APhoenix man was ordered to pay back more than $1.4 million to investors after he used their money to fund an ill-fated gold mine.
Allen Leroy Kayser, 62, was found guilty this week of securities fraud, aggravated theft and racketeering for his scheme that bilked at least one investor out of his life savings.
Along with the restitution, he received six months in jail and five years probation.
In all, six investors bought into Kayser's house-flipping scheme that promised returns of between 15 and 17.5 percent, according to Medford financial Detective Brenda Garich.
In 2006, Kayser placed ads in various newspapers around the state, including in the Mail Tribune, seeking investors for a plan to purchase and sell houses at a profit. In the ads, Kayser said he would buy foreclosed houses, remodel them and sell them.
The ads attracted one investor, who convinced friends and family members to invest with Kayser.
Little did they know he had little experience in real estate and was not licensed to handle secure transactions, Mak said.
"They all said he was very charismatic," Garich said. "They believed what he said was true."
Kayser accepted more than $1 million from these investors, but the stock marked tanked in 2008, crippling the housing market.
"This was simply one of those cases when something looked too good to be true and it was," said Medford police Sgt. Brent Mak.
When his house-flipping scheme was falling apart, Kayser seemed to have panicked, police said. In an effort to earn money, Kayser threw the investors' cash into an ill-fated gold mining operation near Gasquet, Calif.
Kayser purchased the mine and was paying about $10,000 a month on its mortgage using the investors' cash. The hope was he would miraculously strike gold and pay off the investors, Garich said.
"He did not find any gold," Garich said.
The investors had no inkling their money was being funneled into a gold mine, Mak said.
"We think he truly intended to pay back the investors if he had found gold, but that didn't happen," Mak said. "He got in over his head and wasn't qualified to handle what he set out to do, which was return profits on house-flipping."
Kayser went so far as to produce fake paperwork showing that the investors' money was safe and secure, but when the ruse began to fall apart, the victims contacted police.
Medford financial detectives spent close to a year sifting through the evidence in the case. Garich said there was plenty of documentation showing Kayser was running a scam that drained the investors' savings.
One investor, who asked that his name be withheld, said he lost $951,000 to Kayser's scheme.
Court records show other victims having lost $200,000, $160,000, $100,000 and $20,000. Mak said one investor was paid off in full prior to the scheme's collapse.
As part of his plea agreement with prosecutors, Kayser was ordered to pay back the $1.4 million to his victims. No one is under any illusion that these people will ever see their money, Mak said.
"How is he going to pay this back?" Mak asked. "He's 62 years old and has no job. He's got nothing."
Kayser will spend six months in the Jackson County Jail, without the possibility of early release, and will be on five years post-prison supervision. If he fails to complete the terms of his probation, he will be sent to prison for just over four years.
"If he gets into any more trouble, he's going to prison," Mak said.
To avoid falling victim to similar schemes, always be sure to check the credentials of anyone seeking to manage your money, Mak said.
In the end, it comes down to training a skeptical eye on promises of huge returns in short periods of time.
"Take time to look into a person who says he will invest your money," Mak said. "Don't be too trusting, and always verify they are who they say they are."
Reach reporter Chris Conrad at 541-776-4471 or firstname.lastname@example.org.