Two men suspected of running a Ponzi scheme in Durango that netted at least $1.2 million have been indicted by a federal grand jury.
Frederick H.K. Baker and Mark W. Akins are charged with wire fraud, conspiracy to commit wire fraud and making false statements.
An 80-count indictment filed recently accuses the two men of running a high-yield investment program, a type of Ponzi scheme, in which they promised investors a high return on their investments and paid the early investors with subsequent investors money.
About 70 investors fell victim to the scheme. Some of them live in Durango.
Efforts to reach Baker and Akins were unsuccessful Thursday. Both lived in Durango at the time of the crime, but Baker moved to Utah. It is unclear where Akins resides.
Baker appeared this week in a Utah court and is expected to appear next Thursday in federal court in Denver, said Jeff Dorschner, spokesman for the U.S. Attorneys Office in Denver.
Akins had not been arrested as of Thursday, he said.
The suspected conspiracy ran from June 2006 until June 2008, according to the 21-page indictment.
Baker played the role of investor while Akins acted as the gatekeeper, deciding who would be allowed to invest, according to documents.
Baker told at least one person he had developed an algorithm for online currency trading and was only allowing a few friends and family to invest in the operation. Akins, meanwhile, consistently advised investors and potential investors that their money was safe and would earn 8 to 12 percent per month, the documents said.
Baker wanted to remain anonymous to investors. But the pair sometimes indicated that Baker had a history of successfully trading in financial instruments.
As is characteristic of Ponzi schemes, early investors received a return that was paid with money from subsequent investors. Investors typically received interest payments for two to three months and were given the option to reinvest the funds or keep the payments.
As the scheme progressed, interest payments or payback of the initial investment were delayed with a series of excuses. Eventually, payments of interest or principal stopped and investors lost their initial investments, according to the indictment.
The pair oversaw dozens of money transfers, some totaling about $200,000. During the course of the scheme, hundreds of thousands of dollars were transferred between accounts, according to the indictment.
In May 2007, Baker had about $1.2 million in an account set up on his behalf.