Attorney: Locals Invested $750K in Reported Scam

Attorney: Locals Invested $750K in Reported Scam

More than 20 shareholders from Cass, Pulaski spark local lawyer’s investigation

PharosTribune.com

By Mitchell Kirk

More than 20 people from Cass and Pulaski counties contributed about $750,000 to a former Logansport man facing federal charges of defrauding investors, according to a local attorney.

Larry Westby, 64, Vanderbilt, Michigan, faces charges of mail fraud, money laundering and fraud in the offer and sale of securities. The FBI, IRS and Indiana Secretary of State’s office accuse the former Logansport resident of scamming investors out of more than $985,000. Westby started a company called LMW Inc. he based in Indianapolis with the reported objective of selling respiratory therapy protocols.

Scott Starr, a partner with the Logansport-based law firm Starr Austen & Miller, said he spent about a year investigating LMW on behalf of a couple dozen investors starting in 2014. Those investors had bought a total of 732 shares in LMW totaling about $750,000 collectively, Starr said. Most of the investors hailed from Cass County and some from Pulaski County, he continued. Of the shareholders Starr worked with, he said the largest investment was for $145,000, while most were in the $25,000 range.

Starr estimates he’s represented more than 1,400 victims of securities fraud since the 1980s.

“Because I have a lot of experience in doing this work, it was pretty obvious to me that this was a securities fraud case,” Starr said of LMW. “…Still, a lot of people we talked to wanted to believe that it was still good, but I tried to tell them this looks bad to me, smells bad to me.”

The firm’s investigation discovered Westby didn’t have a license to sell securities and that the securities he was selling were unregistered — a breach of Indiana Code, Starr said.

“Larry Westby was just ignoring all of the laws in the way that he was handling these investments,” he added.

Some of the investors started providing the firm with copies of information appearing on LMW’s website. It totals more than 100 pages reporting on the financial condition of the company from 2009 through 2015, when Westby shut the website down.

Part of those communications include reports of selling LMW for more than $37 million. Minor hitches kept pushing back the finalization of the sale, however, according to the reports.

“That’s a hallmark of fraud,” Starr said. “We see that a lot.”

One issue holding up the sale was a Medicaid fraud investigation into one of LMW’s Florida-based customers, Westby told investors.

But when Starr reached out to Medicaid fraud investigators in Washington, D.C., he said he learned there was no such investigation.

“At that point, I knew he was just a fraud,” Starr said.

Starr proceeded to tell the investors.

“Most of them believed us; a few of them still believed Larry Westby,” he said. “…Every fraud case I’ve handled, the fraudster is a very nice guy and incredibly trustworthy and believable because if you look like a crook and you act like a crook, you are not able to finagle money out of people.”

While he was certain Westby was committing fraud, Starr said there was no hope in securing compensation for the investors and chose not to pursue a lawsuit. If Westby had an employer or an entity responsible for him, like an insurance company, things would have been different, Starr explained.

“We just decided that there was not going to be a recovery here for these victims and after working about a year, we decided not to take the case,” he said.

The firm turned over its investigation to the Indiana Secretary of State Securities Division, which worked with the FBI and IRS to indict Westby earlier this month. The agencies accuse Westby of spending LMW investments on two vehicles, the repayment of a personal loan, personal credit card bills and a vintage basketball court.

“This is one of those deals where he just literally stole people’s money, gave them a story and spent the money on himself,” Starr said. “And he should go to prison for this. In my experience, I’ve had a lot of cases where the fraudsters end up in prison.”

Westby’s indictment also lists investors from Beverly Shores, Zionsville, Greensburg and Newburgh. A jury trial is currently scheduled for Oct. 3 in U.S. District Court Southern District of Indiana.

Attempts to reach Westby this week continued to be unsuccessful.

Source: PharosTribune.com

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The team of investment fraud lawyers at Starr Austen & Miller LLP fights for the protection of investors and handles cases involving securities arbitration misrepresentation, overconcentration, broker fraud, negligence and breach of trust.