Sunday , June 22, 2014 - 8:34 PM
KAYSVILLE — Dee Allen Randall has been embroiled in lawsuits and investor complaints for several years — including a high-stakes case against the Boy Scouts of America’s Trapper Trails Council — and hasn't been licensed to sell investments since 1997, according to court documents.
The alleged methods used by Randall, the 63-year-old Davis County man accused of using several businesses to orchestrate an extensive Ponzi scheme, are detailed in an affidavit filed by the Utah Division of Securities. Randall is charged with 23 felony counts of securities fraud for allegedly raking in more than $72 million from 700-plus investors across the country between 2006 and 2011, all the while misleading them about the use of their funds and their expected returns.
Trapper Trails, based in South Ogden, claims Randall defrauded it out of $281,000.
The Trapper Trails Council is one of seven individuals or organizations to bring a federal lawsuit against Randall in the last two years, having done so in December 2011. The council claimed they had been defrauded out of at least $281,000 and sought full repayment of those funds, alleging several civil violations: false pretenses, false representation, actual fraud, fraud as fiduciary, embezzlement and larceny.
The Trapper Trails Council invested $200,000 with Independent Financial and Investment, one of Randall's entities, in 2008. The council reportedly did so at the advice of Rick Kendell, who was then serving as the Endowment Chairman of the organization and also worked for Randall.
The council was promised 12 percent annual interest on an investment in a condominium complex, according to the lawsuit.
"(Randall's) agents promised (the Trapper Trails Council) that its investment would be safe, and that the security interest on the condominium units would provide assurance of repayment."
However, no such complex was purchased, the lawsuit alleges, and Randall's business "did not invest ... money in any real property."
Between 2008 and 2010, Randall allegedly sent false documentation to Trapper Trails detailing the progress of what was actually a non-existent investment.
Allegations state IFI found out in 2010 the council had discovered their fraudulent behavior and reacted by telling the organization the investment would go instead to purchasing a car dealership in Salt Lake City.
Trapper Trails notified IFI in March 2011 that the investment agreement's terms had been breached and demanded repayment of their investment "and all accrued interest immediately." The council never received that payment, according to the lawsuit.
Trapper Trails dismissed the case in June 2012. It wasn't immediately clear whether an out-of-court settlement was reached. It is also unknown whether Kendell stills holds an executive position in the council.
Randall’s initial hearing on the criminal charges has been set for July 2 in 3rd District Court in Salt Lake City. He is out of police custody, and a warrant has been issued for his arrest. His bail has been preset at $100,000.
Randall earned his insurance and security licenses in 1988, according to court documents. Those licenses were "terminated" in December 1997, charges state, and Randall has not been licensed in those industries since that time.
That didn't stop Randall from selling a large volume and variety of insurance products, the accusations state.
"In addition to selling insurance products, from about March 2006 through the middle of 2011, Randall offered and sold interests in private placement securities by issuing Horizon Notes on behalf of the Horizon entities," the court documents read. "The investment products offered by the Horizon entities included but are not limited to investments in residential and commercial property development, as well as an automobile loan business for individuals with poor credit. In exchange, investors were given a 'promissory note' and/or other writings outlining the terms and the amount of interest they would receive from their investment."
Randall promised low-risk returns on the notes ranging between 9 and 17 percent annually, court documents say.
The Utah Division of Securities received its first investor complaints in 2009, the agency says, when Randall began to default on his promised returns. By June 2011, when an official investigation into Randall was launched, more than 50 investor complaints had been filed.
Businesses licenses for Randall's various financial enterprises all expired between 2010 and 2012, according to charges. Documents indicate Randall filed for personal bankruptcy in December 2010 and a year later did the same for each of his ventures, but reportedly continued to receive money from investors, many of whom were not qualified to invest.
As Randall's businesses were moving toward financial ruin, he allegedly transferred investors’ funds back and forth between each enterprise in an effort to keep them afloat.
"The Horizon entities controlled by Randall operated as a Ponzi scheme in which investor monies were routinely and freely commingled and transferred among the various Horizon entities," charges state. "Some of the new investor monies were used to pay interest to prior investors, or to pay sales compensation to 'financial advisers' and insurance sales agents."
Many of Randall's insurance agents were also not licensed to sell securities, charges state, despite investors being told to view them as financial advisers. Court documents identify 38 of those agents by name. Randall would reportedly pay these employees on commission and treated them as licensed sellers.
Randall operated his several businesses throughout Utah, using offices in Kaysville, Woods Cross, Fruit Heights, Logan and Sandy. More than 40 of his former employees were interviewed in the investigation against him.
Contact reporter Ben Lockhart at 801-625-4221 or email@example.com. Follow him on Twitter at @SE_Lockhart. Like him on Facebook at https://www.facebook.com/blockhartSE.
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