Denver Man Sent To Prison For Ponzi Scheme That Defrauded 175 Investors Of $20M

DENVER -- Daniel B. Rudden, age 72 of Denver, Colo., was sentenced by U.S. District Court Judge Christine M. Arguello to serve 121 months (just over 10 years) in federal prison, followed by 3 years on supervised release for mail fraud after he defrauded 175 investors out of more than $19 Million, announced U.S. Attorney Jason Dunn and FBI Denver Field Office Special Agent in Charge Dean Phillips.

Rudden was also ordered to pay restitution of $19,609,905.21 to victims of his Ponzi scheme. Rudden appeared at the hearing free on bond and was remanded at the hearing's conclusion.

According to court documents, Rudden was the President and sole owner of Financial Visions, Inc. (FV). FV's business model was based on taking assignments on life insurance policies in order to pay for funeral expenses. When a family experienced the death of a family member and could not afford the funeral expenses, FV would pay the funeral home and/or cemetery for those expenses and take an assignment on the deceased's life insurance proceeds.

When the insurance company paid the proceeds, it would pay FV directly for the funeral expenses that FV had fronted. FV charged the family of the deceased a 4 to 5 percent fee for this service.

Individuals who decided to invest in FV received a promissory note signed by the defendant. Through the promissory note, the defendant promised to pay back to the investor the principal amount invested plus interest. Most investors were promised 12% simple interest per year on their principal amount invested, to be paid on a quarterly basis.

Over the years, the defendant continued to take in money from new investors, but the number of funeral homes using FV's services did not continue to grow at a commensurate rate. As a result, FV owed investors more and more in interest payments while FV was not making a profit sufficient to sustain such payments. The defendant ultimately began using later investors' funds to make the interest payments to earlier investors. The Ponzi scheme ended up defrauding 175 investors out of more than $19 million. More than 65 victims lost over $100,000 each, and two people lost over $1 million.

The scheme came to a head when the defendant stopped being able to pay out "interest" and could not give investors a refund of their principal balance when demanded. Some investors reported the defendant to state and federal authorities. On July 9, 2018, the defendant himself emailed his investors and admitted that FV had become a Ponzi scheme. As stated in the plea agreement, the government maintains that, based on profit and loss statements, FV was not a profitable business model from its inception.

"This is a scheme that was particularly egregious because the defendant took advantage of people at one of their most emotional times -- following the loss of a loved one," said U.S. Attorney Jason Dunn. "The sentence here appropriately reflects that harm."

"The FBI is committed to aggressively pursuing those who deceive innocent investors by creating complex white-collar fraud schemes. Duplicitous schemes devised to obtain funds from our community's citizens for personal gain is a felony," said FBI Denver Special Agent in Charge Dean Phillips. "The recent sentencing of Daniel Rudden should deter others who engage in this type of crime."

The matter was investigated by the FBI with assistance by the U.S. Postal Inspection Service. The defendant was prosecuted by Assistant U.S. Attorney Martha A. Paluch, Chief of the Economic Crime Section, Assistant U.S. Attorney Rebecca S. Weber, and Special Assistant U.S. Attorney Jason Slothouber of the Colorado State Attorney General's Office. Financial analysts from the Federal Bureau of Investigations, the United States Attorney's Office, and the Colorado State Attorney General's Office provided invaluable assistance to this prosecution.