Four employees of DBSI, a bankrupt Meridian property management firm, were indicted on federal charges Wednesday, including co-founder and CEO Douglas Swenson.
In an 83-count indictment, federal prosecutors accused Swenson, 64, of Eagle of several crimes, including securities fraud, conspiracy to commit money laundering, wire fraud, bank fraud and interstate transportation of property taken by fraud. He is also accused of conspiracy to commit securities fraud, wire fraud, mail fraud and interstate transportation of stolen property.
Three other employes Mark A. Ellison, 64, of Boise, a co-founder who later because DBSI's general counsel; Swenson's sons Jeremy S. Swenson, 40, of Meridian and David D. Swenson, 35, of Boise face similar charges except for conspiracy to commit money laundering.
The four are charged with 39 counts of securities fraud, 34 counts of wire fraud, six counts of interstate transportation of stolen property and two count of bank fraud. Prosecutors allege that beginning in 2007, the four misrepresented the companys net worth when they knew the real estate and other companies under DBSI were almost universally unprofitable. The company relied on new investor funds to pay existing obligation and investors, the indictment said.
The company filed for bankruptcy in November 2008. The company collapsed when real estate prices fell as the Great Recession began.
DBSI managed 244 commercial properties for more than 8,500 investors in the U.S. before it filed for bankruptcy. Among them were 16 commercial properties in the Boise area, including the Plantation Shopping Center, 9000 W. State St.; the Northgate Shopping Center, near State and Glenwood streets; and Broadway Plaza, 1217 Broadway Ave.
The 4-year-old federal criminal investigation of DBSI has already led to a guilty plea by a senior manager on a charge of conspiracy to commit securities fraud, a felony, according to court documents made public Tuesday. Gary Bringhurst, a Utah resident who formerly lived in Boise, faces up to five years in prison and a $250,000 fine. His plea agreement was unsealed Tuesday, and his sentencing is scheduled July 26.
In a statement released before the indictment, Swenson's attorneys said DBSI was a "successful and highly profitable" real estate enterprise. "For more than two decades, its investors made money and were happy," said a statement by his Seattle law firm, Calfo Harrigan Leyh & Eakes.
"It wasn't until the downturn in the economy, the Lehman Brothers failure and the Great Recession that DBSI could no longer profitably buy and sell real estate," the lawyers said. "There was no fraud at DBSI. ... The government's effort to pin the failure of the real estate industry and market on Doug Swenson is shameful and unjust."
Bill Roberts: 377-6408