Convicted Ponzi Schemer Threatens To "Fry This Court" After Receiving 20-Year Sentence

Shortly after learning of his twenty-year prison sentence for operating a Ponzi scheme that duped more than 140 investors out of over $4.3 million, a Montana man stated that he "will fry this court" and threatened that the prosecuting county attorney "will pay."  Richard Reynolds received a 60-year sentence from District Judge Holly Brown, with 40 years of the sentence suspended, following his conviction on six felony charges in December 2013.  Reynolds' outbursts were reportedly followed by his daughter threatening the two co-prosecutors that "this is the beginning, not the end."  Authorities plan to report the threats to police.

Reynolds was arrested in July 2012 after being on the run for several months.  He had been charged with twenty felonies in Gallatin County District Court after a former employee alerted authorities over concerns over the legitimacy of his operation.  According to authorities, Reynolds and his wife, Lori, operated and managed eight corporations from 2008 to 2011 under the several companies, including United Consultant Investment Corporation ("UCIC"), Buffalo Exchange, and Buffalo Extension.  The two solicited investors for a purported foreign currency trading platform through Buffalo Extension and Buffalo Exchange, and in a gold investment opportunity through Buffalo Investment.  Importantly, none of these investments were approved or registered with any state securities regulator or the Securities and Exchange Commission ("SEC").  

Investors were provided with marketing materials and promised quarterly returns of 100 percent.  In one instance, Reynolds communicated with a promoter for a mining entity who provided him with offering documents after Reynolds offered to help raise money for the operation.  However, even after the promoter discovered that Reynolds had securities problems with Missouri and Montana authorities and ceased communication with Reynolds, it was later discovered that Reynolds still solicited several individuals to invest in the mining operation.  

Additionally, Reynolds also used his close relationship with area pastors to identify and solicit investors.  At least eight pastors introduced investors to Reynolds, and in return became employees of Reynolds and received 10% of all investor funds directed to Reynolds' operations  While the pastors thought that Reynolds was truly investing in the foreign currency and gold opportunities being promoted, they later became suspicious when Reynolds failed to meet investor principal redemptions and made promises he could not keep.  In total, Reynolds and his umbrella of entities raised approximately $5.4 million from over 140 investors in 21 states and six countries.

After the Montana Committee of Securities and Insurance was contacted by several former employees who had become suspicious of Reynolds, an investigation revealed that Reynolds and his wife did not make the gold and foreign currency investments they purported to make.  Instead, the two maintained thirty-one separate bank accounts at Bank of America and Wells Fargo, where they used at least $4.4 million of the $5.4 million they raised to live a lavish lifestyle and make Ponzi-style interest payments and principal redemptions.  Additionally, through investigative subpoenas served to E*Trade, the CSI learned that of a total of $725,000 of investor funds transferred in, approximately $314,015 was lost in speculative penny stock trading.  The CSI also learned that the Reynolds were a 49% owner in a pre-production movie being produced about an Indian heroine.  

After standing trial, Reynolds was convicted by a Montana jury of six felony charges, including two counts of fraudulent practices and single counts of theft, operating a Ponzi scheme, failure to register as a security salesperson and failure to register a security.  While Reynolds will be given credit for the approximately two years he has spent in custody, Montana law requires that he serve at least 25% of his sentence before he can be eligible for parole - meaning he will be in prison until at least mid-2017.  Such a timetable does not include any additional sentence based on the alleged threats.