GREENWOOD VILLAGE, Colo. (CBS4)– Confessed Ponzi scheme mastermind Daniel Rudden has reached a plea agreement with federal prosecutors, agreeing to plead guilty to one count of mail fraud. He will be sentenced later this year.
“The damage is more than I ever dreamed I could do to people,” Rudden told CBS4 in an interview last July.
The plea agreement, reached last month between Rudden and federal prosecutors, suggests the Greenwood Village businessman could potentially spend years in prison for defrauding investors out of an estimated $20 million. However, the exact sentence will be up to a federal judge. Rudden initially estimated investors lost $55 million.
Rudden’s investment vehicle- Financial Visions- started in 2001 but collapsed in 2018 when he admitted it had actually been a Ponzi scheme since 2010. However federal prosecutors say in the plea agreement ”Based on profit and loss statements, FV was not a profitable business model from its inception.”
The company took assignments of life insurance policies in order to pay funeral expenses. When a family member died and the family could not afford funeral expenses, Financial Visions fronted the funeral expenses and in exchange would take an assignment from the deceased person’s life insurance policy. FV then charged the family 4 to 5 percent for the service.
Prosecutors say Rudden had about 200 investors, like Rita Webber, 89, who spoke to CBS4 Friday afternoon saying she hoped Rudden will be sentenced to prison.
“Well, certainly he deserves it. He hurt so many people,” said Webber, a great-grandmother.
She was one of Rudden’s earliest investors. Records reviewed by CBS4 show that starting in 2001, she invested a total of $530,000 with Rudden, agreeing to receive 15 percent interest in exchange for her investment. She said that for years, Rudden paid her accurately and on time. Later investors received 12 percent interest on their principal.
But she said last year the payments stopped when the Ponzi scheme collapsed, “He said, ‘I can’t do that.’ He didn’t have the money. He said, ‘I just don’t have it,’ that was his excuse.”
Webber , who suffered a stroke several years ago and can’t walk, said she had been counting on that principal to last her through her retirement years.
“I was in shock. That was my retirement for the rest of my life. It all went out the window… it was gone, I had no notice.”
She called Rudden a “very good person” who “had class” and said it was a shame “he had to fall down like that.”
Rudden told CBS4 he had returned half of Webber’s principal several years ago, but she contends that is not true.
“It just disappeared,” said Webber. “It’s gone, I’ll never get it back, probably.”
As part of the agreement, Rudden will pay restitution to victims although it’s unclear how much money he might have. He told CBS4 he has been driving for Uber and Lyft to make ends meet.
In the 16-page agreement, Rudden agrees, “that by the beginning of 2010, he began using later investors’ funds to pay the interest payments due to the earlier investors because there was insufficient business from funeral homes to fund these payments.”
Rudden has never denied the Ponzi scheme since it was revealed last summer, and has taken responsibility for his conduct. Prosecutors say he turned over some investor files and has cooperated with the government as investigators tried to determine exactly how much each investor lost. However, before turning himself in, prosecutors say Rudden threw his computer, hard drive and other accounting materials into a dumpster.
Rudden has said he is “ashamed” of what he did but that some of his investors have expressed understanding and support.
Not Rita Webber, though, who said, ”That money was to take care of me forever and it’s gone and it’s not the life I had.”