A stock salesman convicted in the Znetix fraud case was accused yesterday of keeping a secret bank account with money wrongly taken from investors.
A stock salesman convicted in the Znetix fraud case was accused yesterday of keeping a secret bank account with money wrongly taken from investors in yet another investment scheme — and spending that money while on trial in the Znetix case.
Larry L. Beaman, convicted in May of 26 counts of wire fraud, money laundering and other crimes as part of the $100 million Znetix scam, had been out of jail on bond while awaiting sentencing. Under the conditions of his bond, he was required to tell authorities about all his sources of income and to maintain just one bank account.
But he failed on both those scores, according to the U.S. Attorney’s Office, which asked yesterday that Beaman’s bond be revoked.
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According to court filings and Assistant U.S. Attorney Jeffrey Coopersmith, Beaman was soliciting investments for something called Qwest/Wealth Builders at the same time he was selling interest in Znetix. At least $55,000 from Qwest/Wealth Builders investors wound up in a bank account Beaman maintained in his niece’s name.
Beaman used a debit card linked to that account to “make purchases up and down the I-5 corridor,” Coopersmith said at yesterday’s court hearing. Court records allege he used the card to pay for hotel rooms and cigars, house payments and cars.
“This is exactly the same conduct he was tried and convicted for,” Coopersmith said.
The alleged secret account was uncovered by an IRS agent investigating another investment scam.
More than 5,000 investors lost their savings in Znetix. The company promised to franchise a chain of unique medical and fitness centers, and advertised at Safeco Field. Investors were told there would be an initial public offering soon and that they would then cash in.
Company founder Kevin Lawrence later admitted misleading investors and was sentenced to 20 years in prison. Fourteen others, including Beaman, were convicted of participating in the scheme.
Beaman faces a hearing Wednesday in which evidence of the allegations will be presented and a judge will decide whether to revoke the bond.
Beaman is scheduled to be sentenced March 4.