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Trust fraud victim sentenced to prison for making threats

Copyright © 2020 Albuquerque Journal

As one of the victims in the $6.8 million embezzlement at the Desert State Life Management trust company in Albuquerque, Andrew Graham hoped to find closure after former company CEO Paul Donisthorpe was sent to prison for 12 years.

On Wednesday, Graham himself was sentenced to a stint in federal prison for threatening to kill the very people trying to help him and some 75 other special needs and vulnerable former clients recoup their stolen money. His trust lost an estimated $100,000 in the scheme.

The targets of his threats: A top state financial regulatory official and an Albuquerque attorney hired by Graham’s family to file a class action lawsuit on behalf of victims.

Graham, 40, pleaded guilty earlier this year to the federal crime of threatening interstate communications via emails, voicemail and phone calls transmitted from his home in Aspen, Colorado, in late 2018 and early 2019.

At sentencing in Albuquerque, U.S. District Judge Kea W. Riggs rejected defense requests for no prison time and imposed a 15-month sentence to be followed by two years of supervised release.

Graham, who has been on pretrial release since his arrest in 2019, has 60 days to surrender.

Court records show Graham was found competent to stand trial after submission of a now-sealed psychiatric report. His defense recommendations for sentencing were also sealed by the court.

But a U.S. Attorney’s Office’s recommendation stated that Graham’s parents “set up a trust to benefit him and ensure the family resources were maintained judiciously. Through no fault of Defendant’s, that trust money was stolen by Paul Donisthorpe.”

Donisthorpe, who comes from a prominent Republican family that included a state legislator and pollster, pleaded guilty to wire fraud and money laundering in the bilking of Desert State client investment accounts from at least 2009 to 2016. He was ordered to pay more than $6.8 million in restitution.

Donisthorpe spent client money on business ventures, mortgages for his home and a vacation home in Angel Fire, vehicles, credit card expenditures and IRS debts, federal records show.

The state uncovered the scheme through an audit of the nonprofit corporation ordered in late 2016 by Christopher Moya, director of the financial institutions division of the state Regulation and Licensing Department.

While the criminal prosecution of Donisthorpe proceeded, Moya’s agency and a legal team at Freedman, Boyd, Hollander, Urias and Ward law firm filed legal actions to help recover money for the victims.

Those efforts met with limited success, the U.S. Attorney’s Office stated in a sentencing recommendation.

“Frustrated, Defendant began to accuse those working to get the trust money back of being involved in some conspiracy to do the opposite,” the recommendation stated. Graham threatened not only Moya, but also an attorney on his private legal team who is African American.

Graham’s phone calls to Moya started out “relatively normal, but escalated over time to include rambling and, later, accusations that financial institution division personnel were somehow complicit in the Desert State fraud.”

Defendant “escalated … to sending very graphic pictures of people who had been killed violently, which FID personnel took as an implied threat of violence,” the U.S. Attorney’s Office wrote.

The sentencing hearing was supposed to be broadcast online, but because of technical difficulties, was not. Graham’s defense attorney couldn’t be reached on Wednesday.

In its filing, the U.S. Attorney’s Office disputed what it said were Graham’s defense assertions that his threats were “jokes, rhetorical flourishes, or otherwise unserious.”

According to federal prosecutors, Graham sent an email to Moya on Dec. 21, 2018, that stated in part, “If this continues I will come down there and start killing people … Chris Moya … I will hunt you down and kill you if you continue to willingly participate in this fraud.”

Graham also showed up at Moya’s office under the guise of having an appointment and was threatening enough to convince Moya to implement new security procedures to protect his staff.

“Defendant’s purpose in issuing his threats was clear: He wanted the money stolen from his trust returned to that trust so it could benefit him as his parents originally intended. His threats were each designed to produce conduct that Defendant preferred – he wanted FID to achieve greater success in recovering his trust’s money and he wanted the private legal team to be staffed only with white attorneys (because he subjectively believed that would make it more successful somehow),” the U.S. Attorney’s Office stated.

Before U.S. District Judge James Browning sentenced Donisthorpe in February 2019, Graham wrote the judge a letter lamenting the innocent victims of the scheme, describing them as “Our citizens that have no voice.”

He wrote that he hoped for “closure to what has been years of trauma” and urged the state of New Mexico and Congress to “set a gold standard for oversight of financial institutions that repeatedly fail to police themselves.”

Moya’s agency, as receiver of the now-closed company, told the Journal on Wednesday that it has found few assets of Donisthorpe’s that could be liquidated for victim compensation. The Angel Fire home, for instance, was heavily mortgaged.

Desert Life had insurance policies that could potentially pay victims’ claims. But two insurers are seeking declaratory judgments that could result in those companies not being required to provide coverage. A third has issued a preliminary letter indicating that the identified claims aren’t covered, Moya’s agency told the Journal.

An update on the federal government’s efforts to recover funds for the payment of the criminal restitution judgment against Donisthorpe was not available on Wednesday.

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