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Draper man pleads guilty to financial fraud

First Published      Last Updated Apr 19 2017 11:02 pm

Courts » $3.1 million stolen from investors in Ponzi scheme.

A Draper man pleaded guilty on Tuesday in federal court to a fraud charge in connection with a scheme in which he took at least $3.1 million from investors by claiming he could produce returns of up to 300 percent a year.

Andrew Dean Kelley pleaded guilty to a charge involving the transfer of $600,000 from one of the victims to Kelley's Blackbird Capital Partners investment company. Instead of investing the money, Kelley admitted he used it to pay earlier investors in what is known as a Ponzi scheme.

Kelley and Blackbird also are facing a lawsuit by the Securities and Exchange Commission filed in December in U.S. District Court alleging Kelley and Paul H. Shumway, of Lehi, took at least $3.1 million from investors under false pretenses beginning in about September of 2014.




Instead of earning returns in futures trading of up to 300 percent in a year as Kelley claimed, Blackbird Capital Partners LLC was allegedly operated as a Ponzi scheme, and monies also went for personal and business expenses, the SEC alleges. The SEC lawsuit remains pending, though Kelly agreed to settle the case without admitting or denying the allegations.

U.S. District Judge Dee Benson scheduled sentencing for Sept. 27. Prosecutors agreed to recommend Kelley receive a prison sentence at the low end of sentencing guidelines, which have yet to be calculated. The maximum sentence is up to 20 years in prison and a $5 million fine.

 

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