An Indianapolis businessman accused of inducing at least 100 individuals to sink more than $11 million into a fraudulent, Ponzi-style investment scheme has agreed to plead guilty to two counts of federal wire fraud and one count of money laundering.
George S. Blankenbaker Jr., president of Indianapolis-based Stevia Corp., faces up to 20 years in prison on each of the wire fraud counts and 10 years for the money laundering charge, federal prosecutors said in papers filed Wednesday in U.S. District Court.
The formal plea agreement said the parties have not agreed to a specific sentencing recommendation, but specifies Blankenbaker will be required to make restitution of more than $1.55 million to his victims.
Blankenbaker, 54, who played football at Indiana University in 1983-84 as a business finance major, has operated several single-employee companies over the past two decades, including Blankenbaker Investments LLC and farm-management firm Stevia Corp., a pink-sheet-traded public company that focuses on the development of Stevia-derived products.
In recent years, he began creating numerous business entities related to hemp and CBD production.
According to federal investigators, Blankenbaker conducted a fraud scheme from August 2016 to May 2019 through three business entities: StarGrower Commercial Bridge Loan Fund 1 LLC, StarGrower Asset Management LLC and Blankenbaker Investments Fund 17 LLC.
A complaint from the U.S. Securities and Exchange Commission filed Wednesday said Blankenbaker and those three companies raised more than $11 million from at least 109 investors, many who were elderly.
“Blankenbaker and his companies falsely told investors that their money would be used to make short-term loans to food exporters in Asia, that the investors would receive interest payments from the profits generated from the loans, and that investments were secured by shipping containers holding the food products,” the SEC said.
But the SEC said Blankenbaker misused at least $8.1 million of those investments, by directing at least $4 million to hemp companies and using more than $1.7 million in investor funds for his own personal benefit.
“Blankenbaker also used at least $965,000 in new investor funds to make Ponzi-style payments to prior investors,” investigators said. … “Contrary to the pretenses, representations and promises made by Blankenbaker, he did not invest the investors’ money as he had described.”
Investigators said Blankenbaker diverted investment money more than 300 times to fund unrelated business ventures, pay personal expenses, make interest payments and return principal payments to investors.
“For the purpose of executing his scheme, Blankenbaker caused the transfer of the financial proceeds of the scheme to be made by interstate wire communications between Indiana and other states,” investigators said, leading to the wire fraud charges.
Prosecutors said 34 investors lost nearly $1.5 million because of Blankenbaker’s schemes.
According to court papers, Blankenbaker also laundered money through a business entity known as EDU Holding Trust, which was designed to utilize investor funds to purchase life insurance policies on the secondary market at a price less than the face maturity amount of the policies.
A message requesting comment on the case sent to Blankenbaker’s attorney was not returned Wednesday night.