A Basalt couple is awaiting trial on federal criminal charges that they used fraudulent means to obtain over $200,000 through the Paycheck Protection Program and also to raise $1.5 million from investors in a CBD business venture.
Ronald Philip Wallace and Stace Yater-Wallace are scheduled to stand trial in an eight-day trial beginning on February 21, 2023, according to an order signed by Chief US District Court Judge Philip A. Brimmer on July 19.
They have been free on bond since authorities arrested them in Denver on June 27. The couple pleaded not guilty to the charges on the same date, according to federal court documents.
The couple declined to comment when reached by phone Wednesday.
“We have nothing to say,” said Mr. Wallace, referring questions to their attorneys, none of whom were available for comment.
The couple face 31 counts of money laundering, three counts of bank fraud and one related count. Ronald Wallace also faces nine counts of wire fraud.
The 10-page indictment does not provide specifics on how the Wallaces orchestrated the alleged schemes, but it notes that Ronald Wallace “provided false or misleading information to potential investors for the purpose of inducing them to invest” in a business venture for “the purpose of of financing the production and marketing of CBD products.”
The indictment lists nine transactions that allegedly constituted wire fraud, beginning in November 2017 when an investor transferred $33,000 to an account controlled by Ronald Wallace. Three more transfers from investors totaling $200,000 were made in 2018, and 2019 saw five transfers totaling $1.25 million, according to the indictment.
November 2017 is also when the Wallaces began laundering money by moving some of the transferred funds to other accounts, the indictment states. The couple continued to launder money — more than $120,000 over 30 transactions — through May 2019, the indictment said.
The couple engaged in more financial crimes from May 2020 to April 2021, when they put false information on loan applications so they could receive PPP funds, the indictment alleges.
“The information provided, as well as the supporting documents and forms, were certified as true and correct,” the indictment states. “The application contained materially false information.”
Proving false information made the Wallaces eligible for PPP loans of $62,500 in May 2020 and $54,854 and $113,492 in April 2021 for their company called Naturlfx Inc., the indictment said.
The PPP loan program was part of the CARES Act enacted in March 2020 in response to economic hardship caused by the COVID-19 pandemic. The government also authorized forgivable PPP loans to help small businesses pay and retain their workers.
The couple were originally scheduled to appear in court this week. The Wallaces’ lawyers, however, were granted leave by Judge Brimmer on July 19 to take more time to prepare for trial.
“The indictment in this case involves a two-year investigation into an alleged fraud and money laundering scheme involving several entities,” said a statement filed July 1 by Denver-area attorneys Lynn Pierce and Ronald Gainor, who represent the Wallace couple. “Investigative materials include over 14,000 pages including interviews, reports and electronic communications and banking/financial records. Additionally, the defense has been provided with an external hard drive with approximately 24 additional Gigabytes of electronic communications and miscellaneous documentation. In addition, some of the key witnesses in the case are located in other states or countries, which will require additional time for the defense investigation.
A single wire fraud conviction carries a maximum sentence of 20 years in prison and a maximum fine of $250,000, according to the U.S. Department of Justice. Money laundering also carries a maximum of 20 years in prison on one conviction, as well as a fine of up to $500,000. Bank fraud carries a maximum of 30 years in prison and a maximum fine of $250,000.
Scheme of wines
In 2007, a federal judge ordered Ronald Wallace to pay $11.2 million to victims of a wine scam in which he sold futures to investors that they never received. He was also sentenced to five years probation and three years supervised release for committing mail fraud, wire fraud and engaging in an illegal monetary transaction.
His probation was revoked in 2009 after he failed to pay restitution and failed to report his financial affairs to his probation officer, according to court documents. After serving three months in prison for a probation violation, Wallace was again placed on supervised release. He continued to violate the terms of his probation and in 2010 was sentenced to nine months in prison to be followed by 27 months of probation, court records show.
In December 2011, Wallace was cited again for a probation violation and in April 2012 he was sentenced to 63 months behind bars. He was paroled in December 2015, according to the Federal Bureau of Prisons.
A spokesman for the U.S. Attorney’s Office for the District of Colorado declined to comment on how Ronald Wallace’s criminal background might affect the current case. The IRS and FBI are the lead agencies in the investigation, according to a June 28 announcement from the Department of Justice.