In the news:
Seattle investment adviser guilty of fraud in $46M case
Mark Spangler was convicted of fraud and money laundering after secretly investing clients’ money into risky startups in which he had an ownership interest.
Seattle Times business reporter
Mark F. Spangler, a Seattle investment adviser, was found guilty Thursday of 31 counts of fraud and money laundering after deceiving clients by secretly investing more than $46 million of their money into two risky startups in which he had an ownership interest.
Spangler, 58, who ran an investment firm called The Spangler Group and is a former chairman of the National Association of Personal Finance Advisors, faces a possible life sentence.
After a 14-day trial, a federal jury convicted him on 24 counts of wire fraud, seven counts of money laundering and one count of investment-adviser fraud.
Sentencing is scheduled for Feb. 6. Spangler’s attorney, John Zulauf, said his client has no comment at this time.
According to Securities and Exchange Commission documents, Spangler raised more than $56 million from his clients beginning in 1998. However, between 2003 and 2011, rather than invest the funds in publicly traded securities, he diverted more than $46 million into two risky startups, TeraHop and Tamarac.
Spangler co-founded TeraHop, a Georgia company that made wireless devices used to monitor the location and activity of people or physical assets such as construction equipment. He served as chairman and CEO until the company failed in 2011.
Spangler also co-founded Seattle-based Tamarac, which designs software for financial planners. He was the company’s chairman until February 2011.
The SEC had a Bellevue accounting firm conduct a surprise inspection of The Spangler Group’s books for the period from December 2009 through September 2010. The firm’s Jan. 30, 2011 report indicated Spangler had been operating without any independent oversight of his company’s funds.
Later that year, the Spangler Group filed for receivership — similar to bankruptcy, but in state court rather than federal court.
That sparked the SEC and U.S. Attorney’s Office investigations into what Spangler did with the $56 million or more entrusted to him.
According to the U.S. Attorney’s Office, Spangler collected more than $4 million in investment-adviser fees from his clients and more than $1 million in fees from the two startups. And, while he was losing tens of millions of his clients’ money, Spangler traveled the world and purchased an $890,000 yacht and a $20,000 engagement ring.
“Mark Spangler gambled with other people’s money without their knowledge — he defrauded friends and family members who trusted him with their life’s savings,” U.S. Attorney Jenny Durkan said in a written statement.
The Securities and Exchange Commission also filed a civil complaint in 2012, accusing Spangler of funneling about $47.7 million of his clients’ money into private ventures “despite representing that he would invest primarily in publicly traded securities,” according to an SEC news release at the time.
The civil case was put on hold while the criminal proceedings continued, and will resume once the criminal trial has concluded, according to an SEC spokesperson.
The civil suit says Spangler and his firm violated the antifraud provisions of securities laws, and seeks financial penalties as well as any gains from the violations.
The SEC declined to comment on its case while in litigation.
U.S. District Judge Ricardo S. Martinez was unavailable Thursday to hear the verdict, so U.S. District Judge Robert S. Lasnik stepped in.
The prosecution asked to have Spangler put into immediate custody, but Lasnik declined, stating he did not have enough knowledge of the case.
The prosecution may renew the request to incarcerate Spangler once Martinez returns next week.
Information from The Seattle Times archives was used in this report.
Coral Garnick: 206-464-2422 or email@example.com. On Twitter @coralgarnick