‘Volume of victims’ postpones sentencing in Ponzi case

By Ed Runyan | March 16, 2011 at 12:09a.m.

Kevin Harris

CLEVELAND

Kevin Harris of Warren will remain a free man for another three months — despite an 80-minute hearing Tuesday for the purpose of sentencing him to prison for engineering a $20 million Ponzi scheme.

Ironically, it was the “volume of victims” in the case that caused federal Judge Lesley Wells to postpone the remainder of the hearing until 10:30 a.m. June 7.

The hearing, in the Cleveland federal courthouse, was nearly complete when Judge Wells realized there was a problem.

For more than an hour, the judge discussed the crimes with Harris and the attorneys, and Harris told Judge Wells how the scheme got started. Judge Wells also heard a statement from one of the victims, Dominic Ventura.

But just before sentencing, a probation officer informed Judge Wells he had not yet provided the judge with nearly 300 victim-impact statements that he had in his possession.

Usually he gives the judge a summary of the statements, but because there were so many and because more than 100 of the victims had not yet sent them in, he had not yet provided her with the statements or a summary, he said.

“I think I need them, even if they are voluminous,” Judge Wells said of the statements.

David Toepfer, a federal prosecutor, said the case is “unique in the volume of victims.”

As for Harris, “I don’t think I can put into words the pain and suffering the victims felt when they fell prey to this crime,” Toepfer said.

“He’s not a stupid man,” Toepfer said of Harris, noting that Harris is a licensed electrician.

Toepfer said Harris did deserve some consideration for having self-reported the scheme to federal investigators, providing documents to help sort it out and cooperating with the investigation.

Toepfer recommended that Harris receive about seven years in prison.

The enterprise, carried out from 2006 to 2008 from the former electrical workers union hall on Parkman Road Northwest in Warren, involved two companies, Complete Developments and Investments International Inc. These offered customers high rates of return on their investment.

Harris, 46, his brother, Keelan, 34, also of Warren; Karen Starr of Barrie, Ontario; and a Toronto-area marketing company; convinced roughly 400 investors, mostly in the Toronto area, that Kevin Harris was highly skilled in foreign-currency trading.

In fact, he had no training, Judge Wells noted.

Unknown to the investors, Kevin and Keelan Harris also had spent time in prison for theft and other offenses and had been sued in various Trumbull County courts dozens of times in the decades prior to starting the businesses.

The scheme collapsed in 2008, when Harris found that he was no longer able to make payouts to customers, and investors began filing lawsuits against the Harris brothers and their companies.

When all of the victim-impact statements are received, officials will know the amount of restitution Kevin Harris must pay. But so far, it is $12.5 million, the probation officer said.

In his statement to the judge, Ventura said he appreciates that Harris has been cooperative during the investigation but not with regard to finding Starr and Keelan Harris. They have not been heard from in months, despite a federal lawsuit filed last year by the U.S. Commodity Futures Trading Commission against Kevin Harris, Keelan Harris, Starr and Global Strategic Marketing Inc.

Kevin Harris is the only person in the scheme charged criminally so far.

Reading from the pre-sentence investigation, Judge Wells said Kevin Harris and others defrauded customers by telling them Kevin Harris was able to professionally manage the currency accounts, then used the money that Global Strategic Marketing Inc. of Toronto helped him secure from investors and used it to develop investment properties in the Middle East.

“Actually you didn’t have any experience at all,” Judge Wells said.

The specific crimes Kevin Harris committed were wire fraud and money laundering, which were related to Harris’ using investor money to lease a BMW in 2007 and wiring $290,000 in investor money from banks in Quebec and Maryland to Complete Development accounts in Warren in 2008.

As for Harris, he told Judge Wells that his actions resulted after he “fell in love with Karen Starr” in 2006 after meeting her through an online dating site.

Starr “convinced” Harris that he could learn how to invest in foreign currency.

“I fell for it,” Harris said of the plot, adding that his investments were failing, but “my love for Karen blinded me.”