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Travis Wright pleaded not guilty Thursday to a federal charge connected to his operation of an alleged Ponzi scheme that left investors out of tens of millions of dollars.

Wright, 47, entered the plea before U.S. Magistrate Paul Warner to the charge of mail fraud connected to his operation of Waterford Funding and related companies that promised up to a 44 percent return from commercial real estate loans.

But the trustee in the Waterford bankruptcy and the federal criminal charge allege Waterford was largely a Ponzi scheme where funds from new investors went to initial investors to make the operation appear profitable and continue to attract new money.

Warner indicated that negotiations were under way that could lead to a deal where Wright would plead guilty, perhaps in return for a recommendation of a reduced prison sentence. But Wright's court-appointed attorney, Rob Hunt, and the U.S. Attorney's Office declined comment. The maximum sentence Wright could receive is 20 years in prison and a $250,000 fine.

Preliminary figures from the bankruptcy trustee's investigation show that in their nearly nine years of operation, the Waterford companies took in $118.2 million from at least 184 investors who were owed $39 million when Waterford collapsed in 2008.

Wright skimmed off around $15 million in investor funds that went to buy a $3 million home, expensive automobiles and numerous hunting trips and vacations with groups of family and friends, according to bankruptcy trustee Gil Miller and statements in the criminal charge.

Warner allowed Wright to remain free pending resolution of the case but he was restricted from travelling out of the state without permission and required to surrender his passport. Wright told the judge he was working as a marketing agent for a lodge in southern Utah. Wright is divorced and living with his parents in Draper.

The appointment of an attorney to represent Wright indicates he has told the court he cannot afford to pay an attorney to represent him.

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.

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