VOL. 132 | NO. 177 | Wednesday, September 06, 2017
Former Lawmaker Larry Bates Sentenced to 21 Years in Ponzi Scheme
By Bill Dries
One-time Tennessee legislator Larry Bates drew a prison sentence of 21 years and 10 months for a $20 million Ponzi scheme around the family business of selling gold and silver to investors.
Bates and his family did so with an appeal based on political and economic instability and focused on pitches on Christian media outlets as well as their own Information Radio Network Inc.
Bates and his son, Chuck Bates, were sentenced Tuesday, Sept. 5, by U.S. District Judge Sheryl Lipman in separate sentencing hearings.
The elder Bates was also ordered to pay $21 milion in restitution to 400 people defrauded in the scheme.
He was convicted by a jury in May of 46 counts of fraud.
Chuck Bates was sentenced to 12 years and 7 months in prison and ordered to pay $19.6 million in restitution. He was convicted by the same jury as his father on 17 fraud counts.
Customers had given $87 million to First American Monetary Consultants for the purpose of buying precious metals. But prosecutors said and the jury agreed that the defendants kept the money for their personal use, including commodities trading and a 10,000-square-foot house. By 2009, the company had more than $26 million dollars in unfilled orders.
The sentencing was delayed because of numerous legal motions on both sides over sentencing factors which the attorneys for the Bates family arguing not all of the investors were vulnerable and that the calculations of losses were inaccurate.
In a Sept. 1 order covering most of the points the defense for all four defendants made on sentencing, Lipman ruled Larry Bates is responsible for the total amount of the loss.
“Not only did Larry Bates direct the operation of FAMC and IRN from an executive level, but he also played a direct role in the expansion and perpetration of the fraud by personally soliciting sales from customers and then deceiving all customers through delay tactics and falsehoods regarding the acquisition of the precious metals,” she wrote in the order.
“As to the conspiracy … the court finds that Larry Bates’s jointly undertaken criminal activity encompassed the entire scope of the conspiracy, which he spearheaded, and thus, all of the conduct of the co-conspirators was reasonably foreseeable to him,” she added.
Attorneys for both of the defendants quarreled with the calculation of the specific dollar amount each was responsible for based on when prosecutors said the fraud began in the charges they were convicted of.
Lipman agreed with the government.
“At no point after 2008 was FAMC solvent,” she said of the claim by attorneys for Chuck Bates. Lipman saying he knew that in January 2008 or should have known given that a growing number of customers were not receiving their orders. “Therefore the court finds that he agreed to undertake the entire conspiracy in January 2008,” Lipman ruled.
- Associated Press contributed to this story.