Lake Co. fraudster sentenced to 5 years on conspiracy charge

A northern Indiana businessman who pleaded guilty to securities fraud in a Ponzi-like scheme has been sentenced to five years in federal prison.

Richard E. Gearhart, 71, was sentenced before Northern Indiana District Court Judge Philip Simon to 60 months and three years of supervised release, the Northern Indiana U.S. Attorney’s Office announced Wednesday. Gearhart, of St. John, was also ordered to pay more than $5.3 million in restitution following his guilty plea to conspiracy to commit securities fraud.

According to acting Northern Indiana U.S. Attorney Tina L. Nommay, Gearhart was a licensed insurance agent from 2008-2013 operating out of Gearhart & Associates in Schererville. He was also CEO of Asset Preservation Specialists Inc.

“Gearhart and others devised a scheme where they promoted and sold unregistered securities to Gearhart’s insurance clients. He promised them no risk to their initial deposit and a return of 6% to 8% on their investment,” according to Nommay’s office.

“He also told them that upon request, their initial investment would be returned within thirty days. Neither Gearhart nor his co-conspirators were licensed to promote or sell the securities.”

Gearhart’s victims ranged in age from 50 to 90 years old. Their money was used to repay other investors and for the personal use of Gearhart and his associates. Money was wired from Gearhart’s bank accounts to other investors and businesses in which Gearhart and his co-conspirators had an interest.

To keep the scheme going, Gearhart sent fraudulent financial statements to his victims showing gains that didn’t exist, according to Nommay. Those victims learned they had lost their savings when Gearhart filed for bankruptcy and listed them as creditors rather than investors.

Also indicted in the scheme was George R. McKown of Indianapolis. He is set for a federal jury trial in October on charges of conspiracy to commit securities fraud, securities fraud and wire fraud, according to online court records.

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