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The operator of what was allegedly the second-largest financial fraud in Utah history has been charged in a single federal fraud count for an operation that took in $167 million.
Travis L. Wright of Draper, who ran Waterford Funding, Waterford Loan Fund and related companies, was ordered Monday to appear in federal court in Salt Lake City Jan. 27 for an arraignment on the mail fraud charge.
Wright allegedly promised investors from Utah and other states up to a 44 percent annual return. But the charging document alleges he operated a Ponzi scheme in which monies from new investors were used to pay off debts to earlier investors to make it appear the companies were highly profitable.
Teresa Red McCormick, who invested her savings from 27 years as a nurse, expressed hope that by federal prosecutors filing the charge last Thursday, before the new year, she might be able to recoup the money she paid as taxes on her "earnings" from Waterford that turned out to be some of her own money being returned to her.
"I have been struggling without my life savings," the Salt Lake City woman said. "I think this is something that is justified because he knew what he was doing. It wasn't a business deal gone bad."
A voice mail message seeking comment from Wright Monday was not immediately returned.
According to the charge, Wright also diverted about $15 million of investor monies for personal use, including money to buy a luxury home for around $3 million once owned by former Utah Jazz player Jeff Hornacek.
Gil Miller, the court-appointed trustee of the Waterford companies who is trying to recover money for investors, said an examination of company and personal accounts shows that Wright also spent several million dollars in landscaping on the house.
Court papers also allege that Wright took large groups of family and friends on multiple trips abroad, including to Argentina, France, Japan and Tahiti, and that he purchased luxury autos, while also providing his wife with $5,000 to $20,000 a month in spending money.
Even though only one charge was filed, a spokeswoman for the U.S. Attorneys Office in Utah said sentencing after a conviction in federal court is based on the amount of money lost.
"In a white-collar crime of this nature, sentences are determined by the loss amount in the case rather than the number of counts in the charging document," said Melodie Rydalch. "An individual convicted of one count of mail fraud would face the same sentence as a person convicted of multiple counts."
She declined to say whether a plea bargain is being negotiated but did say additional charges were possible.
Miller said he is filing numerous lawsuits this week seeking the return of monies from those who made a profit by investing in Waterford.
"These are just investors who invested $100 and got $200 back, and we're suing them for the $100" difference, said Miller.
Waterford is believed to be the largest financial fraud in Utah history after the VesCor companies operated by Ogden businessman Val E. Southwick, who is serving a prison sentence. According to Miller, who was the court-appointed forensic accountant in that bankrupcy, Southwick's companies took in an estimated $250 million from investors, which is up from earlier estimates of $180 million.