An investment fraud scheme hatched by a former Lee’s Summit resident will cost the man nearly fours years in federal prison.
Richard J. Gumerman, 67, a resident of Lee’s Summit as late as 2011, was sentenced Jan. 21 in federal court for an investment fraud scheme in which he stole $724,000 from 13 victims.
According to the office of Tammy Dickinson, United States Attorney for the Western District of Missouri, Gumerman, now of Independence, was sentenced by U.S. District Judge Gary A. Fenner to three years and 10 months in federal prison without parole. The court also ordered Gumerman to pay $722,326 in restitution.
Gumerman pleaded guilty July 26 of last year to one count of mail fraud and one count of filing a false income tax return.
According to a plea agreement obtained from Don Ledford, the public affairs officer for the U.S. Attorney’s office, Gumerman admitted that he stole at least $724,000 from investors from 2007 through December 2011.
Gumerman used investor funds for personal living expenses, to pay other investors, to give money to Hooters’ restaurant waitresses and in other businesses he owned, court records indicate. He did business as Gumerman Trading Company, but is not registered as a broker-dealer agent, investment adviser representative, or issuer agent in the state of Missouri, nor has he ever been.
In February of 1987, Gumerman filed a fictitious name registration for GTC with the Missouri Secretary of State Business Services Division and provided an address for GTC in the 3600 block of N.E. Basswood Drive in Lee’s Summit. Gumerman opened a bank account in the name Richard J. Gumerman dba GTC, in 1988 and was the sole authorized signer on the account.
Despite not being registered to sell securities, Gumerman sold investments with the GTC Trading Fund.
According to legal documents, between January 1992 and December 2010, individuals and groups invested more than $948,000 in the GTC Trading Fund. Gumerman told investors that the GTC Trading Fund pooled investor funds to trade in the commodities futures market.
Prior to opening the GTC Trading Fund, Gumerman had only traded commodities for one year in a personal account, and lost money in that personal trading account and he did not disclose that fact to investors.
Gumerman mailed statements, sometimes to investors. The statements listed a fictional ending balance, fictional “interest” earned and a fictional rate of return on investment.
The account statements did not reflect actual balances in the accounts, actual interest earned, or an actual rate of return.
Gumerman sent to investors fabricated Internal Revenue Service Forms 1099 which reflected that they had earned interest from their investment accounts and investors used those forms to pay taxes on interest they had not earned.
Gumerman also admitted that, when he filed his tax return in April 2011, he stated that his taxable income was $42,534 in 2010. Gumerman failed to declare income he had obtained by fraud; his taxable income was actually $248,350. The total tax loss from Gumerman’s false tax returns was $96,635.
The case was prosecuted by Assistant U.S. Attorney Kathleen D. Mahoney and was investigated by IRS-Criminal Investigation, U.S. Secret Service and the Lee’s Summit Police Department.