Sentencing to be delayed in fraud case
Man won't learn his fate until stepfather's trial has concluded
Philip Rand Lochmiller II, son of the owner of Valley Investments, won’t be sentenced until after his father is tried on multiple charges in connection with the company’s failure.
In court documents he signed, the younger Lochmiller is identified as the stepson of Valley Investments owner Philip Rand Lochmiller, despite the similarity in their names.
The younger Lochmiller pleaded guilty Wednesday to a count of conspiracy to commit securities and mail fraud and one count of money laundering.
A third defendant, meanwhile, failed to plead guilty Thursday when U.S. District Judge Philip A. Brimmer refused to accept her plea.
Shawnee Carver, the executive assistant to the elder Lochmiller, failed to meet the terms of the agreement by telling the court what she did, according to the U.S. Attorney’s Office in Colorado.
Carver will have another chance to plead guilty Dec. 9.
The younger Lochmiller’s agreement describes Carver as playing a significant role in his and his father’s activities. Both Lochmillers would on occasion forge investors’ names on papers, and Carver would notarize the forged signatures, the plea agreement says.
The younger Lochmiller’s agreement sets a maximum 15-year prison term, five years for the conspiracy charge and 10 for money laundering. The sentences are to be served consecutively.
The agreement reflects a provision that allows the younger Lochmiller to dispute at sentencing the prosecution’s charge that the Lochmillers used investment funds coming into Valley Investments to make interest and principal payments to existing investors.
Investigators have described Valley Investments as being operated as a Ponzi scheme in which new money coming in is used to pay promised profits to previous investors.
Investors never were told of the criminal history of the elder Lochmiller, who was sentenced in California in 1986 to a three-year prison term for securities fraud before opening his business in Grand Junction in 1994. They also weren’t told that Valley Investments was operating at a loss, the plea agreement says.
As investor funds came into Valley Investments, much of the money was “immediately used for expenses other than their represented purpose,” the plea agreement said. “Personal expenses, family expenses and other non-business expenditures were all financed with investor funds.”
Accountants found the Lochmillers used multiple business identities, bank accounts and financial transactions, false and fraudulent salaries and payroll records and other methods to paper over the fact that Valley Investments “never generated sufficient profit or value to sustain itself or the Lochmillers’ personal spending without investor funding.”
More than 400 investors pumped more than $30 million into Valley investments, the agreement said.
The elder Lochmiller is awaiting trial in February on multiple charges in connection with the collapse of the company.
The prosecution is seeking to have the trial conducted in Grand Junction instead of in Denver.
Lochmiller II is to be sentenced in Grand Junction.