A South Jordan man has been charged with fraud for allegedly operating a Ponzi scheme that took in at least $49 million from investors by promising returns of about 18 percent a year.
Instead of putting investor monies into safe real estate developments as promised, Kenneth Case Tubbs, 40, allegedly used $37 million to pay back other investors, according to a criminal charge known as an information that was filed against him in U.S. District Court for Utah.
Tebbs is scheduled to make an initial appearance in court on Wednesday. The filing of an information generally means a defendant has agreed to plead guilty. A spokeswoman for the U.S. Attorney's Office for Utah declined to comment.
Tebbs faces one charge of wire fraud, which carries a maximum penalty of 20 years in prison and/or a fine of $250,000.
Attorneys for Tebbs did not immediately respond to a request for comment.
According to the information, Tebbs turned his Twin Peaks Financial Inc. and MNK Investments Inc. into a Ponzi scheme after he expanded in 2006 to include large real estate developments. That expansion drained the company of cash and, in order to maintain a flow of investor monies, Tebbs started creating fake documents and made false promises about where the funds were going and about the safety of investor monies, court documents said.
From January 2005 to October 2007, investors poured in amounts ranging from $5,000 to $11.3 million. About $17 million was lost, according to the U.S. Attorney's Office, if overpayments to certain investors are included.
Twin Peaks Financial and MNK Investments were operated by Tebbs and another South Jordan man, according to documents filed in bankruptcy court.