1 of 3 charged by feds in Westlake-based Ponzi scheme pleads guilty

An Olmsted Falls woman who worked for a Westlake investment firm run by an Avon man admitted in federal court Thursday to taking part in an investment fraud scheme that stole about $9.3 million from clients. U.S. Attorney Bridget Brennan said Tara M. Brunst, 47, pleaded guilty to conspiracy to commit mail and wire fraud, mail fraud and three counts of wire fraud in U.S. District Court in Cleveland. Also charged in the scheme are Raymond Erker, 50, of Avon, and Kevin Krantz, 56, of Olmsted Falls. Brennan said those cases are ongoing. According to court documents, Brunst was employed as a licensed investment adviser for Erker in Westlake. Between January 2013 and January 2018, prosecutors say Brunst, Erker and Krantz stole about $9,366,976 from investors. The trio sold investments to clients that they misrepresented as annuities and senior secured notes with no risk of loss and with a guaranteed rate of return, according to the U.S. Attorney's Office. Without the approval or consent of investors, investor funds were diverted to other entities they controlled and personal bank accounts. To keep up with promised rates of return, Brunst and the alleged co-conspirators falsely represented that payments to previous investors were rates of return and interest when the payments were actually new investor funds, the trademark of a Ponzi scheme, court documents say. Brunst and the alleged co-conspirators also allegedly failed to disclose to investors that they had substantial or limited ownership interests in companies receiving investments from the scheme. To avoid detection, members of the conspiracy set up office fronts in Delaware and Nevada, contracted with call centers and created false websites and account statements that purported to show investor account balances, according to the U.S. Attorney's Office. The case was investigated by the Ohio Department of Commerce Division of Securities, the U.S. Postal Inspection Service and the Westlake Police Department. According to his September 2020 federal grand jury indictment, Erker owned and operated companies called Sageguard, Sageguard Consulting, Sageguard Sourcing, Sageguard Technology, Sageguard Venture, Sageguard Solutions and Sageguard Wealth Management Inc., formerly known as Raymond A. Erker Inc.; GenSource Financial Assurance Co.; and Provident Securities. He has pleaded not guilty to 12 charges including conspiracy to commit mail fraud and wire fraud, wire fraud, money laundering and making false statements under oath, according to federal court records. Erker allegedly lied to his investors about owning the companies they gave him their money to invest in, according to court records. Krantz is charged with conspiracy to commit mail fraud and wire fraud and wire fraud. A jury trial is scheduled in front of U.S. District Judge Dan Aaron Polster in March, according to court records. It is expected to last two to three weeks.