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Ponzi scheme operator’s wife to repay USD650,000

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The United States District Court for the District of Utah has entered a final judgment, dated 16 September, 2011, against Erin O’Malley, f/k/a Erin O Mowen. O’Malley is the former spouse of convicted felon and securities law recidivist, Jeffrey L Mowen.

 

On 4 May 2011, Mowen pleaded guilty to committing wire fraud in a related criminal action, United States of America v. Mowen, Case No. 2:09-cr-00098-DB (D. Utah). In pleading guilty, Mowen acknowledged operating a Ponzi scheme from around October 2006 to around October 2008, wherein he received over USD18 million from investors for use in a purported foreign currency trading program. The SEC Complaint alleges that the investor funds provided to Mowen were raised by Thomas Fry and the other defendants, Fry’s promoters, from the unregistered offer and sale of high-yield promissory notes to over 150 investors in several states. Mowen acknowledged in his guilty plea that, rather than using investor funds for their intended purpose, he used the money for his personal benefit, misappropriating over $8 million.

According to the SEC’s Complaint, Mowen transferred approximately USD650,000 of the misappropriated funds to his then wife, relief defendant Erin O’Malley. The SEC sought the return of those funds in its complaint from Ms O’Malley, whom it alleged had no bona fide right to the funds. The SEC did not allege that Ms O’Malley personally committed any securities law violation. Ms O’Malley did not respond to the SEC’s allegations and the court therefore ordered the default judgment against her, ordering her to disgorge USD654,101 in funds that the SEC had shown, through bank records, Mowen had transferred to her. The SEC’s action is continuing against Mowen, Fry, and Fry’s promoters.

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