DENVER – A former Durango man convicted of being the chief marketer of an investment-fraud scheme will have to pay $340,000 restitution to several of the victims.
A three-day hearing in federal court this week drew back the curtain on some of the workings of the Ponzi scheme, which ensnared 82 investors around the country, including many in the Four Corners, in 2006 and 2007.
U.S. District Judge Philip Brimmer ordered the restitution payments from Mark Akins on Thursday. Brimmer heard testimony this week from the scheme’s bookkeeper and the Federal Bureau of Investigation agent who helped unravel the fraud.
Frederick H.K. Baker of Utah was the scheme’s mastermind. He claimed to be investing in foreign currency trading using a foolproof algorithm that paid out 15 percent profits every month. In reality, he was investing in other Ponzi schemes in an attempt to “scam the scammers” and gain the initial high payments that the schemes usually make to entice investors into pyramid schemes that fail to make promised payouts to later investors.
Baker and Akins separately pleaded guilty to two felony counts of wire fraud and conspiracy. Baker is serving a 41-month prison sentence and must pay $776,336 in restitution. At his sentencing hearing last year, Baker said his family is broke.
Akins was sentenced to 27 months in prison earlier this year. His restitution payment is lower than Baker’s because the judge held him responsible for trades made only after March 1, 2007, when Akins confessed to knowing that Baker was running a fraudulent scheme.
This week’s hearing was scheduled for one afternoon, but it took three.
Assistant U.S. Attorney Dondi Osborne put two witnesses on the stand, Kevin Bryden and FBI Special Agent Margaret Russin.
Their testimony and cross-examination revealed some of the workings of the scheme.
Bryden was the first investor, and he acted as the bookkeeper for Baker.
Prosecutors in Colorado decided not to charge Bryden with any crimes, but Akins’ lawyer, Martin Stuart, tried to paint him as more involved in the scheme than Akins. Bryden testified that he was the one who moved money from victims’ accounts into Baker’s account.
Stuart asked Bryden if he was the one deciding where to put investors’ money.
“No, that’s not true,” Bryden said. “(Akins) was talking constantly to these people. He was on his Bluetooth all the time. ... Sixteen, 18 hours a day he was talking to these people.”
Akins, dressed in a khaki Bureau of Prisons jumpsuit, did not look at Bryden during his testimony. Akins lived in Bryden’s house for more than a year when the scheme was happening.
Akins did not invest his own money in the scheme, but he and Bryden took commissions whenever they executed a trade for Baker.
Akins also set up a multilevel marketing plan that paid other investors commissions of 2 to 3 percent for recruiting new people to the program, Russin testified.
But Bryden testified that he had suffered in the scheme as much as anyone. His bank account had a $240,000 balance before he met Baker.
“By the end of 2007 or possibly the beginning of 2008, it was a goose egg, and then I started selling off my possessions to pay people back, including my car,” Bryden testified.
However, Bryden used about $60,000 of the money to pay himself back.
Still, many questions remained unanswered about the scheme.
Prosecutors believe there were two schemes happening simultaneously, the currency-trading scam and “Private Placement,” also known as “Methwold.” They did not bring charges or calculate victims’ losses on the Methwold scam.
Bryden and Akins confronted Baker in the spring of 2007 when he stopped paying investors. Baker ceased contact, but later that year, Bryden got four separate $100,000 checks from the wife of Randy Kimball of Utah. Kimball is an associate of Baker’s, but testimony never revealed why she sent money directly to Bryden or the nature of the Kimballs’ connection to Baker.
“They were not involved in the scheme,” Russin said of the Kimballs. “They were just involved in returning money.”