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St. George • A prosecution witness testified Friday that William J. Hammons didn't refer investors to VesCor out of the goodness of his heart.
Gil Miller, a certified public accountant, said he dug through a mountain of documents from VesCor, which state regulators say is the largest Ponzi scheme in Utah history. What he found showed that Hammons got a 200 percent return on a $1.2 million investment of other people's money in six months, plus more than $200,000 in commissions. He also received a Mini Cooper car and a Rolex watch.
Hammons is charged with 10 counts stemming from his participation in what prosecutors contend was a securities fraud scheme.
The commissions and other incentives paid to Hammons were contained in an agreement between Hammons and Val E. Southwick, the imprisoned Ogden real estate developer who ran VesCor, which collapsed in 2007 after more than 800 investors lost more than $180 million.
Hammons told potential investors that he was letting them in on a deal that returned 14 percent to 16 percent annually because he was their friend. He maintained that he didn't receive commissions for those referrals.
He has never had a license to deal in securities or real estate.
Miller testified in a case in 5th District Court that involves four separate victims. Prosecutors wrapped up their case on Friday; the defense is expected to begin calling witnesses when the trial resumes Tuesday.
Miller said that after examining the VesCor documents, he determined the company did not follow accepted accounting practices or earn profits the way legitimate companies do to generate interest payments to investors.
Instead, cash came in and cash went out to pay investors, Miller testified. He said such a structure would ultimately lead only to insolvency as new investors failed to meet demands for payouts to earlier investors.
When asked by prosecutor Che Arguello if VesCor operated a fraud, Miller said, "Absolutely."
He said all funds raised by VesCor were pooled and Southwick used the money to pay any expenses he had, whether it was paying investors, operating expenses or supporting his lifestyle.
At one point Friday when the jury was sent out of the courtroom, defense attorney Clifford Dunn asked Judge A. Lynn Payne that some of the charges be dropped, contending Hammons knew nothing of the fraudulent nature of VesCor's' investments.
Clifford said his client never willfully steered investors into a fraudulent investment scheme and no evidence was presented he did.
He said an investment of one of the four investors connected in the case came just from a casual conversation on the street on which they lived, and Hammons was not acting as a licensed agent.
The judge said he would take the defense motions under advisement.