Ever hear of misprision of a felony? Neither have I. But it’s in this Dec. 19 article in the St. Louis Post-Dispatch titled Prosecutors: St. Louis investment house ran $4.5 million fraud.
The City of Northfield’s missing millions are at the heart of the case.
A securities firm in St. Louis defrauded customers of more than $4.5 million and used some of the proceeds for the owner’s personal expenses, a federal prosecutor said Thursday. Rate Search Inc. billed itself as able to find the best return on certificates of deposit by searching financial institutions across the country; it made its money by taking a slice of the interest earned.
But for years, the company and its president and owner, Scott Luster, falsified account statements and other documents to hide missing money, Assistant U.S. Attorney Hal Goldsmith said in federal court in St. Louis. Goldsmith said the company never bought some of the CDs customers thought they owned, redeemed customer CDs before their maturity dates and sent money to customers to lull them into believing nothing was wrong.
Missouri regulators have described it as a Ponzi, or pyramid, scheme. Goldsmith’s accusations came in a hearing where former Rate Search employee Clark Schultz pleaded guilty of misprision of a felony, which means that he knew about a crime and concealed it. He faces about two years or less in federal prison and possibly a fine.
Here’s a cropped photo of Rate Search president and owner, Scott Luster, which I found on this non-profit fundraising event page.