A federal grand jury in Idaho indicted four top executives
of DBSI Inc. on Wednesday alleging securities fraud violations. The charges, 83 in all, include conspiracy to
commit securities fraud, mail fraud, interstate transportation of stolen
property, and wire fraud.
Assistant U.S. Attorney Wendy Olson announced the indictment
against Douglas Swenson, founder and president of DBSI Inc. Swenson was indicted along with DBSI’s
general counsel, Mark Ellison, and two assistant secretaries, David Swenson and
Jeremy Swenson.
Olson was quoted as saying, “investment fraud undermines
markets, bilks investors of promised returns and creates unnecessary loss at a
time when our economy is struggling to recover.”
The U.S. Attorney alleges the executives orchestrated a
scheme to misled investors throughout the U.S. by suggesting DBSI was a profitable
company with a net worth over $100 million, when in reality it was
floundering. Instead of using new
investor funds legitimately, Olson charges DBSI executives were using the funds
to pay returns to other DBSI investors.
In addition to the four executives indicted Wednesday,
another former DBSI executive, Gary Bringhurst, pled guilty to similar charges
after reaching a plea deal.
DBSI, which was founded in 1979, used many investment
strategies, including tenant-in-common (“TICs”). TICs allow multiple investors to become
fractional owners of a property. At its
peak, DBSI managed over 20 commercial properties across the United States and
had more than 8,000 investors. The
company declared bankruptcy in 2008.
