The brother of a Warren man sentenced to more than seven years in federal prison for scamming $15 million from more than 400 investors in a Ponzi scheme and an employee of their company were charged this week with federal crimes.
Keelan Harris, of Warren and Panama, and Karen Starr, a Canada native who lived in the United Arab Emirates, was charged in U.S. District Court in Cleveland with conspiring to commit wire fraud and seven counts of wire fraud.
Harris pleaded not guilty at his arraignment and has a detention hearing scheduled for Monday. Court records say Starr has not yet turned herself in to authorities or been apprehended.
Harris, who records say handled the companies’ money, was also charged with four counts of money laundering, accused of laundering at least $300,000.
Harris’ brother Kevin Harris, of Warren, was sentenced March 1, 2012 to seven years and three months in federal prison after he pleaded to a bill of information that charged him with the same crimes as Keelan Harris.
The scheme, according to court records, involved soliciting 408 investors from around the U.S. and Canada, who lost $15.8 million from 2006 to 2009 in the scheme.
Harris operated his companies, called Complete Developments LLC and Investments International, from the former electrical workers union hall on Parkman Road N.W. in Warren.
Court records say Kevin Harris and Starr created the companies and solicited the investors.
Keelan Harris managed and maintained bank accounts, money transfers and paid the trio’s salaries.
Kevin Harris and Starr solicited investors with the promise that the company would buy investments with high-return yields between 2006 and 2008.
The charges say they offered three, six or 12 month programs that promised investors return rates of 7 to 12 percent per month. Investors were also told 80 percent of their principal investment would be secure.
In one case, an investor wired $220,000 from a Maryland bank to the company.
Instead, prosecutors said, the investments were used to pay salaries of employees of the companies, including Harris, and also paid for cars and international travel.
Among the transactions, according to court documents, was more than $25,000 Harris withdrew from a Warren bank on a CDL account that was then used to buy a BMW from a Warren auto dealer. Some money was transferred into overseas bank accounts in Columbia, Panama and the United Arab Emirates.
Harris’ company advertised on internet sites saying they would buy investments with high-return yields like commercial real estate, high-bearing interest bonds, start-up companies, inventions and foreign currency.
The trio were ordered in May to pay full restitution of $15.7 million and more than $7 million in penalties stemming from a civil lawsuit brought by the U.S. Commodity Futures Trading Commission that relates to a three-month period where the company solicited $8.1 million.
Court records say Kevin and Keelan Harris were each ordered to pay $2.49 million in civil penalties and Starr $2.64 million.
Records say $1.07 million was recovered from their companies to help pay restitution to the investors.
The suit says Kevin Harris, the President and CEO of the companies, had no training in foreign exchange trading. Starr, the suit claims, was the director of the companies, and was convicted of fraud in 1997.
Keelan Harris, was the President and CEO of Investments International. He was convicted in federal of conspiracy to commit credit card fraud in 1998 and identity fraud and 2004. He has also been convicted of breaking and entering and grand theft in 2004.
The lawsuit says Kevin Harris was convicted in 2007 of receiving property under false pretenses in North Carolina. Court records show he was also convicted of complicity to commit aggravated arson in 1996. His three-to-15 year prison sentence was overturned on appeal the following year and he was given five years of probation.