Four executives of a Meridian property-management company that collapsed in the Great Recession will soon head to prison, four years after they were convicted of fraud.
The U.S. Supreme Court has turned down an appeal from the executives of DBSI. That means DBSI executives Douglas Swenson, Mark Ellison, Jeremy Swenson and David Swenson will begin serving their sentences.
The four men and their attorneys are scheduled to appear at 9 a.m. Tuesday before U.S. Magistrate Candy Dale in Boise. Federal prosecutors want the four men taken into immediate custody. Defense lawyers want them to remain free while the federal Bureau of Prisons prepares to assign them to a particular prison, a process that typically takes several weeks.
The four Boise men were convicted by a federal jury in Boise in 2014. They have been out of custody as they pursued appeals, first with the 9th U.S. Circuit Court of Appeals and then the Supreme Court.
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DBSI — short for Diversified Business Services and Investments — managed office buildings, shopping centers and warehouses for investors nationwide. DBSI sold investors fractional interests in the properties, and they leased the properties back to DBSI to manage.
The company collapsed into bankruptcy in 2008. Prosecutors said the company had become a Ponzi scheme, with money from new investors used to pay earlier investors.
Douglas Swenson, 70, the founder and CEO, was sentenced to 20 years in prison after the jury found him guilty of 44 counts of securities fraud and 34 counts of wire fraud.
Company attorney Mark Ellison, 69, and directors Jeremy Swenson, 45, and David Swenson, 40 — brothers and Douglas Swenson's sons — were each convicted of 44 counts of securities fraud. Ellison was sentenced to five years in prison. The younger Swensons were each sentenced to three years.
In his appeal before the 9th Circuit, Ellison argued that lawyers for the four defendants, members of the Church of Jesus Christ of Latter-day Saints, should have been allowed before trial to question potential jurors about whether they were biased against Mormons.
Chief U.S. District Judge B. Lynn Winmill, who is also Mormon, did not allow the questions because he didn't believe jurors would answer honestly about the religion, whether they were biased or not. The appeals court said Winmill was within his discretion to not allow the questions.
A three-member panel of the 9th Circuit court upheld the convictions last August. The court later denied a request for a rehearing before 11 of the court's judges. The U.S. Supreme Court on June 25 declined to hear the case.
"It will be a small satisfaction to hear that they are paying the price," said James Ratterree, a DBSI investor from Stuart, Florida, who said he lost more than $200,000, in an email to the Idaho Statesman.
Another investor, William Barnum of Warren, Oregon, said he was disappointed by how slowly the wheels of justice turn but is glad the four DBSI executives will soon be in prison.
"I think I speak for the victims of the greedy DBSI scheme when I say they were a well-run company for many years, with a good reputation, until greed and arrogance overcame their good business model," Barnum said in an email.
Barnum said he lost $500,000 to DBSI. He said he doesn't expect to get much of anything back — "maybe the money to buy a Whopper, Coke and fries at Burger King," he wrote.