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Kevin Harris gets 7 years in prison after bilking 408 in Ponzi scheme
By Ed Runyan
cleveland
Sixteen months passed between November 2011, when Kevin L. Harris of Warren pleaded guilty to engineering a $20 million Ponzi scheme, and Thursday morning, when Harris was led away to serve a seven-year, three-month prison sentence.
In the interim, federal Judge Lesley Wells had time to review letters written by the 408 victims, who lost a combined $15.8 million — or roughly $38,700 each.
Judge Wells told the parties involved, plus the four victims and dozen Harris family members in the courtroom, she had spent a considerable amount of time reading the letters.
“I did read all of the documents — every one of them,” she said of the foot-high stack.
The judge read in court for 30 minutes from parts of 35 letters. They repeatedly mentioned the depression, anger, sadness, high blood pressure, sleeplessness, hopelessness, embarrassment and hardship the investors suffered as a result of the scheme, which Harris and his associates carried out from 2006 to 2008.
Most of the investors are from the Toronto, Canada, area, prosecutors say. A smaller number of investors are from Ohio and elsewhere in the United States.
Harris, a Warren G. Harding High School graduate, operated the investment company Complete Developments on Parkman Road Northwest in Warren.
Before being led away by a U.S. marshal, Harris said a quiet goodbye to family members, including his father, Willie Harris of Warren.
Willie Harris said after the sentencing he had no comment. “I don’t know anything about it,” he said.
Judge Wells selected letters, she said, that gave her a better understanding of what occurred in the scheme while also giving the victims a voice in the legal process and making a permanent record of the crime.
“I literally gave a stranger $20,000 for free. Every time I think about it, I cry. I’ll always be in debt because of Kevin Harris,” one letter said.
“The bastard has ruined a lot of lives. He’s worse than a monster,” another said.
Oliver Glasford of Toronto, who attended the hearing with his wife, Judith, said he lost $250,000 in the scheme, which collapsed after Complete Developments ran out of money to pay “profit” checks to investors.
After the hearing, Glasford said the seven-year sentence isn’t enough: “The reason is simple. He should be getting what I’m getting — a life sentence.”
Glasford met personally with Harris in Warren as the scheme first unraveled in 2008. “He told me point blank he would pay us back. From what I’m reading, he knew it was all a scam, all fraudulent. Looking back, I can’t believe someone could be so diabolical to look you in the face and lie to you,” Glasford said.
A Ponzi scheme involves paying fake “interest” payments to investors for a period of time to give the false impression that there are actual investments, when in truth the payments actually come from other investors’ funds.
Harris did try to make money through foreign-currency exchange (ForEx) trading early in the enterprise, but the trading was a failure. He also invested in real estate in the United Arab Emirates, said Edward Bryan, a federal public defender representing Harris.
But Complete Developments told investors Harris was a successful foreign-exchange (ForEx) trader and venture capitalist and that no more than 20 percent of their investment was at risk, Bryan said — admitting that the 20 percent promise was ridiculous.
“Nobody can make that guarantee,” Bryan said of investment firms, adding that Harris and his associates victimized investors with a promise of a 100 percent return on their investment per year.
Bryan asked Judge Wells to consider that Harris had succeeded as a small businessman in Warren but became a big businessman when he met Karen Starr of Toronto on the Internet, and Starr introduced Harris to marketing executive Patrick Cole of Toronto.
“He does accept responsibility for creating this mess, but there are others involved,” Bryan said.
David Toepfer, an assistant U.S. attorney, said before the hearing that he anticipates other parties involved in the Complete Developments scheme will eventually be charged.
Judge Wells ordered Harris to pay restitution of $15.7 million to his investors, but Toepfer said Harris has less than $100,000 in various pieces of property he once owned in the Warren area. Other than the property, Harris has no assets to recover, Toepfer said.
Judge Wells had relatively little latitude as to the sentence Harris received — between 78 and 87 months. She chose the highest figure — 87 months — and agreed with Toepfer that Harris should report to prison immediately.
Judge Wells could have sentenced Harris to more than 87 months, but prosecutors were recommending no more than 87 months because Harris had cooperated with the investigation, Toepfer said.