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A federal judge who said he was influenced by angry letters from victims rejected a plea bargain agreement Tuesday with the man accused of operating the second-largest financial fraud in Utah history.
U.S. District Judge Clark Waddoups said the eight-year prison sentence Travis Wright had negotiated in return for his guilty plea to one count of mail fraud appeared too light given the magnitude of how Wright had "intentionally deceived and misled people."
The decision means that Wright, who lives in Draper, can now either renegotiate a new plea bargain agreement with federal prosecutors or go to trial on the mail fraud charge.
Clark said while he normally defers to the U.S. Attorney's Office in negotiated plea bargains, this time he had received numerous angry letters about the deal. In addition, three victims told Waddoups in court that the sentence was too light after Wright had knowingly lied to people, some of whom lost their entire retirement accounts in his Waterford and related companies.
World War II veteran Maurice Burton, 87, said he used the $5,000 he had saved from his service in the Pacific Theater to invest in homes and real estate until it had grown 65 years later to $230,000, all of which he placed with Wright.
"That creep stole it in 65 seconds," said Burton. "I don't think he should ever get out." Burton added, "There's no justice in the United States."
Prosecutor Mark Hirata declined to comment on the decision. It is uncertain now how the case will move forward.
After the victims spoke, Wright faced the gallery and asked for forgiveness.
"I'm truly sorry for what I've done," he said
Wright lived in a $5.5 million home in an exclusive neighborhood, traveled on various hunting safaris to Africa and bought expensive watches and guns all with other people's money.
Wright, the former operator of Waterford Funding and related companies, has pleaded guilty to one count of wire fraud. As part of a plea agreement with the U.S. Attorney's Office, Wright accepted a recommendation of an eight-year prison sentence. But Waddoups could ultimately impose up to 20 years in prison and a $1 million fine.
Wright operated Waterford, allegedly the second-largest scam in Utah history, from 1999 to 2009, when it collapsed. Investors took it over and filed for bankruptcy. The scheme took in $167 million and involved as many as 200 victims with losses as high as $50 million on investments after Wright promised returns of up to 44 percent over nine months, according to court records and the bankruptcy trustee.
The trustee and prosecutors have said Waterford operated mostly as a Ponzi scheme in which money from new investors went to pay off investors with mature notes. This made it appear the business was successful so it could continue to attract more investments.
But in a statement to the court admitting his guilt, Wright said he didn't intend to operate a Ponzi scheme when he started Waterford.
"However, over time, I realized and knew that my commercial real estate projects were unable to meet interest payments and principal due investors," Wright said. "Rather than disclosing this negative cash flow position to all current investors, I, or others acting at my direction and control, continued to solicit new investors."
The largest financial fraud in Utah history is believed to be that of Ogden businessman Val Southwick, whose real estate investment company, VesCor Capital, was also a Ponzi scheme. Southwick took in some $400 million but caused as much as $250 million in losses to about 180 investors, according to accountants who examined the company, though Hirata, an assistant U.S. attorney, put the VesCor loss at $140 million. Southwick pleaded guilty and is serving nine consecutive prison sentences.
Hirata was clearly on the defensive from the beginning of the hearing in trying to explain why prosecutors had agreed to an eight-year sentence. He pointed to Wright's cooperation and said he hoped other financial scammers would see the plea bargain as a model to confess to their crimes and cooperate with investigators.
"The government felt it was really in our best interests, including the victims', to start an eight-year sentence now instead of four years from now," said Hirata, pointing to the time it would take to investigate and prosecute the case without Wright's cooperation.
Before Waterford went under, Wright lived in a Holladay home that had been owned by former Utah Jazz player Jeff Hornacek.