Kansas lawyer sentenced in East Texas Ponzi scheme
A 62-year-old Leawood, Kan., lawyer has been sentenced to federal prison for investment fraud in the Eastern District of Texas, announced U.S. Attorney John M. Bales in a statement Aug. 9.
Clifford R. Roth pleaded guilty on March 14 to interstate transportation of money taken by fraud and was sentenced to 46 months in federal prison by U.S. District Judge Marcia Crone in Beaumont. Roth was also ordered to pay restitution in the amount of $2,270,802 to approximately 21 investors, mostly from the Beaumont and Southeast Texas area.
According to information presented in court, in November 2007, Roth, an attorney licensed in Kansas, traveled to Beaumont and solicited investors to participate in the purchase of bank holding company stock to be used for the purchase of an Oklahoma bank which would then open a branch office in Beaumont.
Roth made representations to potential investors that their stock investment would be held in an escrow account until the bank purchase was made or retained only for purposes of the bank purchase and would be returned to investors with accrued interest if the purchase was not made. Based upon these representations, from November 2007 to April 2008, dozens of investors from Beaumont, Port Arthur, Houston and surrounding areas made numerous wire transfers of investment and retirement funds totaling almost $2.5 million from the Texas area to a title company controlled by Roth in the Kansas City area.
The FBI determined that the investor funds were actually used to pay numerous personal expenses of Roth's, as well as the repayment of various investors who had previously made investments with Roth unrelated to the bank acquisition, in effect, a Ponzi scheme. The acquisition of the bank never occurred.
Roth was ordered to report to the Bureau of Prisons on Aug. 23 to begin his prison sentence.
This case was investigated by the Beaumont, Texas and Kansas City, Kan., FBI offices and prosecuted by Assistant U.S. Attorney Robert L. Rawls.