DENVER – LAWFUEL – The Law News Network – Bill Leone, United States Attorney for the District of Colorado, Kathleen Roberts, Postal Inspector In Charge in Denver, and Richard C. Powers, Special Agent in Charge of the Federal Bureau of Investigation’s Denver Office, announced that KENNETH ROY WEARE, age 58, of Lakewood, Colorado, was sentenced today to serve 36 months in federal prison by U.S. District Court Judge Edward W. Nottingham for defrauding over 23,000 investors by implementing an “Offshore Rent/Mortgage Free Program.” WEARE was also ordered to pay restitution totaling $1,199,355 to the victims of the crime who responded to the FBI’s victim survey. WEARE was remanded into custody.
On March 25, 2003 a federal grand jury in Denver returned an indictment charging WEARE with wire fraud, mail fraud, and engaging in monetary transactions in property derived from unlawful activity. He pled guilty on April 1, 2004.
Prior to the indictment WEARE was in the custody of the United States Marshals Service on contempt of court charges for failing to pay disgorgement of investors funds, repatriate moneys held offshore, and provide an accounting of money raised from investors, from a civil Securities and Exchange Commission case.
According to the indictment, WEARE devised a scheme to defraud approximately 23,000 investors by offering them an opportunity to become “members” of an “Offshore Rent/Mortgage Free Program.” WEARE established a company called J&K Global Marketing Corporation to implement the scheme.
The indictment states that for a yearly “membership fee” of $375, WEARE promised investors that they would receive, after waiting for six months, payments of $375 a month. An investor could become a “Qualified Member” by referring three other investors to become members of the program. A “Qualified Member” would receive a $50 payment for each referral, and, after six months, would receive $1,500 per month. WEARE also told investors he was investing in “high yield programs,” which would return between 200% and 1,200% per month.
From November 19, 1999 to December 31, 2000, WEARE caused investors to transmit more than $9,000,000 in membership fees by means of wire transfers, checks and money orders to bank accounts in the United States, Canada, Luxembourg, and the West Indies. WEARE then used a portion of the funds to make payments back to investors. He allegedly converted the remainder of the funds for his own use and benefit and the use and benefit of others.
This case was investigated by the U.S. Postal Inspection Service and the Federal Bureau of Investigation with the assistance of the Securities and Exchange Commission.