Home Dallas Press Releases 2012 Last of Seven Defendants Sentenced in AmeriFirst Securities Fraud Case
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Last of Seven Defendants Sentenced in AmeriFirst Securities Fraud Case
Fraud Scheme Involving More Than 500 Victims, Including Mostly Retired Investors, and More Than $50 Million

U.S. Attorney’s Office July 27, 2012
  • Northern District of Texas (214) 659-8600

DALLAS—The final sentencing was held today in the massive AmeriFirst securities fraud case, prosecuted in the Northern District of Texas, that has resulted in a total of seven felony convictions and prison sentences up to 25 years, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas. Today, John Porter Priest was sentenced by U.S. District Judge Barbara M. G. Lynn to one year in federal prison.

Priest, 43, of Ocala, Florida, was sentenced by Judge Lynn to one year in federal prison and ordered to pay $4,742,946 in restitution. He pleaded guilty in September 2010 to one count of securities fraud based on his role in the Secured Capital Trust scheme.

“The AmeriFirst investment fraud came to light just over five years ago. Since that time, a coalition of public agencies, including the FBI, the Federal Deposit Insurance Corporation Office of Inspector General, the U.S. Securities and Exchange Commission, the Texas State Securities Board, and the Florida Office of Financial Regulation, have worked tirelessly, alongside court-appointed receivers in Florida and Texas, to bring the perpetrators of the fraud to justice,” said U.S. Attorney Saldaña. “The sentencings this week close a five-year chapter in the authorities’ work on this matter. All seven of the most culpable participants in the AmeriFirst scheme have been convicted of felonies and sentenced. We have pursued this matter for the last five years because investment fraud, particularly when it victimizes seniors as the AmeriFirst fraud did, is intolerable and must be redressed.”

Dennis Woods Bowden, 59, of Farmers Branch, Texas, was sentenced last Friday by Judge Lynn to serve 192 months in federal prison and ordered to pay more than $23 million in restitution. Bowden was the owner and chief operating officer of the now-defunct Dallas-based AmeriFirst Funding Corp. and AmeriFirst Acceptance Corp. Bowden was also a manager and owner of American Eagle Acceptance Corp., a Dallas-based company that bought and sold used automobiles, financed purchases of used automobiles, and bought and serviced used car notes. In December 2011, a jury convicted Bowden on four counts of securities fraud and five counts of mail fraud related to his role in a scheme to defraud investors in connection with the sale of securities. AmeriFirst has been under control of a court-appointed receiver since the Securities and Exchange Commission (SEC) brought an emergency action to halt the fraud in July 2007.

In connection with the same scheme, in 2010 a jury convicted Jeffrey Charles Bruteyn, 42, of Dallas, on nine counts of securities fraud. Bruteyn is currently serving a 25-year federal prison sentence. Bruteyn is the former managing director of AmeriFirst. On June 29, 2012, the U.S. Court of Appeals for the Fifth Circuit affirmed Bruteyn’s conviction and sentence.

According to evidence presented at the trials, Bowden and Bruteyn orchestrated offerings of promissory notes called secured debt obligations (SDOs) that raised more than $50 million from more than 500 investors living in Texas and Florida, many of whom were retired and all of whom were looking for safe and secure investments.

Bowden paid Bruteyn and brokers working under Bruteyn’s direction to sell the securities, but Bowden also signed documents that went directly to investors. Through the brokers and through documents that he signed, Bowden misled, deceived, and defrauded investors by misrepresenting, and by failing to disclose, material facts concerning the safety of the securities. Among other things, Bowden falsely represented to investors that their investments were guaranteed by a commercial bank, that the investors’ principal was secured by an interest in certain types of collateral, that insurance purchased by AmeriFirst companies insured the investors against loss of their money, and that the issuers of the SDOs were acting as the investors’ fiduciaries. In fact, none of these representations was true. Bowden, supposedly acting as the investors’ fiduciary, spent investors’ money on things investors did not approve or even know about, including an airplane, sports cars, a condominium, real estate for used car lots, and his own personal living expenses.

Another defendant convicted in the scheme, Vincent John Bazemore Jr., 37, of Denton, Texas, a broker who sold SDOs, pleaded guilty in October 2007 and is currently serving a 60-month federal prison sentence. Bazemore was also ordered to pay nearly $16 million in restitution.

Gerald Kingston, 47, of Dallas, pleaded guilty in December 2007 to one count of conspiracy to commit securities fraud, stemming from his role in helping Bruteyn manipulate the stock price of Interfinancial Holdings Corporation (IFCH). Acting at the direction of Bruteyn, Kingston bought and sold hundreds of thousands of shares of IFCH and affected matched trades to create the false impression of widespread interest in the stock. Kingston admitted that he derived more than $1.6 million in proceeds from his fraudulent sales of IFCH in the course of the conspiracy. Judge Lynn sentenced him in January 2012 to a two-year term of probation and fined him $50,000.

Eric Hall, 40, of Fort Myers, Florida, pleaded guilty in June 2008 to one count of securities fraud, based on his role in a scheme to defraud investors in an entity called Secured Capital Trust. He was sentenced by Judge Lynn in April 2012 to a two-year term of probation and ordered to pay approximately $4,742,946 in restitution.

Fred Howard, 64, of Tarpon Springs, Florida, was sentenced by Judge Lynn two weeks ago to five years in federal prison and ordered to pay approximately $4,742,946 in restitution. He pleaded guilty in February 2012 to one count of securities fraud for his role in the Secured Capital Trust scheme.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

Assistant U.S. Attorneys Alan Buie and Christopher Stokes and Special Assistant U.S. Attorney Stephanie Tourk were in charge of the prosecutions.

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