HELENA, Mont. (AP) -- The state securities commissioner said Tuesday that Montana is paying more than $240,000 this week out of a restitution fund that aims to help victims of securities fraud.
Most of the money is going to 20 victims of a Ponzi scheme run by two Polson men now serving time in federal prison.
Commissioner of Securities Monica Lindeen said state law, improved at the Legislature this year, now allows her to collect small fees from the securities industry to pay for the fund. She said victims of fraud can be compensated 25 percent of the amount they lost, up to a maximum of $25,000, of ordered restitution.
She said the money is often sorely needed by victims who are generally not wealthy investors.
"These are folks who can be your grandmother, or the gentleman down the street who is retired and who decided to do his best to make his money last," Lindeen said.
U.S. Attorney Michael Cotter prosecuted the Cornerstone Financial Ponzi scheme case. He said the "swindlers and grifters" who run such schemes usually don't have any money left to repay victims.
He said Robert Congdon and Keith Kovick preyed on people desperate for a loan and charged them in excess of 10 percent for real estate loans. The pair then took money from investors for the scheme, using money from newer investors to pay off older investors.
"These defendants, like so many, were motivated by greed," Cotter said. "The defendants used the money to support their lavish lifestyle."
Kovick was sentenced to 2 ½ years in prison, and Congdon was sentenced to two years. Both were held responsible for nearly $1.2 million in restitution. But Cotter said the "swindlers and grifters" who run such schemes usually don't have any money left to repay victims.
Lindeen's office said the payment was by far the largest so far out of the fund launched in 2012. It had distributed $50,000 total prior to this quarter.
A measure carried by Rep. Duane Ankney, R- Colstrip, established the permanent funding source with fees that is expected to generate $272,000 for victims each year.
Lindeen said the biggest problems arise with individuals or small firms that are not registered or licensed with her office. Victims of such operations usually have nowhere else to turn to for restitution.
She said consumers can easily check if an investment operation is registered by calling her office.
- Crime & Justice
- Ponzi scheme
- Michael Cotter