Former owner and CEO of Yellowstone Partners Investment Firm indicted for fraud
A 47-year-old former Idaho Falls man was indicted by a federal grand jury sitting in Boise on 17 counts of wire fraud and six counts of tax fraud Thursday, U.S. Attorney Bart M. Davis announced.
David Hansen was the 90 percent owner and chief executive officer of Yellowstone Partners, LLC, an investment management firm headquartered in Idaho Falls.
The indictment alleges the following: Yellowstone Partners managed its clients’ investment funds pursuant to management agreements that provided for Yellowstone Partners to collect fees for its services. The actual client funds were kept in accounts at national brokerage firms. Yellowstone Partners would receive its fees by submitting billing requests to the brokerage firms. Those requests were supposed to comply with the fees set forth in the management agreements between Yellowstone Partners and its clients.
The indictment furthermore alleges that: From 2008 to 2016, Hansen systematically and intentionally overbilled many of his clients’ accounts. He personally submitted fraudulent billing requests to a brokerage firm, and he also directed certain of his employees to do the same. The fraudulent billings resulted in the transfer to Hansen and Yellowstone Partners of client funds in amounts far in excess of what was allowed for under the management agreements It is estimated that Hansen defrauded his clients of at least $9,448,941 through his overbilling scheme.
The indictment furthermore alleges that: In 2012 and 2013 Hansen aided and assisted in the preparation of false and fraudulent income tax returns for Yellowstone Partners and himself. Specifically, as part of the overall fraud at Yellowstone Partners, Hansen caused Yellowstone Partners’ revenue and his own income to be significantly underreported.
The indictment finally alleges that: if convicted of wire fraud, Hansen shall forfeit $9,448,941.
The charge of wire fraud is punishable by up to 20 years in prison, a maximum fine of $250,000, and up to five years of supervised release.
The charge of aiding and assisting in the presentation of a false and fraudulent tax return is punishable by up to 3 years in prison, a maximum fine of $250,000, and up to one year of supervised release.
This case is being investigated by the Federal Bureau of Investigation and the IRS-Criminal Investigations Division.
An indictment is a means of charging a person with criminal activity. It is not evidence. The person is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
