Securities Law Blog

Verlin Swartzendruber was indicted by a federal grand jury in 2006, arrested in Laredo, Texas in 2008, and on May 28, 2010 he pleaded guilty to one count of fraud. The Texas man was accused of defrauding investors mainly from North Dakota, South Dakota and Minnesota, in a bank trading scheme he ran from St. Vincent and Grenada, in the West Indies, under the name Joseph Severin.

According to court documents, Swartzendruber is accused of soliciting between $14 million and $16 million from more than 500 investors. He allegedly told investors that he had unique access to international trading programs that would generate high rates of returns, and paid promoters to recruit investors.

Swartzendruber was originally charged with 11 felony counts of wire fraud, money laundering and conspiracy to defraud the United States. In exchange for his guilty plea, prosecutors dropped the other charges. The plea reduces his potential prison time from 115 years to no more than 5 years following his August 3, 2010 sentencing.

Under the conditions of the plea agreement, Swartzendruber will forfeit $10 million and pay about $1 million in restitution. The agreement allows his wife to keep a motor home, a vehicle, a fishing boat, her Social Security income and part of the proceeds from the Strawberry Lake Christian Bible Camp the couple manages over the summer.

The investigation began ten years ago when a complaint was filed with the North Dakota Securities Commission.