Ryan Koester of Brownsburg was sentenced Thursday to 16 years in prison for his role in stealing $1.5 million from 24 investors in both Hendricks and Johnson counties, as well as the State of Colorado. He will also have to pay more than $517,000 in restitution.
According to the Office of the Secretary of State, Koester scammed clients through his company, Rykoworks Capital Group, as he claimed to be an expert in foreign commodities trading.
Clients were told he would invest their funds in foreign markets, but the funds were used for his personal living expenses and risky Internet trading.
Koester was never licensed to sell securities in the State of Indiana, had no financial trading education, and scammed his clients by guaranteeing their initial investment and high return rates.
He pleaded guilty in November 2013 to four class C felony securities fraud violations and was sentenced Thursday by Johnson County Judge Mark Loyd to 16 years.
Two of the 16 years are deemed executed with the remaining 14 years to be served on probation.
Koester will be ordered to pay $517,512 in total restitution to be paid monthly. He is also ordered to undergo a psychological evaluation with the possibility of counseling.
In what is common with schemes like this, Koester exploited the trust of his college fraternity brother to convince him to invest.
“This case is a classic example of a Ponzi scheme,” Secretary of State Connie Lawson said in a press release. “Preying on personal relationships with his victims, Koester manipulated the facts and his expertise. He even went so far as to use social media to solicit new clients to scam.”
Lawson said the Securities Division of her office is responsible for licensing securities professionals, financial advisors, mortgage loan brokers, and others, as well as registering the products that they sell.
She said the investigation was started when a complaint was filed from one of Koester’s victims.
“We do have attorneys here who are experts in that,” she said in a phone interview with the Hendricks County Flyer. “Our office also has a unit that’s called the Prosecution Assistance Unit. A lot of county prosecutors may not have the time or the resources to work on white collar crime, because they’re busy doing the physical crime investigations. We assist in that. We run all the paperwork and then if the prosecutor wants us to, they will even deputize our attorneys here and we help them take it to trial.”
In this case, Secretary of State Office attorney Diana Moers Davis was deputized to aid the prosecution.
Lawson said it’s important for Hoosiers to know how to protect themselves from situations like this.
“That’s one of my passions right now … we have a program called Indiana Investment Watch,” she said. “That program is paid for by the fines that we collect from securities violators — it’s not paid for by taxpayer money. But first of all, especially in this case and it seems like in so many other cases, if people would get online or call our office, they would find out immediately if a financial advisor is licensed and the product they’re selling is registered. There’s even a history of the individual on the website as well.”
Lawson said then an individual needs to ask questions and investigate the legitimacy of a claim. Asking if there is a legitimate office or if they can get the prospectus in writing is a good place to start, she said.
“(Also) ask the individual if they’ll explain the opportunity to your lawyer or your accountant,” she said.
If someone feels they might have been a victim of fraud, Lawson said, it’s important to report it.
“Anyone who’s a victim needs to remember that the worst thing that you can do, if you think you are a victim, is not file a complaint or not report it,” she said, “because that gives our office then the opportunity to investigate and maybe freeze assets and prevent other people from being a victim.”
Lawson reiterated it’s important to know what questions to ask to cut down on the likelihood of becoming a victim of fraud.
“I think the biggest thing for people to remember is to ask the questions, investigate, and it’s so important to make sure that the person they are dealing with is licensed and the product that they are selling is registered,” she said.
For more information about investment fraud, visit the website at www.indianainvestmentwatch.com.