Indiana man gets 7 years for scheme that defrauded investors | Indiana News

INDIANAPOLIS (AP) — A central Indiana man has been sentenced to seven years in federal prison for a Ponzi scheme that defrauded more than two dozen investors from their retirement savings.

A federal judge also ordered 71-year-old George R. McKown on Friday to pay more than $5.2 million in restitution to his victims. The Carmel man was convicted in October of conspiracy to commit securities fraud and wire fraud.

Prosecutors said McKown and co-defendant Richard E. Gearhart of Lowell, Indiana, sold securities to people who transferred their traditional individual retirement accounts, pensions, annuities, 401k plans and cash to a company that men controlled called Asset Preservation Specialists.

McKown and Gearhart promised investors 6% to 8% returns and provided liquidity. But prosecutors said they secretly used the investors’ money for businesses the pair had an interest in and sent them fake monthly statements showing positive returns even though they were losing money.

Prosecutors said the couple also used the investors’ money to pay off other clients to keep them from becoming suspects.

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At least 25 people between the ages of 50 and 90 invested more than $5 million from 2008 to 2013, the Indianapolis Business Journal reported. Many of them didn’t learn their money was gone until 2013, when Gearhart filed for bankruptcy.

He pleaded guilty to conspiracy to commit securities fraud and was sentenced last year to five years in prison and ordered to pay more than $5 million in restitution.

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