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A Utah woman testified Tuesday that when Kaysville insurance agent Dee Allen Randall solicited a $100,000 investment in 2008 from her and her husband to be used to finance auto loans, he assured them their investment would be safe because "everyone needs cars."
Two years later, Linda Christiansen said, Randall pitched another "safe" investment, this one involving a corporate office building, and she put in $50,000 to become a part owner in the property.
Despite the assurances, Randall's business got behind on the interest payments from the 2008 investment and there were no payments from the 2010 investment because "I think everything fell apart," Christiansen told 3rd District Judge James Blanch.
Christiansen was testifying at a preliminary hearing for Randall, who is accused of operating a Ponzi scheme that took in about $72 million from several hundred investors.
The 64-year-old defendant — who filed for bankruptcy in December 2010 — is charged with a pattern of unlawful activity and 22 counts of securities fraud in connection with his operation of Horizon Mortgage and Investment and related entities. All of the charges are second-degree felonies, except for one fraud count that is a third-degree felony.
The hearing, which began Tuesday and is scheduled to last three days, is being held to determine if there is enough evidence to try Randall on the charges.
Randall and his agents sold "Horizon Notes, which purportedly provided annual returns of 9 to 17 percent, according to the charges. The charges say investors were told their funds would be used to finance car loans and real estate.
Most of the investors believed Randall because he had a good reputation in the insurance industry and was an active member of The Church of Jesus Christ and Latter-day Saints, the charges allege.
Christiansen said she and her husband had invested about $200,000 of their retirement money into one of Randall's businesses in 2006 at the suggestion of their financial advisor and had been receiving interest payments from that. Two years later, when her husband was terminally ill, he was looking for a way to provide for her after he was gone and Randall came to their home in August 2008 to pitch the car loan investment, she said.
The couple put in their money; Lennis Christiansen, former public works director for Hyrum City, died on Oct. 29, 2008.
In April 2010, Randall presented Christiansen and her daughter and son-in-law, Shari and Bret Hancey, with a solicitation to invest in the corporate office building. Bret Hancey, who also testified Tuesday, said Randall told them his mother-in-law's missed payments from the car loan investment were due to a cash-flow problem and that the office building investment would be kept completely separate.
The Hanceys and Christiansen each made $50,000 investments. Then, the first quarterly payment didn't come in July 2010, Hancey said, and he asked about getting his money back.
At a meeting with Randall in September 2010 to discuss the situation, Christiansen asked the businessman if he would have his own mother invest, Hancey said. Randall responded that his daughter and son-in-law were investors, Hancey recalled.
Hancey said he decided to wait a month and got two quarterly interest payments, one in October 2010 and one in January 2011. According to court records, the Hanceys have received $3,145.83 in interest and none of the $50,000 has been repaid.
Under cross-examination, Hancey acknowledged he had signed a paper saying he understood the risks of investing.
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