Texas man

guilty of

defrauding

local

investors

By KURT NESBITT

Journal Staff Writer

MINNEAPOLIS -- A Texas man faces several years in prison and a potentially hefty fine for defrauding local investors of more than $1.6 million after a federal jury found him guilty Tuesday.

Howard Eugene Liner, of Katy, Texas, lured as many as 20 people into a phony investment scheme by promising huge returns when, in fact, most of the money was spent either on personal property or was used to pay back other people Liner had stolen from, according to a federal indictment.

Liner solicited money from investors located primarily in southwestern Minnesota, including people in cities like Morgan, Springfield, Redwood Falls and Mankato and the Upper Sioux and Lower Sioux Indian communities.

Liner was convicted on one count of false statement, 17 counts of wire fraud and one count of money laundering following an eight-day jury trial in U.S. District Court in Minneapolis. The jury reached its verdict Tuesday.

Liner faces a maximum penalty of up to five years in prison and a $250,000 fine for the false statement charge and each count of wire fraud. The charge of money laundering is punishable by no more than 10 years in prison and a $250,000 fine.

Liner was indicted following a joint investigation by the FBI and the U.S. Department of the Interior's Office of the Inspector General.

Liner allegedly told a FBI agent that someone stole the investors' money during an October interview. He also told at least one investor that he would refund their money in exchange for a signature on an affidavit that the indictment said was false.

Liner began soliciting investments around July 1999. He promised greater-than-market returns in exchange for placing investors' money in secret trading programs that allegedly were supervised by the U.S Treasury, Department of Defense or the U.S. government for the purpose of funding projects "which were humanitarian and would benefit global development," to which he claimed exclusive access, the indictment said.

Liner paid the investors small sums of money to make them think their investments were working and paid commission to people who helped him get investors, but he used most of the money to buy a house, cars and vacations.

Most of the investments mentioned in the indictment were sent to Liner through wire transactions, staring in September of 1999 and ending January of 2000. Most of the money was wired from personal checking accounts in Minnesota banks.

The indictment said Liner got $300,000 from the Upper Sioux Community through a wire transaction on Nov. 13, 1999, and received $100,000 from the Lower Sioux Community using the same method one day later.

He also used wire transfers to launder about $174,000 from a bank account at the Bank of America in Texas to another bank account at Janesville State Bank from August to November in 1999.

Liner tried to discourage investors from finding out for what he was really using their money. He also tried to avoid legal action by telling investors they would be punished if they told anyone else about the investments or promising them the returns would be paid out soon. He said the money was frozen by the government, and it was stolen by someone else. He said that a flood in Houston damaged the bank records and by ignoring and not responding to investors' questions, the indictment said.

Liner stopped soliciting investments in March of 2003. His attorney could not be reached for comment.

"The victims, as alleged, lost most if not all of their investments. In some cases, their life savings," said Assistant U.S Attorney John Marti.

"Often, when something seems too good to be true, it is often false," he said. "There are a number of prosecutions like this one across the country even though people keep getting caught."

Marti recommended that potential investors look at the U.S Treasury's website, treasuryscams.com, before making an investment.