Date: May 7, 2020
GREAT FALLS — A Fairfield man who admitted posing as a financial services manager to steal more than $700,000 from a family and then spent the money for his own benefit was sentenced today to 28 months in prison followed by three years of supervised release and ordered to pay restitution.
Michael Lee Van Auken pleaded guilty in January to wire fraud, money laundering and filing a false tax return.
Chief U.S. District Judge Brian M. Morris presided and allowed Van Auken to self-surrender. Judge Morris ordered Van Auken to pay $719,340 restitution to the family and $165,195 restitution to the IRS.
"Montanans have a tradition of trust when it comes to doing business with one another. We're also raised to pay our taxes. When someone violates that trust to embezzle a family's money for his own gain and avoids paying income taxes, he will be caught and prosecuted," U.S. Attorney Alme said.
"Special Agents pride themselves on untangling complex financial transactions created by fraudsters such as Van Auken," said IRS-Criminal Investigation Special Agent in Charge Andy Tsui. "Along with protecting the integrity of our nation's tax system, IRS-Criminal Investigation seeks to help individuals and entities who suffer financial harm at the hands of swindlers and bring them to justice."
"Not only did the family suffer a devastating financial loss, but they are also left to deal with the consequences of Mr. Van Auken's misrepresented tax services," said Paul Haertel, special agent in charge of the Salt Lake City FBI. "The case should serve as a reminder that the FBI and our law enforcement partners will go after unscrupulous individuals who deceive and defraud unwitting people of their hard-earned money. We also encourage the public to do their due diligence and research when looking to invest and to immediately report any fraud to police or the FBI."
In court documents filed in the case, the prosecution said Van Auken formed various business entities to hide his embezzlement from a Montana family. Van Auken offered to provide the family various financial services, including investment opportunities, filing of personal and business taxes and the creation of wealth management plans.
Investigators found that Van Auken failed to provide the services as promised. Instead, Van Auken used the money for personal expenses and invested in foreign currency trading to try to recover amounts owed, none of which the victims authorized. Van Auken defrauded the victims of approximately $719,340.
As part of the scheme, Van Auken misrepresented his background to gain the victims' trust by claiming he had received a law degree and an accounting degree. Van Auken further misrepresented the value of the "investments" to the victims by creating fraudulent documents and telling them the investments were doing well, when in fact, the investments did not exist and the money was not invested as claimed.
In addition, Van Auken created a wealth management plan that he claimed would double the victims' net worth in five years. The plan induced the victims to use Van Auken's services. When the victims asked Van Auken return their funds, he failed to do so.
Van Auken claimed he would invest the victims' money in a new drill bit for oil drilling and fracking industries. Instead, Van Auken invested the money in foreign currency trading in an attempt to repay the funds owed and embezzled the money for his own personal expenses.
As part of the scheme, Van Auken laundered $210,000 he received from the victims for the drill bit investment by spending it on unauthorized expenditures and transferring $100,000 to a personal account.
Van Auken also filed a false tax return in 2018 for tax year 2014 in which he claimed a total income loss of $118,839, but did not claim $295,340 he received from defrauding the victims. The additional income resulted in $76,819 due in taxes. The investigation also showed that Van Auken owed $165,195 in taxes for the years 2013-2015.
Assistant U.S. Attorney Ryan Weldon prosecuted the case, which was investigated by the IRS and FBI.