Former securities broker Barbara Sue Edgemon, who played a subordinate role in a $1.5 million Spokane-based investment fraud scheme, avoided federal prison but will be confined for a year under a sentence handed down Monday.
The 34-year-old woman must serve six months at Turner House, a community corrections facility in north Spokane, to be followed by six months of home confinement with electronic monitoring, Senior U.S. District Court Judge Frem Nielsen said.
During that one-year period, Edgemon will be allowed to leave Turner House and her home only for work or court-approved outings.
The judge also placed Edgemon on five years of probation and ordered her to make restitution payments of $250 a month, which probably will last the remainder of her life.
While on probation, she must continue counseling for a “gambling addiction” and must not gamble.
She also will have to make her personal financial information available to federal probation officers.
She was indicted in January 2004, along with Lee Douglas Tusberg, on charges of conspiracy and federal securities fraud. They both struck plea bargains and cooperated with state and federal investigators to avoid harsher sentences if convicted by a jury.
On Friday, Tusberg, 58, was sentenced to 30 months in prison. He was ordered to make restitution payments of $300 to $500 a month.
He is responsible for $1.87 million in restitution, including interest. Edgemon was found jointly responsible with Tusberg for $810,000 in restitution.
Tusberg worked as a security broker for Metropolitan Mortgage until 1996 when he left to form his own business, Trans-Link Research and Development Group. Shortly thereafter, he hired Edgemon who also had worked at Metropolitan.
Tusberg also was an independent contractor for KMS Financial Services, a broker-dealer firm based in Seattle.
That affiliation put Tusberg in contact with various investors in Spokane and Coeur d’Alene.
Without any involvement by KMS, Tusberg and Edgemon convinced 35 “unsophisticated, middle-class” investors to invest in Trans-Link.
The company promised to secure cell-phone contracts in China, but really had no assets and was simply a Ponzi scheme, Assistant U.S. Attorney Tom Hopkins said in court filings.
Tusberg and Edgemon were both state-licensed brokers for Trans-Link, Hopkins said.
Their securities licenses were revoked after an initial investigation by the state Department of Financial Institutions. Those findings led to a criminal investigation by the FBI.
The investors recovered their investments, but not the 12 percent interest they were promised, when bonding companies for KMS stepped in.
Edgemon and her attorney, Mark Prothero, struck a plea bargain last July, two months before Tusberg also pleaded guilty. Both pleaded guilty to charges of conspiring to commit securities fraud.
The prosecutor urged the judge to sentence Edgemon to a year and a day in prison, which would have resulted in a 10-month sentence after “good-time” credit.
“I don’t feel a prison sentence is appropriate,” Prothero argued on his client’s behalf.
The defense attorney said Edgemon has found new employment.
If she was sent to prison, she would lose that job and couldn’t begin making restitution payments, he said.
Edgemon said that every day for several months she’s lived with the fear of going to prison for her wrongdoing.
“There’s no question about it – this was a serious offense,” the judge told Edgemon as she stood before him.
In handing down the split sentence, Nielsen said it’s unlikely Edgemon will break any more laws. “This whole matter, it appears, has had a profound impact on you and your family.”