DENVER – LAWFUEL – Press Release Service – Troy Eid, United States Attorney for the District of Colorado, Richard C. Powers, Special Agent in Charge of the Federal Bureau of Investigation (FBI) Denver Division, and Terry L. Stuart, Special Agent in Charge of the IRS-Criminal Investigation, Denver Field Office, announced that JANNICE McLAIN SCHMIDT, age 69, was sentenced today by U.S. District Court Judge Robert E. Blackburn, to serve 108 months (9 years) in federal prison for securities fraud related to the Smitty’s – Capital Holdings – Reserve Foundation high yield investment scheme. In addition to today’s sentence, SCHMIDT also agreed to forfeit any interest she had in previously seized money and property, including her farm in Nebraska. SCHMIDT was already in custody because of a previous bond revocation.
JANNICE SCHMIDT, along with her husband NORMAN SCHMIDT, and five other defendants, were indicted by a federal grand jury on March 16, 2004, on numerous charges related to the investment scheme. JANNICE SCHMIDT is the first defendant to be sentenced in this case. NORMAN SCHMIDT and four others are scheduled for trial on April 2, 2007. Defendant PETER MOSS is a fugitive believed to be overseas.
According to the stipulated facts outlined in the plea agreement, in the first part of 2001 SCHMIDT was solicited to invest money in the Smitty’s, LLC high yield investment program. It was her initial understanding that the program used investor funds to trade medium term notes with little or no risk, because funds invested were maintained in a non-depleting bank account, and insured against loss. In the fall of 2001, SCHMIDT became the bookkeeper for Smitty’s. Later, SCHMIDT began to solicit investors in the Smitty’s high yield scheme, receiving commissions for the people whom she brought into the program. She then became aware that similar investment programs were being marketed through the entities Capital Holdings, LLC, Capital Holdings International, LLC, Monarch Capital Holdings, LLC, Rocky Mountain Sports Promotions, LLC, and High Track Team, LLC.
SCHMIDT continued to assist in the operation of Smitty’s, including soliciting investors, maintaining investor accounts, and preparing and sending monthly statements to investors, which falsely represented the status of the investment. During this period, she became aware that the investors’ funds were not being deposited into non-depleting accounts, were not being used for the purposes represented to investors, and that no trading of medium term notes had taken place.
During the course of the investigation, agents seized approximately 60 bank accounts, 8 NASCAR race cars, 1 race truck, as well as other race related vehicles and items. The value of all assets seized, including cash and property, totals approximately $24,000,000. Agents also seized the Redstone Castle, located in Redstone, Colorado. The castle was later sold via auction by the IRS. The funds will ultimately be disbursed to victims of the high yield investment scheme by a Department of Justice appointed trustee.
Agents conducted over 800 interviews, reviewing close to 100,000 pages of documents, and invested tens of thousands of hours investigating this scheme. The Justice Department requested assistance from seven foreign countries. Among the foreign law enforcement entities assisting with the investigation were the Scotland Yard, the Royal Mounted Canadian Police, the New Zealand Police, the St. Vincent WI Police, and the Australian Federal Police.
The case was investigated by the Federal Bureau of Investigation (FBI), the Internal Revenue Service (IRS) Criminal Investigations, and the State of Colorado Department of Regulatory Agencies Division of Securities.
The case is being prosecuted by Assistant United States Attorneys Wyatt Angelo and Matthew Kirsch. The civil asset forfeiture case is being handled by Assistant United States Attorney James Russell.
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