A Colorado rancher has been sentenced to nearly 3½ years in prison for bilking investors out of nearly $5 million in a cattle Ponzi scheme straight out of the Wild West.
Richard K. Sears, 73, of Pueblo, admitted selling investors on the idea that he was developing a new breed of high-altitude cattle — the Rocky Mountain RomAngus — that prosecutors say didn’t yet exist.
A longtime hunting outfitter, Sears pleaded guilty in May to mail fraud. Prosecutors say he began enlisting backers in 2008 through mailings targeting people with hunting licenses.
Sears’s proposal was to use investors’ cash to purchase Angus cows he would then lease back to mate with Romagnola bulls, a breed whose history can be traced to the late 19th century in the Emilia-Romagna region of Italy. Prosecutors said Sears offered to handle managing the herd and to cover all costs related to its care.
In return, investors would receive an annual payment of 10% of what they paid in, and the right to either reclaim cows after a certain period of time, or the return of their full investment, prosecutors said. Sears would keep all the calves born as a result of the arrangement.
But prosecutors say Sears never bought all the cattle he had promised investors he would, and ceased buying new stock at all after 2011, while continuing to raise money.
At certain points, he stopped making the annual payments or returning investors’ cash as promised, blaming drought for the high cost of hay and an outbreak of venereal disease among the herd, prosecutors said.
Instead, he used the money to pay off tax debts and to pay back earlier investors, according to court documents. In all, prosecutors say Sears raised around $7 million from dozens of investors and misappropriated nearly $5 million.
Sears’s attorney, John Richilano, said his client had begun the venture with honest intentions but, after being dealt a number of setbacks, made some poor choices and dug himself into a hole he couldn’t get out from.
“He has always been interested in cattle and didn’t do this to enrich himself,” Richilano said. “He is very remorseful and takes full responsibility.”
Prosecutors described it as a complex fraud that took thousands of hours of investigation to unravel.
“Creative fraudsters may go to great lengths to hide their crimes, but we are going to uncover them,” said Cole Finegan , U.S. attorney for the District of Colorado.
In addition to a sentence of 41 months in federal prison, Sears agreed to pay $4.97 million in restitution.