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Source: US State Government of Utah

SALT LAKE CITY – Christopher D. Hales, 39, of Lehi pleaded guilty to wire fraud conspiracy and money laundering conspiracy in connection with a financial fraud scheme he and other co-conspirators devised while Hales was in a halfway house serving a sentence for another federal fraud case.  The scheme resulted in a loss to investors of at least $7 million. 

The plea agreement includes a stipulated 10-year sentence, subject to the Court’s approval. Federal prosecutors asked for detention following the change of plea.  Hales did not contest detention at this time.  U.S. Magistrate Judge Daphne A. Oberg presided over the hearing last week.

“Utah has an outsized fraud problem, and these allegations illustrate the conduct of a serial schemer. Utahns must diligently consider investment pitches and their risks before parting with hard-earned savings,” U.S. Attorney John W. Huber said today.

“A judge once told Christopher Hales he was addicted to defrauding people,” said Special Agent in Charge Paul Haertel of the Salt Lake City FBI.  “The reality is that most fraudsters have no remorse or conscience, and they often reoffend.  That’s why it’s so important for the public to do their due diligence when looking to invest and immediately report fraud to police or the FBI.” 

“Hales is a bad apple that has continuously fed his greed and preyed on others too many times,” said IRS-Criminal Investigation Special Agent in Charge Tara Sullivan, “IRS-Criminal Investigation is proud to work with our partners to help protect Utah residents from scammers like Hales. Please remember, if it sounds too good to be true, it probably is.”

Hales was convicted of bank fraud in April 2011 as a part of a mortgage fraud case.  He was sentenced to 90 months in federal prison and ordered to pay $12,719,236 in restitution.  He violated terms of his supervised release in 2016 and he was sentenced to another 30 months in federal prison.

According to a Felony Information filed in the current case, Hales was released from federal prison on Feb. 8, 2018, and resided at a halfway house in Salt Lake City until around Aug. 8, 2018. Nevada Secretary of State records show Sindakit Software LLC was formed on Aug. 6, 2018, by a co-conspirator (CC1) known to federal prosecutors.  CC1 was listed as the sole officer. CC1 was listed on the Sindakit Software bank account as the manager and was the only authorized signor.

The Information alleges Hales and CC1 conspired to defraud investors and potential investors by inducing them to purchase investments in a sports betting software. Hales purported to own a sports betting software that “beat the house” to convince investors to give him money to place sports bets.  In furtherance of the conspiracy, the indictment alleges Hales made a variety of false statements of material facts to investors and potential investors, including representing that 100 percent of investor funds would be used to place sports bets when, in fact, Hales diverted nearly all investor funds received to his and CC1’s personal use, and to make payments to other investors.

Hales also told them he was Chris Christian, when in fact, he was Christopher Hales, a convicted felon on supervised release. Investors were also told Hales would match all investor funds, when in reality he would take out a line of credit with the sports betting website and use the line of credit to hedge bets. Hales also told investors that the sports betting was producing a rate of return for investors of around 10 percent a week – an amount made up by Hales to entice investors to provide funds. He also represented that there were potential buyers willing to purchase the software he developed for tens of millions of dollars, when there were actually no buyers, according to the Felony Information.

In furtherance of the conspiracy, Hales failed to disclose to investors that they did not actually own an algorithm or a sports betting software and that they were laundering investor funds through transfers in and out of the Sindakit Software account.  Sports betting account statements provided to investors were false and were inflated based on Hales’ line of credit and his ability to manipulate the statements.  They also did not disclose that part of the investors’ money was used to pay commissions to those introducing investors to Sindakit or that they were using investment money from newer investors to pay promised winnings to earlier investors in what is commonly recognized as a Ponzi scheme.  

Assistant U.S. Attorneys in the Utah U.S. Attorney’s Office are prosecuting the case. Special agents of IRS Criminal Investigation and the FBI are conducting the investigation.

MIL OSI USA News