A central Indiana man has been sentenced to seven years in federal prison for a Ponzi-like scheme that bilked more than two dozen investors out of their retirement savings.
A federal judge also ordered George R. McKown, 71, on Friday to pay more than $5.2 million in restitution to his victims. The Carmel man was convicted in October of conspiracy to commit securities fraud and wire fraud.
Prosecutors said McKown and co-defendant Richard E. Gearhart of Lowell, Indiana, sold securities to individuals who transferred their traditional individual retirement accounts, pensions, annuities, 401k plans and cash to a company the men controlled called Asset Preservation Specialists.
McKown and Gearhart promised investors returns of 6% to 8% and ensured liquidity. But prosecutors said they secretly used the investors’ money for ventures in which both men had an interest, and sent them fake monthly statements showing positive returns even though they were losing money.
Prosecutors said the pair also used the investors’ money to repay other clients to keep them from getting suspicious..
At least 25 individuals between 50 and 90 years of age made investments from 2008 to 2013 of more than $5 million, the Indianapolis Business Journal reported. Many of them didn’t learn their money was gone until 2013, when Gearhart filed for bankruptcy.
He pleaded guilty to conspiracy to commit securities fraud and was sentenced last year to five years in prison and ordered to pay more than $5 million in restitution.