Maryland man indicted for fraud and pending case against him with SEC

United States Attorney for the District of Maryland, Rod Rosenstein along with Special Agent in Charge of the Federal Bureau of Investigation for Maryland, Richard A. McFeely announced in a press release that David Wehrs Sr. from Annapolis, Maryland was charged on February 4th. Mr. Wehrs has been charged with wire fraud for his scheme to defraud investors and financial institutions. The alleged loss involved in the fraud is approximately two million three hundred thousand dollars.

The indictment against Mr. Wehr states that used his company Maryland Title and Escrow Company, Inc. which is located in Annapolis, Maryland and his home remodeling company Show-me to perpetrate fraud between 2007 and 2009.

Mr. Wehr is accused of enticing individuals and investors to invest money through the Maryland Title and Escrow Company, Inc into what he presented as a Federal Deposit Insurance Corporation back money market fund. Mr. Wehrs further guaranteed the monthly payoff from the fund would be over ten percent from a money market he called American Funds Fixed Rate Money Market. Mr. Wehrs did not deposit the monies he received from investors into the fund and actually deposited the monies into accounts that he controlled that were in the name of his company. Mr. Wehr further wired the monies to a brokerage account in the name of his title company to a bank in Chicago, Illinois.

Mr. Wehr used the monies to day trade. Day trading is the buying and selling of securities on the respective markets in the hope that stocks will increase or decrease in value for the time they are owned, often only a few minutes. Mr. Wehr according to documents day traded millions of dollars of stock every month.

Mr. Wehr also used a Ponzi scheme. He used some investor’s money to pay the monthly interest and redemptions to other investors, as well as pay expenses on his two businesses, made escrow payments on his title company, purchased real estate and pay his own personal expenses with the funds.

The indictment further reveals that Mr. Wehr had no funds left in his personal accounts or the day trading accounts to pay investors and began to use monies set aside to pay lending institutions for mortgage payoffs from his title company. He used approximately six hundred thirty thousand dollars causing Mortgage Lenders not to received payment for loans that should have been paid in full. He used an addition hundred thousands of earnest money that was being held by his title company to pay for the down-payment on a purchase, causing monitory damage to the homebuyer.

Total losses caused by Mr. Wehr’s fraud are estimated to be around two million three hundred thousand dollars. He faces a maximum sentence of up to twenty years in federal prison and substantial monetary fines. Arraignment has not been scheduled as of today.

The Attorney General notes that a file of information is merely an allegation that a crime has been committed and that the party or parties are innocent until proven guilty in a court of law.

Mr. Wehr also has a pending parallel civil action against him filed by the Securities and Exchange Commission. The filing today included a proposed settlement. The Securities and Exchange Commission seeks a permanent injunction of future violations of the securities act, the exchange act and the advisors act as well as disgorgement of fraudulent gains; prejudgment interest and money penalties.

The settlement proposed to the court in which Wehr without admitting or denying guilt in the Securities and Exchange Commission’s filing consent to the filing of the permanent injunction and to entry of the administrative order that will permanently bar him from any association with any investment advisor.