| For Immediate Release Case # 06NF0425
January 4, 2010 |
Susan Kang Schroeder Public Affairs Counsel Office: 714-347-8408 Cell: 714-292-2718 Farrah Emami |
PONZI SCHEMER SENTENCED TO OVER 90 YEARS FOR DEFRAUDING 125 MOSTLY-ELDERLY INVESTORS
OUT OF $11 MILLION AND FAILING TO
PAY $530,000 IN TAXES
*Defendant’s wife sentenced for filing false tax returns
SANTA ANA – A man was sentenced today to 90 years and eight months in state prison for stealing the life savings of over 125 unsuspecting elderly victims in a “Ponzi” scheme by fraudulently soliciting more than $11 million in investments through the illegal sale of unqualified promissory notes or stocks and filing false tax returns on his ill-gotten profits. Jeffrey Gordon Butler, 51, San Juan Capistrano, was found guilty by a jury June 30, 2009, of 693 felony counts for making untrue statements of material fact in the offer and sale of securities, the offer and sale of unqualified securities, theft from elderly persons, using a scheme to defraud in the sale of a security, and filing false tax returns for years 2001 through 2004. A restitution hearing has been scheduled for Jan. 29, 2010, in Department C-41, Central Justice Center, Santa Ana.
The defendant’s wife, Peggy Warmath Butler, 49, San Juan Capistrano, was also convicted June 30, 2009, of four felony counts of filing false tax returns and excessive taking sentencing enhancements. Peggy Butler was sentenced to one year in jail, seven years of formal probation, and will have to serve seven years in state prison if she violates her probation. The People objected to the sentence, advocating for a minimum sentence of three years and four months.
The sentencing lasted four days and victim impact statements were heard from over 40 victims and their family members. Many of these impact statements were video recordings of elderly victims and played for the court, as these victims died prior to sentencing.
“Many of Jeffrey Butler’s victims had trouble believing that he was capable of stealing their life’s savings. He stole more than money from the people who trusted him. Jeffrey Butler also stole his victims’ dignity, independence, and dreams,” stated Orange County District Attorney Tony Rackauckas. “By sentencing him to 90 years in prison it means that Jeffrey Butler will spend the rest of his life in prison unable to victimize another person.”
Circumstances of the Ponzi Scheme and Tax Fraud
A “Ponzi” scheme is when investors are offered high, short-term returns on investments, but instead of the investments generating actual income and legitimate profits, the money from the investors is kept for the benefit of the defendant or used to repay earlier investors. Jeffrey Butler sold more than 300 promissory notes or stocks without obtaining a license for the notes from the California Department of Corporations, as required by law. The majority of the victims involved in this case were over 65 years old and unaware of the risks of their investments. Several of the victims lost their life savings and many died awaiting the jury trial.