BLOOMINGTON — A Bloomington financial planner was sentenced to five years in prison Thursday on charges of theft by deception in a scheme that caused two investors to lose more than $600,000.
Derek Gordon, 44, pleaded guilty in June to theft by deception, money laundering, forgery and wire fraud. He received sentences of two to four years on the other counts, to be served concurrently.
As part of his plea agreement, the most serious charge was amended by lowering the amount taken to $499,999, which made Gordon eligible for probation. Beyond that there was no agreement on the length of the sentence.
First Assistant State's Attorney Adam Ghrist argued a prison sentence was needed to send a message both to the defendant and others who might consider committing such a crime. Judge Casey Costigan agreed.
Although the case did not involve physical harm or threats, “it did cause emotional harm,” said Costigan.
He described the offenses as a violation of trust.
“You used your professional reputation to commit the offense,” said Costigan. “They understood the risk of investment but they needed accurate information and that wasn't provided.”
Gordon created a hedge fund in 2012 that attracted investors but quickly lost money in the volatile stock market. However, Gordon hid those losses from investors and provided misleading information, according to testimony at Thursday's sentencing hearing. The scheme continued until July 2015.
Witnesses said Gordon claimed he was overseeing several million dollars in assets when, in truth, nearly all the money was quickly lost — either through actual losses or transaction fees that ate away 18 percent to more than 24 percent of the money invested. All funds invested were typically lost within two or three months of investment, according to hearing testimony.
Ron Briscoe testified that Gordon told him he “would be one of the smaller investors” with his $529,000 — which amounted to about 65 percent of his retirement savings. In actuality, he was the largest investor and the fund had nearly no money in it at that time.
As part of the plea agreement, Gordon agreed to pay $524,850 in restitution to Briscoe and $100,000 to another investor, Richard Jackson.
Frank Lunn, one of the original investors, lost about $200,000 but was not part of the restitution request.
Defense attorney Chris Gramm requested probation, arguing that imprisonment would cause harm to his family and make it more difficult for him to pay restitution. He noted that Gordon didn't intend to squander the money and that the vast majority of the money “was not stolen and did not end up in Mr. Gordon's pocket.”
However, Ghrist said Gordon's continued deception caused more losses.
“It's not like one mistake. It went on for years,” Ghrist said. “From the beginning, they were never told the truth.”
In asking for mercy from the court, Gordon said, “My actions were selfish, extremely selfish. … I thought I had something I thought was a dream and it turned into a nightmare.”
He said the cover-up “wasn't for monetary gain. It was because I was scared.”
Gordon had faced up to 15 years in prison. Ghrist asked for a nine-year sentence on the most serious charge.