FBI joins probe of trust company accused of taking clients' funds - Albuquerque Journal

FBI joins probe of trust company accused of taking clients’ funds

Copyright © 2017 Albuquerque Journal

The FBI has joined the investigation into the alleged diversion of millions of dollars in assets, including clients’ Social Security deposits, held by the Desert State Life Management trust company in Albuquerque for elderly and mentally or physically incapacitated clients.

The FBI on Thursday filed a petition seeking the civil forfeiture of two properties owned by Desert State CEO Paul Donisthorpe and his wife, Liane Kerr.

The allegations contained in the 17-page petition contend Donisthorpe engaged in an illegal scheme to defraud the clients of his nonprofit trust company, conducting “financial transactions involving the proceeds of that scheme in a manner so as to conceal the nature, source, location, ownership or control of the proceeds of that scheme to defraud,” all in violation of federal wire fraud, bank fraud and money laundering laws.

Included in the forfeiture petition is a “luxury lodge” in Angel Fire that the couple has been actively trying to sell. The price was reduced just last weekend to $725,000 from $899,000, according to internet real estate listings. The assessed value in 2016 was $925,000.

The federal government also seeks the forfeiture of Desert State’s business office, at 1011 4th St. NW. That’s the same address for Kerr’s law office. She is a criminal defense attorney.

Both properties, the petition alleges, were purchased at least in part with Desert State client funds.

The forfeiture action filed by the U.S. Attorney’s Office in Albuquerque and signed by FBI Special Agent Grant Nixon is a civil matter, and no criminal charges have been filed in the case. Neither Donisthorpe, a certified public accountant who reportedly has medical issues, nor his wife returned Journal requests for comment.

The state Financial Institutions Division has been attempting to conduct a financial examination of Desert State since February, despite what state officials said were numerous stalling attempts by Donisthorpe. He has reportedly suffered some sort of brain damage, either from a stroke, a fall or a suicide attempt, according to a petition filed May 31 by the state agency.

The state petition, which seeks to assume control of the trust company via receivership, contends that so far examiners have found more than $4.1 million in client assets missing after being transferred into bank accounts associated with Donisthorpe and his other business interests. Donisthorpe hasn’t yet responded to the state’s allegations in court. An estimated 70 clients have been identified as suffering losses, state officials say.

The Santa Teresa family of one client has been informed that their disabled son’s $1 million account at Desert State has been drained to zero.

The federal petition states that FBI agent Nixon reviewed a March 10, 2015, financial statement signed by Donisthorpe and his wife showing their joint income to be about $100,000. The couple had obtained a mortgage on the four-bedroom, four-bathroom Angel Fire home, with $130,128 as the principal amount of the loan.

At least $49,000 of client funds were diverted from Desert State client accounts and applied to the mortgage on the Angel Fire property, the forfeiture petition states. Another $37,870 in clients funds were applied to the mortgage on the 4th Street property in Albuquerque after being diverted to Donisthorpe’s Spectrum Capital account. More than $10,000 in what the FBI believes were client funds was also applied to the 4th Street property from two other accounts that Donisthorpe controls.

The petition alleges that client funds were “laundered” through Spectrum Capital Markets LLC and into Donisthorpe’s Corazon Cattle and Paul A. Donisthorpe LLC accounts.

According to the forfeiture filing, the state Financial Institutions Division on May 17 provided the FBI with an Excel spreadsheet showing bank information for Desert State and three of Donistorpe’s other business ventures: Paul A. Donisthorpe LLC, Spectrum Capital Markets LLC and Corazon Cattle LLC. The funds came from various sources including client Social Security deposits and client accounts at financial institutions like Charles Schwab or Vanguard, the petition says.

The financial records showed a pattern of client funds being transferred from client accounts at other financial institutions to Desert State before passing through Desert State accounts to an entity controlled by Donisthorpe, Spectrum Capital. “These transfers did not appear to be authorized by clients and are not consistent with legitimate operations at DSLM,” the petition states.

From Spectrum Capital, the funds were diverted to other entities Donisthorpe controlled: bank accounts, credit card accounts and mortgages, “none of which are associated with DSLM or legitimate business activities of DSLM,” according to the forfeiture filing.

From August 2013 to April 2016, the transfers from the Desert State account to Spectrum totaled about $2.2 million, it stated. “The analysis identified no funds returning to DSLM accounts once they enter the Spectrum Account.”

Home » News » New Mexico News » FBI joins probe of trust company accused of taking clients’ funds

Insert Question Legislature form in Legis only stories

Albuquerque Journal and its reporters are committed to telling the stories of our community.

• Do you have a question you want someone to try to answer for you? Do you have a bright spot you want to share?
   We want to hear from you. Please email yourstory@abqjournal.com

taboola desktop

ABQjournal can get you answers in all pages


Questions about the Legislature?
Albuquerque Journal can get you answers
Email addresses are used solely for verification and to speed the verification process for repeat questioners.
Teenage girls charged in severe beating of other teen
ABQnews Seeker
Two teenage girls have been charged ... Two teenage girls have been charged and a third is being sought in the severe beating of another teen earlier this month at a ...
‘A real tragedy’: Animal nonprofit raising funds to replace ...
ABQnews Seeker
A nonprofit that provides medical care ... A nonprofit that provides medical care for animals in the wild had its trailer full of medical supplies and equipment stolen, now the organization ...
Teens accused in back-to-back carjackings in Southwest Albuquerque
ABQnews Seeker
Three teens are accused of carjacking ... Three teens are accused of carjacking three people at gunpoint Tuesday afternoon before a police pursuit that ended in a crash in Southwest Albuquerque.
Vallejos out as state cannabis director
ABQnews Seeker
The news of Vallejos' departure comes ... The news of Vallejos' departure comes as the state nears one full year of recreational cannabis sales. To date, the state's cannabis businesses have ...
Former Navajo Nation President Ben Shelly dies at age ...
ABQnews Seeker
Former Navajo Nation President Ben Shelly ... Former Navajo Nation President Ben Shelly died Wednesday after a long illness, according to a family spokesman. He was 75.
Spring break's half-over already? Here's a list of low-cost ...
ABQnews Seeker
Spring break is half-over for Albuquerque ... Spring break is half-over for Albuquerque Public Schools kids and their families, and the weather's been meh. With drizzly, moody weather expected to continue ...
$500 rebate for New Mexico residents in 2023: What ...
ABQnews Seeker
New Mexico taxpayers could be taking ... New Mexico taxpayers could be taking home an additional $500 or $1,000 this year. How do these rebates work?
Cloudy with a 100% chance of retirement: 15 questions ...
ABQnews Seeker
Steve Stucker, longtime weatherman with KOB, ... Steve Stucker, longtime weatherman with KOB, will be retiring at the end of the month. From the names — and health statuses — of ...
New Mexico passed laws protecting access to abortion. Opponents ...
ABQnews Seeker
Anti-abortion activists want to challenge the ... Anti-abortion activists want to challenge the passage of New Mexico’s House Bill 7 in court.