Ex-LV chiropractor arrested in $34M fraud scheme
FBI agents have arrested former Las Vegas chiropractor Robert L. Buckhannon in what authorities say was a $34 million scheme to defraud hedge fund investors.
The 53-year-old pleaded not guilty Wednesday in federal court to wire fraud and conspiracy charges.
U.S. Magistrate Judge George Foley Jr. ordered him released on his own recognizance with GPS monitoring while awaiting a December trial.
A co-defendant, Terry Rawstern, 66, of South Dakota, has been summoned to appear in court here on the charges.
In the 18-page indictment, federal prosecutors are seeking to recover $44.8 million from the two defendants.
“Often these cases take considerable time and resources to investigate and litigate, but the American people deserve to know that we are working diligently to catch the perpetrators,” Nevada U.S. Attorney Daniel Bogden said in a statement after the indictment was unsealed.
Records show that Buckhannon’s chiropractic license in Nevada expired on Jan. 1, 2011. He operated a chiropractic clinic in Battle Creek, Mich., where his license is set to expire at the end of November.
The criminal charges stem from a December 2010 civil complaint filed by the Securities and Exchange Commission against Buckhannon and seven other defendants linked to the hedge fund investment scheme. The complaint was filed in Tampa, Fla., where the hedge funds under the control of Buckhannon and his co-conspirators were based.
Both the SEC complaint and the Las Vegas indictment allege that between 2008 and 2010, the defendants comingled investor money and looted and bankrupted the hedge funds by steering millions of dollars to themselves.
Buckhannon is accused of secretly funneling at least $341,000 of investor money to his family and associates, the indictment alleges. He spent $60,000 on an engagement ring for his fiance and $80,000 for a down payment on a Las Vegas house, the indictment alleges.
In 2010 Buckhannon agreed to pay roughly $1.5 million to settle the SEC suit against him. That included returning $1.4 million to hedge fund investors and paying a $130,000 fine.
But Buckhannon never “paid a penny” of the settlement, Assistant U.S. Attorney Kathryn Newman said Wednesday in court while arguing for his detention.
She also said hundreds of investors lost money in the scheme and $13.1 million was still missing.
Newman argued that Buckhannon was a flight risk, with relatives and co-conspirators living outside the United States. She said he is the target of an arson investigation stemming from a December suspicious fire at a bar he owned in Battle Creek.
His court-appointed defense lawyer argued that Buckhannon was broke with an expired passport and doesn’t have money to flee the country. He said the defendant has $300 in the bank.
Records show he filed for bankruptcy in Las Vegas in 2011 listing $291,405 in assets and $37.1 million in liabilities, mostly owed to unsecured creditors.
His case was discharged in December.
Contact Jeff German at jgerman@reviewjournal.com or 702-380-8135. Follow him on Twitter @JGermanRJ
