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A Kaysville businessman claims he was conducting a "legal Ponzi scheme," but authorities are investigating him for possible violations of the law in an operation that took in $65 million from 700 or so investors, some of whom lost their retirement savings.

Dee Allen Randall, the owner of Horizon Mortgage & Investment, Horizon Financial & Insurance Group and Horizon Auto Funding, is suspected by a U.S. bankruptcy official of running a Ponzi scheme in which monies from new investors were used to pay earlier investors to make it appear the businesses were profitable.

Randall had promised returns of up to 14 percent and to safeguard retirement monies with investments in real estate, auto leases or through insurance products.

Ogden attorney Steven Bailey, who represents several investors, said Randall has said in court he took in about $65 million from about 700 investors.

"A lot of these people are individuals who invested self-directed IRAs or 401(k)s through his entities and are now out their life savings, their anticipated retirement savings, and have no source of income," Bailey said Tuesday.

Randall's attorney did not return a phone call and email asking for a response to the allegations.

Randall filed for a Chapter 11 bankruptcy in December, seeking to forestall creditors while he reorganized his finances.

But Laurie Cayton, of the U.S. Trustee Office, sought appointment of a bankruptcy trustee to take charge of Randall's financial affairs and conduct an investigation.

In a memorandum to bankruptcy Judge Joel Marker, Cayton raised allegations of fraud. Part of the evidence she cited was claims from investors and Randall himself that he was running a "legal Ponzi scheme" because he had accurately disclosed in private placement memorandums how he would use investor monies.

"He believes that because that intent is outlined that he is free to continue his 'Ponzi scheme' under the guise of a Chapter 11 plan of reorganization," Cayton said, arguing that "certainly the court will not want to condone the perpetuation of such a scheme through the Chapter 11 process."

Randall is under investigation by state regulators, said Jennifer Bolton, spokeswoman for the Department of Commerce on Tuesday. She declined to provide further details. Keith Woodwell, director of the state Division of Securities, said under Utah law disclosure to investors that their money could be used to pay others might not shield a business operator from fraud charges.

Tracy Olson, a Murray attorney representing two investors, said he did not use the phrase "legal Ponzi scheme" that his clients attributed to him in their letter to Cayton but his review of what happened indicated Randall shifted client funds between companies at will.

"It looked like what he was doing was taking money from a person who was investing with this company and putting it into this other company that he owns and runs," Olson said.

Judge Marker appointed forensic accountant Gil Miller as the bankruptcy trustee. Miller declined comment on Tuesday, except to say that he is in Randall's stead and is in control of all of the entities with which Randall was associated.

Cayton said in her memo to the court that Randall had continued to solicit investments after he filed for bankruptcy protection but did not disclose the filing to potential investors.

In his bankruptcy filing, Randall listed only three businesses that he operates but failed to name a number of others and wouldn't even acknowledge their existence at a meeting with creditors, Cayton said. He also used monies without court permission, she said.

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A legal Ponzi scheme?

Keith Woodwell, director of the Utah Division of Securities, said while most operators of Ponzi schemes are charged under Utah law for lying about where money will be invested or for failing to disclose key information, full disclosure of where funds will go does not exempt them from possible charges.

"The argument you can make with a Ponzi scheme is that even if it's disclosed that you're going to use money from new investors to pay back old investors … it's engaging in an 'act or practice or course of business' that would operate as a fraud upon investors," Woodwell said, citing the Utah law.