Rexburg man pleads guilty to investment fraud scheme
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POCATELLO — A Rexburg man admitted to defrauding and stealing some $9 million from investors in U.S. District Court Tuesday.
Michael Justin Hoopes, 41, plead guilty to wire fraud and engaging in monetary transactions in property derived from specified unlawful activity, according to a district court news release.
In his plea agreement, Hoopes admitted that from 2007 through February of 2011, he engaged in a scheme to defraud investors in various investment opportunities he offered. Specifically, Hoopes solicited investors to provide him with capital he represented he would use in his commodities futures day trading activities and to invest in Connected Lyfe, a publicly traded company.
Hoopes misrepresented to investors that he earned returns day trading in excess of 20 to 25 percent. He told investors he would invest all of their capital in day trading and pay them from the profits generated by their investments. He also told them he would receive personal compensation only from profits above the 20 to 25 percent return.
To support the misrepresentation, Hoopes provided false monthly account statements to investors documenting the purported positive returns. He promised investors they could double their investment within one year with little risk of loss.
In reality, the court found Hoopes did not invest all of the capital he received. Much of it was used for personal expenses, including to pay credit card bills, and pay “positive” returns to existing investors primarily from the capital raised from new investors.
Between 2007 and February of 2011, Hoopes received in excess of $9 million from investors. Of this amount, the defendant did not invest and misappropriated approximately $620,000 for his own personal use. Contrary to monthly account statements showing positive returns, he lost most of the remainder day trading and in other failed investments.
The charge of wire fraud is punishable by up to 20 years in prison, a maximum fine of $250,000, and up to three years of supervised release, according to the news release. The charge of engaging in monetary transactions in property derived from specified unlawful activity is punishable by up to 10 years in prison, a maximum fine of $250,000, and up to three years of supervised release.
Sentencing is set for May 12 before U.S. District Judge Edward J. Lodge at the federal courthouse in Pocatello.