Plea Deal Struck For Illinois Man Charged In $600K Investment Scam

June 19--BLOOMINGTON -- A Bloomington man pleaded guilty Monday to stealing more than $600,000 from two investors in a plea agreement that could send him to prison for 15 years.

Derek Gordon, 44, accepted a prosecution plea offer as a bench trial on 20 felony counts was set to begin in McLean County Circuit Court.

He pleaded guilty to theft by deception, money laundering, forgery and wire fraud. The state amended the most serious charge, lowering the amount of money taken to $499,999 to allow Gordon to be eligible for probation when he is sentenced Aug. 21.

Gordon also agreed to pay $524,859 to Ron Briscoe and $100,000 to Richard Jackson, two investors who lost their money after turning funds over to Gordon to invest in a hedge fund.

Losses of a third investor, Frank Lunn, who allegedly lost $200,000 in the sunken fund, were not part of the restitution listed in the plea agreement, but may be considered during sentencing, said First Assistant Adam Ghrist.

Defense lawyer Chris Gramm said his client was initially in favor of a bench trial "because the whole story would be told. It would come out that he did not steal the investors' money in the true sense of the word."

The defense claims the losses were the result of highly volatile stock market conditions between 2012 and 2013. Gordon admitted to illegal activity he engaged in to hide the losses, including the creation of false financial reports.

"The cover-up was much worse than the underlying crime from our perspective. When you're faced with these large losses, it's hard to face people. That was Derek's undoing," said Grimm, who estimated that Gordon illegally pocketed less than $10,000.

In his statement to support the plea, Ghrist detailed a three-year scheme by Gordon that started with the investment from Lunn that evaporated into a $6,000 value within two months in late 2012. In January 2013, Briscoe cashed out his retirement and handed over between $100,000 and $500,000 to Gordon's Cornerstone Genesis Fund, said Ghrist.

Gordon told the new investor that his contribution "was the smallest in the fund" that was actually worth less than $6,000 at the time, said the prosecutor.

In September 2014, Gordon told Jackson of "multi-millions he was trading within this hedge fund" that had one other investor.

The state alleged that investors were not told of the 18 to 27 percent brokerage fees charged their accounts by a firm that did not involve Gordon.

When questions surfaced from investors in 2014, Gordon began to shift money within the accounts and produce false statements and e-mails in an effort to show the fund was making money. Briscoe was told in December 2014 that his investments were worth almost $1 million when in fact the fund had a value of about $5,500, according to evidence from the state.

The risks associated with the hedge fund were spelled out in documents signed by the victims who all work in the financial sector, said Gramm.

This story will be updated.

Follow Edith Brady-Lunny on Twitter: @pg_blunny

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