‘Devastating fraud.’ Kentucky trader gets prison term, order to repay $16.9 million
A Kentucky investment adviser who told clients he was making money for them when he was actually losing huge sums has been sentenced to 10 years in federal prison.
William S. Evans III also was ordered to pay $16.9 million in restitution to victims, according to a news release from acting U.S. Attorney Carlton S. Shier IV.
Evans, 69, did business under the name Turning Point Investments in Lexington. He lived in Mercer County at a house overlooking Herrington Lake.
Evans urged clients to take money from other accounts to invest with him in the commodities futures market, promising big returns and no risk to their principal, according to court records.
He often lied to clients and told them their investment was making money, or would be soon, and encouraged them to invest more, when in fact he rarely made money in any given month and ultimately lost “huge sums” of his clients’ money, Evans acknowledged in his plea agreement.
Evans told one investor in a December 2018 email that the investor was “off and running to make 15-20%!”, according to an affidavit from Roger Kimmel, a special agent with the U.S. Secret Service who investigated the case.
“Market tanked today and we made money, no brag just fact,” Evans told the investor, who had given Evans $100,000.
In reality, Evans lost more than $14,000 on trades that month and in the two months before, Kimmel said in the affidavit.
Evans’ attorney, Andrew L. Sparks, said in a sentencing memorandum that Evans had a successful career in the office supply business before starting work in the finance industry.
He had great success at first, which led him to begin offering investment services to friends and acquaintances, but the business failed, causing millions of dollars in losses to clients, according to the memo.
“Mr. Evans deeply regrets the harm he has caused,” Sparks said in the memo.
The memo sought a lower sentence for Evans, citing a disorder called clinical dementia syndrome.
However, the prosecutor, Assistant U.S. Attorney Kathryn M. Anderson, said in a sentencing memo that Evans “perpetrated a devastating fraud” on people who trusted him.
One husband and wife who invested with him said they didn’t feel comfortable taking out a home-equity loan to invest money with Evans, but he assured them they would be able to pay it back within a year or two with their returns, according to the memo.
The couple said Evans showed them a form indicating their investment had gone up more than $180,000 in less than a year, but that turned out to be a lie.
After a lifetime of working and saving, the couple ended up having to take out a mortgage to pay off the home-equity loan and are uneasy about being able to pay for care as they get older, the memo said.
Evans showed clients bank statements that misled them into believing their money was secure, while illegally investing without a license and losing money for months on end, the prosecutor said.
Evans put money from investors into his own bank accounts or into trading accounts in his name or the name of his wife; used money from some clients to pay off debts to other clients; and spent some on personal expenses, including improvements to his house and payments on a boat, according to the sentencing memo.
“At the heart of this case is deception, veiled under relentless optimism and repeated misrepresentations,” the prosecutor said.
Federal authorities froze more than $10 million Evans and his wife had in various accounts in May 2020, and they sold their house and boat to pay toward restitution, according to court records.
U.S. District Judge Karen K. Caldwell sentenced Evans Tuesday in federal court in Lexington. Evans must report to prison on Dec. 15.
