Copyright © 2017 Albuquerque Journal
During a surprise hearing in federal court Monday, Paul Donisthorpe, former CEO of Desert State Life Management, pleaded guilty to bilking dozens of New Mexico’s most vulnerable residents out of more than $4 million.
“This was a heartbreaking case. An individual was trusted by the elderly, disabled and other New Mexicans with special needs to make sure their rent, medical bills and living expenses were covered,” Terry Wade, the special agent in charge of the FBI in Albuquerque, told a news conference Monday afternoon announcing the guilty plea. “Instead, he stole a great deal of money from all of them so he could support a lavish lifestyle, like a lodge in Angel Fire.”
The federal charges against him and the agreement, in which he pleaded guilty to wire fraud and money laundering, were not made public until hours after Donisthorpe, 62, left the courthouse. The U.S. Attorneys Office then held what it called a “law enforcement announcement” and refused to take any questions.
Donisthorpe said in his plea agreement that he used his ill-gotten gains to pay mortgages on his home in Albuquerque and vacation home in Angel Fire. He will be sentenced to eight to 12 years in prison, according to the recommendation in his plea agreement.
He also must pay $4,812,857 in restitution to the victims of his crimes.
Donisthorpe ran a decadelong scheme in which he stole more than $4.8 million from many of the 70 of his nonprofit trust company’s clients, acting U.S. Attorney James Tierney said Monday.
At the end of 2016, the company should have had more than $5 million in client assets, excluding real estate and insurance policies. But it had only $926,000, according to a search warrant affidavit unsealed on Monday.
Donisthorpe, who currently lives in Bloomfield, was released on standard conditions of release after his court appearance before Magistrate Judge Laura Fashing. His sentencing hearing hasn’t been scheduled.
Ahmad Assed, Donisthorpe’s attorney, could not be reached for comment Monday.
Federal charges
Earlier this year, state financial regulators accused Donisthorpe of siphoning client money, the FBI filed for forfeiture of some of his property and the state put his nonprofit company into receivership. About 40 of his clients had been notified by the state that their trust money was missing.
But federal charges – in the form of a criminal information – were not filed until Monday, at the same time as the plea agreement.
The criminal information revealed more details about the case. It said that from 2006 through 2016, Donisthorpe on numerous occasions liquidated his clients’ investments and then had their money transferred to accounts that he controlled, which he used for his own personal expenses. He then concealed the theft by causing his accounting staff to falsely record the clients’ balances in Desert State accounting records, according to the criminal information.
He presented those false records to his company’s board of directors, the Financial Institutions Division and his clients, according to the information.
96-year-old lost $32,000
Donna Burk, of Texas, still hasn’t told her 96-year-old mother her $32,000 savings held at Desert State was stolen.
Burk said Monday that she hopes enough money will be recovered to help compensate victims for their losses.
“It’s one step out of the way. It’s tremendous. It’s great. But I’m still just going to pray.”
Under the plea deal, Donisthorpe agreed to the forfeiture of the company’s headquarters in Albuquerque, an Angel Fire vacation home and his interest in a Texas cattle ranch, in addition to the restitution.
There was no prior notice of Monday’s plea by Donisthorpe, who hasn’t been seen for months since state regulators filed their case alleging the theft. Burk said she hopes to appear at Donisthorpe’s sentencing.
“I’d love for him to be able to see faces of victims,” said Burk, who has been in contact with other victims, some of whom are being hounded by creditors. She has already had to adjust her work schedule starting in January because she’s had to reduce the hours she can pay an in-home sitter for her mother.
Search warrants
The two search warrants unsealed Monday show that in January 2017, the state Financial Institutions Division contacted Desert State and Donisthorpe to schedule an examination of the company the next month.
As the date of that examination approached, the state agency was unable to reach Donisthorpe or receive records it had requested from him.
Financial Institutions Division employees went to Desert State multiple times in late February and early March, and no one was working there, according to the warrants.
Liane Kerr, Donisthorpe’s now ex-wife, contacted the division in early March and said her husband had a stroke and was hospitalized. She said several Desert State employees and board members had recently quit or were out of the country. She said the people working there at the time would be unable to assist with the examination, according to the warrants.
In late March, Helen Bennet, an attorney and Desert State board member, told the Financial Institutions Division that Donisthorpe had recently tried to commit suicide by overdosing on prescription medication. She said he told her that he couldn’t remember whether he embezzled money but that if money was missing he must have done it, according to the search warrants.
Corrales Mayor Scott Kominiak was appointed acting CEO of Desert State in mid-March, and he took possession of a computer that Donisthorpe used while operating the company. FBI agents obtained a search warrant for that computer in early June.
