Roseville Man Convicted In $6.8 Million Ponzi Scheme

SAN FRANCISCO, CA — A Roseville resident was convicted Tuesday in federal court in San Francisco of conspiracy, fraud and money laundering in a Ponzi scheme that bilked Japanese investors of $6.8 million.

Kevin Kyes, 69, was found guilty by a jury in the court of U.S. District Judge Susan Illston of 22 counts after a weeklong trial.

The convictions included conspiracy to commit wire fraud, 17 counts of wire fraud, conspiracy to commit money laundering and two counts of money laundering.

Kyes will be sentenced by Illston on Aug. 17. He faces a maximum sentence of 20 years in prison for each wire fraud count and 10 years for each money laundering count.

A codefendant, John Holdaway, 73, of Sandy, Utah, pleaded guilty before Illston in October 2017 to one count of wire fraud. His sentencing date has not been set.

In addition to receiving prison terms, both Holdaway and Kyes can be ordered to forfeit the proceeds of the scheme and pay restitution to the victims.

U.S. Attorney's Office spokesman Abraham Simmons said evidence at the trial showed that Kyes and Holdaway worked between 2012 and 2015 to defraud Japanese investors of $6.8 million through a business they called Money Management Strategies.

The investors were told their money would be put into high-speed trading programs that historically had returns of more than 100 percent annually, Simmons said.

In fact, however, the two men did not invest the money as promised. Some of the money from later investors was used to repay earlier investors, in a ruse known as a Ponzi scheme.

The men spent other investment money on themselves, on repayments to creditors in previous investment programs they ran, and on gold-related businesses, Simmons said.

Prosecutors said in a trial brief filed in April that Kyes and Holdaway worked mainly through two Japanese investors to recruit other investors beginning in 2012.

In late 2014, the two Japanese contacts were investigated by Japanese regulators for other investors' losses and were eventually cleared.

The prosecution brief said the two Japanese recruiters then "became increasingly desperate in their demands of Kyes and Holdaway" and eventually voluntarily flew to the United States to report the alleged scheme
to the FBI.

Both of the Japanese recruiters testified at Kyes's trial, according to court records.

— Bay City News; Image via Shutterstock