Utahns make fraudulent investments, they find funds difficult to recover

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By Kristian Ekenes and Stacie Carnley

Eric Nelson was first introduced to Fasi Filiaga by a mutual friend in fall 2003. As a managing partner of an investment group, Filiaga taught people how to handle money. After taking numerous classes and company seminars, Nelson became interested in investing. Being sure to do his homework, he studied Filiaga’s organization and watched its funds for more than a year until he felt confident in its stability and decided to invest a large chunk of money in 2007.

One year later, Nelson, a Lindon resident, was out thousands of dollars, just as he was getting ready to send his daughter to college. Filiaga, now serving four felony counts of 1-15 years each, had conned Nelson and numerous others for a total of $3 million. Nelson felt cheated and outraged. Despite his best efforts, he had been scammed.

Fraud, in all its forms, is an increasingly widespread epidemic. Since 2008, the FBI has hired 91 new agents to investigate fraud cases. FBI authorities estimate Utah courts alone are home to more than $2 billion worth of fraud prosecutions.

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FBI authorities estimate Utah courts alone are home to more than $2 billion worth of fraud prosecutions.
For the many Americans affected by fraud, the road back to financial repair can be a long and arduous path. Four years after losing his investment, Nelson is still working tirelessly to bring those responsible to justice and to retrieve what is rightfully his.

“If I can’t recover funds,” he said, “it will be 15 years before I get back to where I was.”

In the face of such a daunting task, many victims may not know where to begin. Victims of fraud should file a complaint with the Utah state Securities Division — the agency primarily responsible for enforcing securities laws and regulating the investment industry.

Even with the help of state institutions, success isn’t always guaranteed. Keith Woodwell, director of the Utah Securities Division, said if victims of fraud make investments through a licensed stock-broker or investment advisor, their chance of recovering lost funds is very high. However, the majority of fraud victims lose their money to unlicensed individuals in the securities industry. These individuals are often neighbors, friends or relatives.

“Their chances of recovery are much harder,” Woodwell said.

After the Securities Division is notified about a possible fraud scheme, it determines if the alleged violation actually constitutes fraud. When a thorough investigation is complete, the Securities Division decides what type of action to take — ranging from internal administrative penalties, to filing a civil court case or referring the case to the attorney general for criminal prosecution.

In 2011, the Securities Division ordered more than $5 million in restitution to be paid to fraud victims, a drop in the bucket compared to the FBI’s estimate of money lost in fraudulent activity in Utah.

“It’s rare that people who are victims of these cases recover more than a few cents on the dollar,” said Rodney Snow, president of Clyde Snow & Sessions law firm. “They may get 30 or 40 cents on the dollar. That would actually be a pretty good return.”

Snow said he worked on a case in Utah County where an individual collected $34 million from fraudulent investments. When all was said and done, the victims were able to recover $13 million of their lost money.

“That’s not bad considering,” Snow said.

Snow said in some cases it may not be financially worth it for fraud victims to go after the money they lost. Often, victims have to hire lawyers, who charge high rates, to help them locate funds and file lawsuits against the fraudsters.

“Generally, in my experience, in most cases [the victims] are spending more money on collecting what they [lost] then they’re going to [recover],” he said.

Of Filiaga’s 11 victims, which include Nelson and others from various states, two have dropped out after years of fighting for their money with little success. Nelson said he and his team are just starting to recover funds, proving that, to be successful, it takes a lot of time, money and patience.

“My experience in recovering funds is that it is unbelievably challenging,” he said.

Even if a victim has little chance of recovering any funds, he or she can benefit from reporting the crime. If a case is being investigated by the state or the SEC, the victim can be eligible for a tax deduction on money lost through the Victims of Crime Act.

Nelson said he has made it his personal mission to make sure Filiaga and those who supported or covered up his fraudulent activity, are held accountable.

“If I don’t do something about it, I’m allowing this to grow,” he said. “As a private citizen, I plan to fight my specific crime, because if I don’t, it goes unpunished.”

According to Nelson, it was originally proposed Filiaga receive a mere two months in jail for his crime.

“Had it not been for the attorneys, myself and others, he would have had only 60 days of jail time and have been ordered to pay restitution of a few dollars a month,” he said. “That’s unbelievable to me.”

Although the road to recovery is daunting and often proves fruitless, there are some success stories. Because of Nelson’s and his attorney’s efforts, Filiaga is currently serving his 30-year sentence in the Central Utah Correctional Facility in Gunnison.

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