Lawyers disagree on whether DBSI officials misled investors

The federal fraud trial could go to the jury on Wednesday after closing statements end.

jsowell@idahostatesman.comApril 8, 2014 

Prosecutors and defense attorneys are summing up nine previous weeks worth of testimony as they close out the criminal trial of four executives of Meridian property management company DBSI.

The refrain Monday was familiar: Company president Douglas Swenson and the others concealed material information from investors about the company's finances as it headed toward bankruptcy in the mid-2000s, federal prosecutor Mark Williams told jurors Monday in closing statements.

Williams dismissed company claims that DBSI was a victim of the 2008 national economic meltdown.

"Ladies and gentlemen, make no mistake about it, DBSI was not the victim of the downturn of the economy in 2008. The downturn allowed the fraud to be exposed," he told the jury of 10 women and four men.

Angelo Calfo, Swenson's attorney, reminded the jury that Swenson, his sons Jeremy Swenson and David Swenson, and company attorney Mark Ellison are presumed innocent. Calfo said prosecutors failed in their burden to show the defendants were guilty beyond a reasonable doubt.

The four men are charged with a total of 89 counts of conspiracy, fraud and money laundering - among other things, accused of using payments from new property investors to pay previous investors who were promised guaranteed earnings.

"This case is about whether Doug intended to cheat and whether DBSI intended to cheat," Calfo said.

Investors received monthly payments "like clockwork" until right before the company declared bankruptcy in November 2008, Calfo said. And neither investors nor former DBSI employees called to testify for the prosecution accused Swenson or the others of lying to them.

Even so, Williams said, the executives skirted the truth with shady dealings. For several years, the company, formerly known as Diversified Business Services and Investments, moved millions of dollars into the bank account of its investment arm in late December to make it appear on annual audits that the company's finances were better than they were. A few weeks later, the money was drained from the account.

Investors in the company's offerings of shopping centers, office buildings and warehouses had to have a yearly income of at least $200,000 or a net worth of more than $1 million.

Calfo pointed out that investors had to sign contracts certifying that they had the ability to evaluate the investment offerings and understood the risk.

John Sowell: 377-6423, Twitter: @IDS_Sowell

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