Jean Coffin of Arizona, Daryl Bank of Florida, insurance salesman Tony Sellers of Idaho, insurance salesman Tom Barnett of California, attorney Billy Seabolt of Virginia, Raeann Gibson of Florida, and Roger Hudspeth of Virginia—deceived hundreds of unsuspecting investors, most of whom were at or near retirement age.
401k cash-outs
They convinced the retirees to invest in or send money to companies owned and controlled by Alcorn, Bank, and Maerki.
Alcorn and others then misappropriated significant portions of the investment funds to pay for what prosecutors said was their criminal enterprise and lavish lifestyles, as well as to pay exorbitant commissions to Smith and other salesmen.
Smith began selling the fraudulent investments in 2011 for Alcorn, Maerki, and Bank. The conspirators used material misrepresentations to sell illiquid, highly speculative investment vehicles that were then used as vehicles for fraud.
Based on the fraudulent misrepresentations, unsuspecting investors cashed out of 401k and other retirement accounts to invest without knowing that Alcorn, Bank, and Maerki were immediately transferring 20% to 70% of the funds to other companies that they controlled in the form of purported “fees.”
As a result of the scheme, the victims suffered losses exceeding $20 million.
Alcorn was convicted of conspiracy, wire fraud, and money laundering. He faces a maximum penalty of over 200 years in prison when sentenced on June 23. Smith was convicted of conspiracy and wire fraud, and he faces a maximum penalty of over 90 years in prison when sentenced on June 23.
According to the Justice Department, actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.
- Bank was convicted after trial of conspiracy, mail and wire fraud, selling unregistered securities, securities fraud, and money laundering, and was sentenced in September 2021 to 35 years in prison.
- Maerki pleaded guilty to conspiracy and was sentenced in March 2021 to 16 years in prison.
- Seabolt was convicted after trial of conspiracy and mail fraud and sentenced in September 2021 to 10 years in prison.
- Gibson pleaded guilty to conspiracy and was sentenced in February 2020 to 10 years in prison.
- Hudspeth pleaded guilty to investment advisor fraud and money laundering and was sentenced in May 2018 to over 12 years in prison.
- Sellers pleaded guilty to conspiracy and was sentenced in January 2022 to 5 years in prison.
- Coffin and Barnett each pleaded guilty to conspiracy and will be sentenced in March and May 2022, respectively.