A federal grand jury has indicted an Estes Park resident and a Denver man on charges stemming from an alleged multi-million-dollar investment fraud scheme.
The indictment, unsealed in Denver on Wednesday, accuses Timothy A. McPhee, of Estes Park, and Heath J. Posey, of Denver, of wire fraud, conspiracy to commit wire fraud, and money laundering in connection with the operation of a fund marketed as the “ROI Cash Flow Fund.”
From January 2023 to February 2024, McPhee and Posey are alleged to have solicited more than $8 million from over 50 investors, claiming the money would be pooled and leveraged for foreign exchange trading to generate a 3% monthly return. Instead of using the funds as promised, the indictment alleges that the defendants misappropriated millions of dollars for personal gain and used new investor funds to pay earlier investors.
If true, that is a hallmark of a Ponzi scheme.
Posey made his initial court appearance on Dec. 18 before U.S. magistrate Scott Varholak in Denver, according to U.S. Department of Justice spokesperson Matthew Nies. McPhee is scheduled to make his initial appearance on Jan. 7 before federal magistrate Kathryn Starnella, Nies said in an email to the Estes Valley Voice.
The indictment accuses McPhee and Posey of promoting the ROI Cash Flow Fund at seminars, through videoconference calls, and via email communications. Promotional materials described the fund as a low-risk opportunity to earn consistent returns by lending money to a third-party borrower for forex trading.
The materials falsely claimed that the borrower had a long history of profitability and a track record of reliable repayments since 2014. In reality, the indictment alleges that the borrower, identified as Hemingway Global Capital, frequently failed to meet obligations, and McPhee and Posey did not transfer investors’ money to Hemingway after late 2022.
The indictment also describes the role of an unindicted co-conspirator who worked under McPhee’s direction from 2020 to 2023. That person, who is not identified and who resided in Fort Collins and Castle Rock, assisted in creating promotional materials and recruiting investors but resigned in October 2023.
The indictment notes that the unindicted co-conspirator maintained spreadsheets tracking payouts to Hemingway investors and used this data to target individuals for the new fund. The alleged co-conspirator resigned from the operation in October 2023, shortly before the scheme began to unravel.
To bolster investor confidence, McPhee allegedly defended Hemingway and its operators against reports of fraudulent activities published in online news sources. In addition, McPhee and Posey are accused of targeting previous Hemingway investors who had experienced delays in receiving payouts, persuading them to transfer their investments to the ROI Cash Flow Fund with promises of more reliable returns.
Bank records cited in the indictment indicate that the defendants used investor funds to sustain the scheme and for personal use. Between June 2023 and December 2023, McPhee and Posey allegedly transferred $2.2 million from the ROI Cash Flow Fund to accounts controlled by McPhee, including a family trust that he operated. These funds were reportedly used for personal expenses, investments, and salaries paid through Opus Administration Services LLC, a company established by the defendants in Wyoming.
The indictment also alleges that the defendants sent a misleading letter to investors in May 2024, claiming that all funds had been lent to a borrower and that no distributions had been made to the general partner or fund manager. Federal prosecutors contend these statements were false, as McPhee and Posey had misappropriated significant portions of the funds.
The indictment, unsealed Wednesday, charges McPhee, 63, and Posey, 38, with violations of multiple federal statutes, including 18 U.S.C. § 1343 (wire fraud), § 1349 (conspiracy to commit wire fraud), and § 1957(a) (money laundering. If convicted on the charge, the wire fraud and conspiracy counts could result in a maximum penalty of 20 years in prison on each. The alleged violation of 18 U.S.C. § 1957(a), which bans engaging in monetary transactions with criminally derived property, could result in up to 10 years in prison per count.
Both men also face financial penalties if convicted, including forfeiture of assets obtained through the alleged fraud.
Prior indictment
McPhee was previously indicted in September 2023 along with Larry Conner of Frisco, Texas for of conspiring to defraud the United States and aiding in the preparation of false income tax returns. According to the inditement, McPhee, Conner “along with others – promoted and sold an abusive-trust tax shelter to clients nationwide for fees ranging from approximately $25,000 to $50,000.”
According to a Sept. 25, 2023, press release from the Department of Justice, “the indictment alleges that McPhee and Conner instructed clients to assign their income to a series of sham trusts to make it appear as if the income was no longer owned or controlled by the client. However, this paper trail was allegedly false as the clients continued to benefit from and control the income assigned to the sham trusts. McPhee and Conner’s promotion and sale of the tax shelter allegedly resulted in tens of millions of dollars in federal income taxes not being paid to the IRS.”
McPhee and his wife, Marcia Predmore, were also charged with concealing a substantial amount of their own income from the IRS.
On April 24, 2024, an additional inditement was returned by a federal grand jury in Denver charging Marcia Predmore, Roderick Prescott, Suzanne Thompson, and Weldon Wulstein with conspiring with McPhee and Conner to defraud the IRS by promoting, selling and implementing an abusive-trust tax shelter scheme between February 2018 until September 2023 involving more than tens of millions in unpaid federal income taxes.
Is there any way to get the timeline of what happens now? Do they just declare bankruptcy? When they go before the judges, do they get a jail sentence? I am sorry for the people who have lost money and even sorrier that people I knew as Estes Park citizens and business owners felt the need to fund their own retirements in this manner.
Sybil