The former organizer and managing partner of a hormone replacement clinic has reached a plea deal with federal prosecutors on a charge that he defrauded investors.
Michael Betts, formerly with Abundant Living Medical Clinic in Lexington, entered into the plea agreement on Wednesday in U.S. District Court in Lexington. He could be sentenced to up to 20 years in prison, ordered to pay a $250,000 fine and ordered to submit to three years of supervised release.
Betts agreed to pay $150,925 restitution as part of the plea agreement. “This amount reflects the loss suffered by investors,” the plea agreement said.
The clinic dissolved in 2013, according to the Kentucky Secretary of State’s website. The clinic specialized in weight-loss treatment, hormone replacement therapy and vitamin supplements for men and women, according to the Kentucky Board of Medical Licensure. The now-closed office was on Monarch Street in the Beaumont shopping and office area, according to the Better Business Bureau.
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Betts acknowledged that he defrauded investors by offering limited partnership interests, according to the plea agreement. He pledged the investment would generate a guaranteed minimum of 10 percent return within five years.
Betts also began offering a “micro-investment opportunity” which was advertised as a “very secure investment” in which investors would essentially loan money to the clinic.
“In return,” the plea agreement says, “investors would receive the full amount of their investment back after two years and receive approximately $5,000 in free medical services.”
None of the investors in either program received any of their money back, the plea agreement says.
Betts failed to disclose to investors that the money would be used by him “for things other than furthering the business,” the agreement says.
Betts also failed to provide investors with documents outlining risk factors. He did not tell investors that he had filed for bankruptcy in 2008 or about a 2011 judgment of $39,430 (reduced to $12,500) against him.
The securities were not registered with the Kentucky Department of Financial Institutions and Betts was not registered to sell notes.
In a separate deal tied to the federal guilty plea, the Fayette County Commonwealth’s Attorney’s Office agreed not to bring state charges against Betts based on facts known to investigators.
Betts is scheduled to be sentenced Aug. 2 by U.S. District Judge Karen Caldwell in Lexington.