Trial looms for Basalt couple accused of PPP loan fraud, investment scam
Basalt residents await trial for money laundering, bank fraud, and more.
A Basalt couple are awaiting trial on federal criminal charges that they used fraudulent means to receive over $200,000 through the Paycheck Protection Program and to also collect $1.5 million from investors in a CBD business venture.
Ronald Philip Wallace and Stace Yater-Wallace are scheduled to stand an eight-day trial beginning Feb. 21, 2023, according to an order signed by U.S. District Chief Judge Philip A. Brimmer on July 19.
They have been free on bond since authorities arrested them in Denver on June 27. The couple pleaded not guilty to the charges on the same date, according to federal court documents.
The couple declined comment when reached by telephone Wednesday.
“We have nothing to say,” Mr. Wallace said, referring questions to their attorneys, neither of whom could provide comment.
The couple face 31 counts of money laundering, three counts of bank fraud, and one related charge. Ronald Wallace also faces nine counts of wire fraud.
The 10-page indictment does not provide specifics on how the Wallaces orchestrated the alleged schemes, but it notes Ronald Wallace “provided potential investors with false or misleading information for the purpose of inducing them to invest” in a business venture for “for the purpose of funding the production and marketing of CBD products.”
The indictment lists nine transactions that allegedly constituted wire fraud, starting in November 2017 when an investor transferred $33,000 to an account controlled by Ronald Wallace. Another three transfers from investors totaling $200,000 were made in 2018, and 2019 saw five transfers accounting for $1.25 million, according to the indictment.
November 2017 is also when the Wallaces began laundering the money by moving a portion of the transferred funds to other accounts, the indictment said. The couple continued to launder money — more than $120,000 over the course of 30 transactions — until May 2019, the indictment said.
The couple engaged in more financial crimes from May 2020 through April 2021, when they put false information on loan applications so they could receive PPP funds, the indictment alleges.
“The information provided, as well as supporting documents and forms, were certified as true and accurate,” the indictment says. “The application contained materially false information.”
Proving false information made the Wallaces eligible for PPP loans of $62,500 in May 2020 and $54,854 and $113,492 in April 2021 for their company called Naturlfx Inc., said the indictment.
The PPP loan program was part of the CARES Act adopted in March 2020 in response to economic hardships brought on by COVID-19 pandemic. The government also authorized forgivable PPP loans to help small businesses pay and keep their workers.
The couple originally were scheduled to stand trial this week. Attorneys for the Wallaces, however, were given permission from Judge Brimmer on July 19 to get more time to prepare for trial.
“The indictment in this case involves a two-year investigation into an alleged wire fraud and money laundering scheme involving several entities,” said a pleading filed July 1 by Denver area attorneys Lynn Pierce and Ronald Gainor, who represent the Wallace couple. “The investigative materials include over 14,000 pages including interviews, reports, and electronic communications and bank/financial records. In addition, the defense has been provided an external hard drive with approximately an additional 24 Gigabytes of electronic communications and miscellaneous documentation. Furthermore, some of the key witnesses in the case are located in other states or countries, which will require additional time for the defense investigation.”
A single wire fraud conviction carries a maximum prison sentence of 20 years and a maximum fine of $250,000, according to the U.S. Department of Justice. Money laundering also carries a 20-year prison maximum with a conviction, as well as a fine capped at $500,000. Bank fraud carries a maximum of 30 years in prison and a maximum fine of $250,000.
The wine scheme
In 2007, a federal judge ordered Ronald Wallace to pay $11.2 million to victims of a wine scam in which he sold futures to investors that they never received. He was also sentenced to five years of probation and three years of supervised release for committing mail fraud, wire fraud and engaging in an unlawful monetary transaction.
His probation was revoked in 2009 after he failed to pay restitution and didn’t report his financial affairs to his probation officer, according to court documents. After serving three months in prison for violating probation, Wallace again was put on supervised release. He went on to violate terms of his probation and in 2010 was sentenced to nine months in prison to be followed by 27 months of probation, court records show.
In December 2011, Wallace was cited another time for violating probation and in April 2012 was sentenced to 63 months behind bars. He was granted early release in December 2015, according to the Federal Bureau of Prisons.
A spokesperson for the U.S. Attorney’s Office for the District of Colorado declined to comment on how Ronald Wallace’s criminal background could affect the current case. The IRS and FBI are the leading investigating agencies, according to June 28 announcement from the Department of Justice.