Thursday, October 2, 2014

ROBERT BUCKHANNON CHARGED! Feds Charge Battle Creek's "Crooked Chiropractor" With Conspiracy and Fraud Relating To $34 Million Dollar Hedge Fund Swindle; Buckhannon Facing Up To 30 Years On Fraud Charge, Additional 20 Years On Wire Fraud Charge & He Was Released With Just An Ankle Monitor...And A Promise To Return In December For His Trial!

It looks like the Battle Creek Police department will have to get in line—the Department of Justice has first dibs on "crooked chiropractor" Robert Buckhannon!

Buckhannon, who was arrested by FBI agents at a Henderson, Nevada coffee shop on Tuesday, pleaded not guilty at a 3:00pm arraignment Wednesday before U.S. Magistrate Judge George Foley.  He was released on a personal recognizance bond pending trial. 

Daniel G. Bogden, United States Attorney for the District of Nevada said the fraud was committed from 2008 to 2010. Buckhannon and Terry Rawstern, 66, of Aberdeen, S.D., have been charged in a criminal indictment with one count of conspiracy to commit wire fraud and one count of wire fraud.

Rawstern is scheduled to be arraigned this afternoon at 3:00 p.m.

If convicted, Buckhannon and Rawstern could face up to 30 years in prison on the conspiracy charge, and up to an additional 20 years in prison on the wire fraud charge.  The DOJ said they will also have to pay fines that can reach up to $1 million per count.

“We have been working with our federal, state and local partners to investigate and prosecute persons who commit significant financial crimes,” said U.S. Attorney Bogden. “Often these cases take considerable time and resources to investigate and litigate, but the American people deserve to know that we are working diligently to catch the perpetrators.”

According to the indictment (filed on September 24 and unsealed yesterday), from April 2008 through April 2010, Buckhannon and Rawstern, along with some other co-conspirators managed members of two Bradenton, Florida-based hedge funds, Arcanum Equity Fund, LLC and Vestium Equity Fund, LLC.


The DOJ said the defendants engaged in a fraudulent scheme to misappropriate $34 million they raised from investors by misrepresenting how they would use the investors' funds, along with misrepresenting that there were safeguards over the investors' money, such as an independent trustee and independent fund administrator.

The DOJ said the defendants then looted and bankrupted the hedge funds by taking payments on false and fictitious profits, while taking improper and undisclosed loans. The indictment states that as a result of the defendants' conduct, investors lost approximately $13.1 million.

Buckhannon is accused of "secretly funneling at least $341,000 of investor money to his family and associates", the indictment alleges. He spent $60,000 on an engagement ring for his fiance (and now wife, Marlena Michaels) and $80,000 for a down payment on a Las Vegas house, the indictment alleges.

In 2010 Buckhannon agreed to pay roughly $1.5 million to settle the SEC suit against him. That included returning $1.4 million to hedge fund investors and paying a $130,000 fine.


Buckhannon and Kelly Demoss, On Deck Sports Bar
But, as I reported on this blog August 14, Buckhannon never paid a penny of the settlement, a fact Assistant U.S. Attorney Kathryn Newman stated Wednesday in court while arguing for Buckhannon's detention. She also said hundreds of investors lost money in the scheme and "$13.1 million was still missing".

Newman argued that Buckhannon was "a flight risk, with relatives and co-conspirators living outside the United States." She said he is "the target of an arson investigation stemming from a December suspicious fire at a bar he owned in Battle Creek."

Buckhannon's court-appointed defense lawyer argued the "crooked chiropractor" was "broke with an expired passport and doesn’t have money to flee the country". 

He said the defendant "has $300 in the bank", leaving the rest of us to wonder how much Buckhannon has stashed in various mattresses—in Las Vegas and Battle Creek.

Further updates to come, once I complete my review of this 18-page federal indictment. 

1 comment:

  1. Any updates on this? Seems he was supposed to show up for court in December