A long-time Seattle investment adviser was sentenced today in U.S. District Court in Seattle to 16 years in prison, three years of supervised release and $19.8 million dollars in restitution for 32 criminal counts including wire fraud, money laundering and investment advisor fraud, announced U.S. Attorney Jenny A. Durkan.
Mark F. Spangler, 58, formerly of Seattle, promised his clients that he would protect their life’s savings by investing it in safe investments. Instead, Spangler diverted their money – without their knowledge or consent – to two risky start-up companies that he controlled and in which he had a significant financial stake. Spangler was convicted in November 2013 following a three week trial. U. S. District Judge Ricardo S. Martinez said at sentencing that Spangler “touted his ethical foundations . . . But used his clients’ trust against them. It was a complete betrayal in the worst possible way . . . He became someone willing to lie, cheat and swindle those same clients he described as friends and family.”
“Mark Spangler convinced his clients they were family and he would only do right by them. But his wealth was built on lies and by defrauding those who trusted him,” said U.S. Attorney Jenny A. Durkan. “Herisked his clients’ retirement funds, money for their children’s education, for charitable giving and for their livelihood, on risky start-up ventures – the very investments they told him they wanted to avoid. He now has a long time to think about all the harm he has done.”
The evidence at trial demonstrated that Spangler repeatedly violated his fiduciary duty as an investment advisor by hiding where his clients’ money was invested, and by providing them with false account statements which, among other things, drastically inflated the value of their investments. Spangler told his clients that their assets were worth over $73 million. However, after Spangler ran out of money and put his business into receivership, only approximately $28 million was recovered for the victims, resulting in a loss of approximately $50 million.
“When you knowingly mix deceit and trickery into the financial well-being of individuals, you create a recipe for devastation that could last a lifetime,” said Kenneth J. Hines, Special Agent in Charge of IRS Criminal Investigation’s Seattle Field Office. “Today's sentencing demonstrates how federal law enforcement will band together to help put an end to the shameful criminal behavior of those who prey on investors for their personal financial gain. IRS Criminal investigators will continue to use their financial expertise to identify and trace laundered funds in these types of investor fraud schemes.”
“The fraud perpetrated by Mr. Spangler was egregious,” said Acting Special Agent in Charge W. Jay Abbott of the FBI’s Seattle field office. “As a family investment advisor, he was trusted to invest according to his client’s wishes. Instead of respecting their sacred trust, Mr. Spangler chose to place his own interests above those of his clients. Spangler’s deceit resulted in the diversion of tens of millions of his client’s hard-earned savings. The FBI is committed to holding people like Spangler accountable, and will continue to partner with the U.S. Attorney’s Office, IRS Criminal Investigations, and the Securities Exchange Commission to accomplish this mission.”
Many of the investors who testified in court described how they were told their funds were conservatively invested in publicly traded companies and in bonds. Spangler provided them false quarterly account statements fraudulently inflating the value of their accounts and how the money was invested. When some investors sought to liquidate their holdings Spangler ran a Ponzi scheme seeking new money from investors to pay out the other investors. Eventually, Spangler was unable to raise money to cover all the liquidation requests and was forced to place his investment business into receivership.
The Securities and Exchange Commission (SEC) has ongoing civil litigation underway against Spangler in federal court.
The case was investigated by the FBI and Internal Revenue Service Criminal Investigation (IRS-CI). The case is being prosecuted by Assistant United States Attorneys Mike Lang, and Francis Franze-Nakamura.