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A South Jordan businessman was sentenced Monday to 6 ½ years in a federal prison on his guilty plea to a fraud charge stemming from his operation of a Ponzi scheme that took in $49 million from more than 100 investors.
U.S. District Judge David Sam sentenced Kenneth Case Tebbs to prison after reading from letters sent by victims, one of them an elderly widow who said Tebbs had sat on a couch and held her hand while telling her an investment of practically all of her savings would be profitable and safe. Two weeks later, he filed for bankruptcy, she wrote.
"Many of these victims were victimized on the eve of bankruptcy, when the wheels of the filing of bankruptcy were in motion," said Sam before pronouncing the sentence that had been recommended by prosecutors.
Tebbs ran the real estate investment companies Twin Peaks Financial Inc. and MNK Investments Inc. for which he solicited investments to buy houses and undeveloped land in Salt Lake and Utah counties for resale or development. He promised returns of up to 18 percent, plus an origination fee of up to 5 percent.
But Assistant U.S. Attorney Mark Hirata told Sam Monday that when the businesses couldn't generate enough money to pay promised returns, Tebbs turned the operation into a Ponzi scheme, using money from new investors to pay earlier ones.
His victims lost their money and "to this day are living that financial nightmare," Hirata said.
Of the $49 million he took in, $37 million went back to investors. About $17 million was lost, according to the U.S. Attorney's Office, if overpayments to certain investors are included.
In February, Tebbs pleaded guilty to one count of wire fraud.
In court Monday, Tebbs told the courtroom that included about 15 or so victims and family members that he was sorry for his actions that had hurt investors, friends and family.
"If I could go back and change the decisions I made I would, but I can't," Tebbs said in a halting voice. "I can't change the effect on those good investors and how [his decisions] affected their lives and their childrens' lives. I have to think about that every day."
Sam said Tebbs had to report to prison by noon Oct. 28.