Business


Suit alleges Ponzi scheme

TUESDAY, JULY 21, 2009

Bonner County man accused of bilking more than $2 million from investors

The Idaho Department of Finance has sued former Bonner County real estate agent Dale E. Lowell and his son, Luke, alleging Dale Lowell ran a Ponzi scheme that defrauded investors of more than $2 million.

The civil complaint filed Friday in Bonner County District Court says at least 23 investors entrusted Dale Lowell with their money. In return, he guaranteed returns of 10 percent per month based on trades in stock options that would earn 30 percent per month.

In fact, the complaint says, Lowell never made any profits on options trading, dating back to private trades he made on his own behalf that began in 2000. On the contrary, he reported tax loss carryovers from 2002 alone of $58,000.

Although he did some trading shortly after initiating his program in 2005, Lowell was soon paying early investors with money that he received from subsequent investors, the telltale behavior of someone running a Ponzi scheme.

Lowell distributed at least $313,687, including $194,850 to Luke Lowell for a real estate deal.

Also, according to a default judgment obtained in King County by three Puget Sound-area investors, Dale Lowell transferred all assets to his wife, Suzi, divorced her, then told investors “I have as my No. 1 goal in life to get ‘remarried’ to Suzi.”

Lowell and his ex-wife live together in Spokane County, the investors’ complaint says.

As he became more desperate in 2008, he promised to double investors’ money in four months, according to the Department of Finance’s complaint. He also told investors that the Internal Revenue Service had frozen his accounts as it investigated a money-laundering scheme, which he denied.

But as the Department of Finance closed in this spring, Lowell sent a letter to the investors admitting “99.99 percent of all representations by me have evolved into being 100 percent false.” The Idaho complaint says Lowell committed fraud, sold unregistered securities and was unlicensed as a broker-dealer. The state is seeking an injunction, $10,000 for each violation of Idaho’s securities laws, at least $40,000 in penalties, and restitution.

The state may try to recover money from investors who received some funds back from Lowell.That could be a problem for the Puget Sound-area investors, who gave Lowell a total of $113,000, including $82,000 that one of the investors withdrew from a retirement account. The three investors are seeking restitution, costs and fees of $301,000, based on a March statement of their accounts from Lowell, according to their complaint.But Lowell repaid them about $36,000 before the alleged scheme collapsed.



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