(TOLEDO, Ohio) — The managers of a Lucas County investment firm have been indicted on multiple felonies in a decade-long scheme to deceive and defraud investors, cheating at least 200 clients out of $72 million, Ohio Attorney General Dave Yost and Ohio Department of Commerce Director Sherry Maxfield announced today.
The indictment, filed last week in Lucas County Common Pleas Court, names eight defendants with felonies: James DelVerne, 93 felonies; Doug Miller, 39 felonies; Gary Rathbun, 37 felonies; Colleen Hall, 10 felonies; Nancy Rathbun, seven felonies; Adam Solon, seven felonies; John Walters, six felonies; Brad Konerman, five felonies.
The felony charges include engaging in a pattern of corrupt activity, unlawful securities practices, telecommunications fraud, aggravated theft, perjury, money laundering and several other financial charges.
Seven defendants were arrested today, while a final defendant is in the process of turning himself in. The indictment, unsealed following the arrests, is available on the attorney general’s website.
The case centers on Northwest Capital, a Toledo investment firm that serves as an intermediary between investors and businesses raising capital by selling accounts receivable.
From January 2011 to December 2021, the indictment says, the defendants solicited investment advisory clients to purchase alternative investments from securities issuers without fully disclosing the managers’ conflicts of interest.
The defendants also manipulated funds among interrelated entities to make the investments appear successful.
To continue raising additional capital from investors, the Northwest Capital managers and their business associates created new, affiliated entities for investment without disclosing to existing investors the poor financial condition of these companies and the monitoring fees skimmed by the defendants.
They then certified false investment values, which were shared in annual statements issued to investors.
A total of 741 investments from at least 200 people – roughly $72 million combined – were allegedly mismanaged.
Besides Northwest Capital, other entities and investment funds associated with the indictment include Briarfield Capital, ThunderRoad Partners, TRF Fund 1, TRF Fund 2, Kings Point Leasing and Winding Creek Partners.
The case is the culmination of a multi-year investigation by the Ohio Department of Commerce’s Division of Securities and the Ohio Attorney General’s Bureau of Criminal Investigation.
The Division of Securities previously revoked the investment advisor representative licenses of two of the defendants, Doug Miller and Gary Rathbun, for misconduct related to this action.
The case is being prosecuted by the Special Prosecutions Section of the Attorney General’s Office.
Indictments merely contain allegations, and the defendants are presumed innocent unless proved guilty in a court of law.
If you suspect you are a victim of investment fraud or that a family member has been defrauded, call the Division of Securities’ Investor Protection Hotline at 877-683-7841.