Bentley Ordered to Prison for Four Years, Pay Back Investors $24 Million for CD Ponzi Scheme

PHILADELPHIA – For his role in a Ponzi scheme that hundreds of credit unions and others invested $370 million in, Robert L. Bentley was sentenced on Oct. 21 to serve 55 months in prison and ordered to pay $24 million back to investors. Bentley’s case goes all the way back to 2001 when the SEC filed a complaint against Bentley and Entrust Group alleging that from 1994 to October 2001, the defendants sold supposed bank-issued, federally-insured certificates of deposits that were actually uninsured securities. More than 200 credit unions, banks and individuals invested more than $370 million with the defendants. According to Frank Mayer, partner with Montgomery, McCracken, Walker & Rhoads LLP, the court-appointed receiver, more than 90% has been returned to investors and $24 million remains for distribution. According to the government, Bentley used investor money in a number of excessive ways including $20,000 for “high-priced” prostitutes; $78,000 for illegally imported Cuban Cigars; bribes to a bank vice president and items and services paid for on a trip to Las Vegas. Bentley, a former cocaine addict, was shown some leniency by U.S. District Judge Jan E. DuBois because he founded the Philadelphia chapter of Cocaine Anonymous in 1986. In March, Bentley pleaded guilty to mail fraud and bribery charges. “Fifty five months is substantial and the restitution is very substantial,” Mayer said. “We also have civil actions pending against those we allege were complicit,” referring to Southeastern Securities, SFG Financial Services, Peninsula Bank and certain individuals associated with those institutions. “Those recoveries would be added to monies we would return to the victims,” Mayer said. “The goal is to make up the $24 million loss there.” One individual with ties to Bentley is Monty Ray Parker, who was charged with one count of bank bribery earlier this year. Parker was a vice-president of Sunflower Bank, N.A. in Salina, Kan. According to the SEC complaint, Bentley promised Parker that if he would purchase bonds for Sunflower Bank through Bentley Financial, Bentley would kick back one-third of Bentley Financial’s commissions to Parker. He eventually sold approximately $185 million in bonds to Sunflower Bank, and Bentley “corruptly paid” to Parker approximately one-third of the commissions received by Bentley Financial on such bond purchases totaling approximately $1 million. The SEC will continue to work with the court-appointed receiver, said Robert Fusfeld, regional trial counsel with the Commission’s Denver office. “I am pleased with the sentence and think it is appropriate,” said Fusfeld. Mayer said the receiver is set to ask the court for permission for two more distributions to claimants. In an April 2004 letter to credit unions, NCUA urged credit unions to implement adequate due diligence methods and procedures for safekeeping investments, particularly CDs. Citing Bentley in the letter, the agency reiterated the need for federally-insured credit unions to carefully review their safekeeping practices to ensure that they provide adequate protection against fraudulent investment schemes and potential losses. While Bentley created Entrust to safekeep CDs for investors, Entrust was not registered with the SEC and was not affiliated with a financial institution as is required for FCUs under Part 703 of NCUA Rules and Regulations. Shortly after the SEC’s complaint in 2001, NCUA kept in contact with the SEC, the receiver and other federal and state regulatory agencies on any updates. -