Former owner and CEO of Yellowstone Partners investment firm indicted for fraud
David Hansen, 47, formerly of Idaho Falls, was indicted Thursday by a federal grand jury in Boise on 17 counts of wire fraud and six counts of tax fraud.
U.S. Attorney Bart M. Davis announced the indictments in a Friday news release.
Hansen was the 90 percent owner and chief executive officer of Yellowstone Partners LLC, an investment management firm headquartered in Idaho Falls.
In March 2017, the Post Register reported that FBI agents had raided the Idaho Falls headquarters of Yellowstone Partners, an established investment adviser with satellite offices around the West and more than $850 million in assets under management. The raid, which previously had been unreported in the media, took place in November 2016.
During the FBI raid agents spent several hours seizing computer files and other records, the Post Register reported.
Thursday’s indictment alleges that from 2008 to 2016, Hansen systematically and intentionally overbilled many of his clients’ accounts. “He personally submitted fraudulent billing requests to a brokerage firm, and he also directed certain of his employees to do the same,” the U.S. Attorney’s news release said.
The fraudulent billings resulted in the transfer to Hansen and Yellowstone Partners of client funds in amounts far in excess of what was allowed for under the management agreements. It’s estimated Hansen defrauded his clients of at least $9,448,941 through his overbilling scheme, the release said.
Former Yellowstone Partners employees told the Post Register in 2017 that company employees found significant irregularities in a number of client accounts during the spring of 2016. The former employees said the events touched off an internal controversy over what had caused the irregularities, which appeared isolated to one group of accounts under one adviser. Several Yellowstone employees left the firm by the early summer of 2016, the Post Register reported.
Thursday’s indictment also alleges that in 2012 and 2013 Hansen aided and assisted in the preparation of false and fraudulent income tax returns for Yellowstone Partners and himself. Specifically, as part of the overall fraud, Hansen caused Yellowstone Partners’ revenue and his own income to be significantly underreported, the release said.
Hansen is a partner at Elite Advisor Institute in Mesa, Ariz., the Post Register reported. The company’s website says he is “the co-founder of SRG’s (Succession Resource Group’s) Elite Advisor Institute training and coaching platform.”
Efforts Friday to reach Elite Advisor Institute were unsuccessful and Hansen’s LinkedIn account, which is linked from his company biography, said “this profile is not available.”
The indictment alleges that: “if convicted of wire fraud, Hansen shall forfeit $9,448,941,” the release said.
The charge of wire fraud is punishable by up to 20 years in prison, a maximum fine of $250,000, and up to five years of supervised release.
The charge of aiding and assisting in the presentation of a false and fraudulent tax return is punishable by up to three years in prison, a maximum fine of $250,000, and up to one year of supervised release.
This case is being investigated by the Federal Bureau of Investigation and the IRS-Criminal Investigations Division.
The sole owner and member of Yellowstone Partners is now DeGrand Management, which is incorporated in Wyoming and owned by Doyle Beck. DeGrand Management purchased the firm in April 2017, after reports of the FBI investigation, the Post Register reported in December.