PATRICK P. DAVISON SENTENCED IN U.S. DISTRICT COURT

 

Bill Mercer, United States Attorney for the District of Montana, announced today that during a federal court session in Billings, on July 13, 2007, before U.S. District Judge Richard F. Cebull, PATRICK P. DAVISON, a 50-year-old resident of Billings, appeared for sentencing. DAVISON was sentenced to a term of:

• Prison: 10 years

• Special Assessment: $200

• Restitution: $5,598,166.49

• Supervised Release: 3 years

DAVISON was sentenced in connection with his guilty plea to securities fraud.

In an Offer of Proof filed by the United States, the government stated it would have proved at trial the following:

From approximately May of 1998 through February of 2003, DAVISON was employed by UBS Financial Services as an investment advisor in Billings.

From May 15, 1998, through March 7, 2003, DAVISON was registered by the State of Montana to sell securities, and was not lawfully registered to do so after that time.

From approximately March of 2003 until July of 2006, DAVISON continued to sell securities, including fraudulent securities, as an investment advisor and business consultant from an office in Billings.

DAVISON conducted business and sold securities under his own name and under the names Davison L.L.C., P & N Ventures and PPV.

Between June 15, 1995, and July 7, 2002, DAVISON induced Investor A to make nine (9) separate loans totaling $810,000 to DAVISON and the Billings Catholic Schools for various financial needs of the Billings Catholic Schools, to be repaid in the principal amount plus interest. With the exception of the first two such loans, none of the amounts loaned by Investor A were used for the benefit of the Billings Catholic Schools.

On Billings Catholic School loans dated March 15, 1999, and July 14, 1999, DAVISON stated that the loans were backed by the Diocese of Great Falls/Billings, when, in fact, no such guarantee existed.

During the period of loans from Investor A to the Billings Catholic Schools, DAVISON repaid Investor A approximately $645,000 of the original principal amounts.

On November 29, 2002, DAVISON induced Investor A to purchase a promissory note in the amount of $250,000 from Mayfair Auction II, doing business as the Big Sky Gold Rush Charity Raffle, knowing that no such promise to pay existed and that he had forged the name on the promissory note. DAVISON repaid the principal amount to Investor A.

Between June 20, 1996, and January 12, 1999, DAVISON induced Investor B to purchase bonds issued by PPV through five (5) separate transactions totaling $675,000, knowing that no such bonds existed. DAVISON regularly paid Investor B interest on the non-existent bonds. DAVISON also repaid Investor B approximately $50,000.

Between May 16, 2000, and January 16, 2001, DAVISON induced Investor C to purchase bonds which were not named or described. In 2005, DAVISON represented that the bonds were issued by Northwest Telecommunications Network, Washington Power Consortium, and Portland Area Industrial Council in the approximate amount of $900,000, knowing that no such bonds existed. DAVISON represented to Investor C that these bonds were secured by U.S. Treasuries and senior mortgages on telecommunication and power substations, knowing that no such security existed. DAVISON has repaid $300,000 in principal.

DAVISON made quarterly interest payments to Investor C on the foregoing investments knowing that he had converted the invested funds and that no principal amount remained.

Between December of 2000, and September of 2002, DAVISON induced Investor D to invest approximately $1,375,000 in seven (7) separate transactions for tax-free bonds paying 10% interest issued by the Foundation Assistance Group, knowing that no such bonds existed.

During the period of investment described above, DAVISON made quarterly interest payments to Investor D on the non-existent investments and provided Investor D with false statements of his account. DAVISON has made no repayment of principal amounts to Investor D.

In approximately July of 2002, DAVISON induced Investor E to purchase tax-free bonds in the amount of approximately $275,000 issued by the St. Labre Indian School, knowing that no such bonds existed. DAVISON has made no repayment of principal amounts related to these bonds.

On August 7, 2003, DAVISON induced Investor A to loan approximately $200,000 to the JNR trust knowing that no such trust existed and that the loan was not guaranteed with U.S. bonds contrary to the face of the loan documents. DAVISON repaid the principal amount to Investor A.

On November 11, 2003, DAVISON induced Investor A to loan approximately $100,000 to Rustic Construction of Boise, Idaho, knowing that no such entity existed. DAVISON repaid the principal amount to Investor A.

On March 31, 2005, DAVISON induced Investor A to loan Davison L.L.C. approximately $200,000 to be secured by coal leases held by Davison L.L.C. knowing that no such coal lease security existed. DAVISON and Davison L.L.C. have made no repayment of the principal amount to Investor A.

In approximately October of 2003, DAVISON induced Investor B to invest approximately $664,000 in a qualified profit sharing plan, the Qualified Plan Davison L.L.C., and Contracts 2003-1, 2, and 2005-1 knowing that no such investor accounts and contracts existed and that such funds were converted to the use of DAVISON. Investor B received statements of interest deposits made by DAVISON to these accounts although no principal balance existed. No repayment of principal occurred.

In 2005, DAVISON induced Investor B to invest $250,000 in a contract paying 15% interest knowing that no such contract existed and that the funds were converted to the use of DAVISON. On this fraudulent investment, DAVISON repaid approximately $100,000 of the principal amount plus interest.

On May 1, 2006, DAVISON represented to Investor C that his investment account balance had been rolled over into a note carried by Gateway L.L.C. knowing that no such note existed.

It was also part of the manner and means of the scheme and artifice to defraud that DAVISON made and caused to be made the following statements and transactions relative to Investor E:

In May of 2006, DAVISON induced Investor E to loan DAVISON approximately $100,000 in return for a promissory note secured by 1,500 shares of Exxon Mobil stock, knowing that no such security for the promissory note existed. DAVISON has made no repayment of principal amount related to the promissory note.

On August 21, 2003, DAVISON induced Investor F to loan approximately $150,000 to Mayfair II with the promissory note secured by assets of PPV, a $100,000 U.S. Treasury note, and a $50,000 Federal Home Loan Mortgage note, knowing that PPV had no assets and the other security for the promissory note did not exist. DAVISON has made no repayment of the principal amount related to the promissory note.

In December of 2003, DAVISON induced Investor G to loan DAVISON approximately $250,000 on a promissory note secured by a $250,000 U.S. Treasury note, knowing that no such security for the promissory note existed. DAVISON has made no repayment of the promissory note principal.

In 2003, DAVISON induced Investor H to purchase a contract worth approximately $170,000 and paying approximately 8% interest knowing that no such contract existed and that the principal amount was converted by DAVISON. DAVISON paid interest on the note knowing that no principal balance existed.

Because there is no parole in the federal system, the "truth in sentencing" guidelines mandate that DAVISON will likely serve all of the time imposed by the court. In the federal system, DAVISON does have the opportunity to earn a sentence reduction for "good behavior." However, this reduction will not exceed 15% of the overall sentence.

Assistant U.S. Attorney Leif M. Johnson prosecuted the case for the United States.

The investigation was conducted by the Federal Bureau of Investigation.