Opinion ID: 4024287
Heading Depth: 3
Heading Rank: 2

Heading: bsmi

Text: After HFGI ceased operations, Billʹs companies were strapped for cash. Bill announced to his employees that they would start a new company, BSMI, to mine precious metals in Alaska. BSMI made multiple material misrepresentations to induce investors to purchase BSMI stock, including that: (1) HFGI had loaned BSMI $900,000; (2) BSMI had $850,000 available in total assets; and (3) investorsʹ money would be used for expenses such as fuel, food, transportation, labor, and insurance. In fact, investor funds were used primarily to pay BSMI salaries and for personal expenses of BSMI co‐conspirators. BSMI also concealed (1) Billʹs involvement in BSMI by not disclosing his involvement in marketing materials and having him impersonate his son Kristofor, the BSMI Vice President, when speaking with investors3 and (2) BSMIʹs connection to HFGI. These misrepresentations were made to investors both orally (via in‐ person presentations, over the phone, or via internet webinars) and in written 3 According to Joseph Pascua, such concealment was necessary to prevent potential investors from ʺlooking into who Bill Lange wasʺ because ʺif they did a Google search, they would find out that Bill Lange had various companies that owed people a lot of money.ʺ Trial Tr. at 1626. ‐8‐ materials (business plans, PowerPoint presentations, private placement memoranda, and an email newsletter). Victims invested $780,000 in BSMI.
Kristofor was Vice President of BSMI and a member of the BSMI Board of Directors. He attended key internal BSMI meetings, participated in meetings where BSMI solicited investors, and made sales calls to potential investors off a call list circulated by Russell. Kristofor allowed his father to pose as him when addressing investors. At times, Kristofor was present when his father impersonated him on the phone. The BSMI business plan also contained material misstatements regarding Kristoforʹs past business, marketing, and mining experience. For example, the business plan stated that he (1) was an officer at First Choice Financial, another company owned by Bill, (2) had extensive mining experience, (3) was familiar with environmental issues and high‐tech mining equipment, (4) worked for a finance company in marketing and was an officer of the company, and (5) worked for a consulting company using his marketing expertise to develop nationwide offices. Kristofor reviewed and approved his biography before it was included in the business plan. Many of the statements about his background were false or inaccurate. For example, Kristoforʹs mining experience ‐9‐ was limited to the time he spent helping his father as a child at Alaska mines, where he ʺhelped with clean up,ʺ ʺhelped move the rocks,ʺ and ʺplay[ed] with [his] BB gun.ʺ Trial Tr. at 3315‐16. Moreover, he was not an officer of First Choice Financial and functioned at HFGI largely as an administrative assistant.
Russell was a salaried employee of BSMI and, unlike Kristofor, was not an officer of the company. Russellʹs duties at BSMI included setting up and managing the company website and office email addresses, preparing, editing, and formatting the BSMI marketing materials ‐‐ including the business plan, placement memoranda, the PowerPoint presentation, and electronic newsletters ‐‐ and culling and distributing the call solicitation lists of potential investors. Russell reviewed, edited, and provided comments on the BSMI business plan, which contained misrepresentations about the background and work experience of the BSMI officers, omitted all references to HFGI, and contained false information about BSMIʹs assets. Russell also ʺscrubbedʺ a sales lead call list twice, to remove potential investors who were on the Federal Trade Commissionʹs National Do Not Call Registry, and circulated it to the BSMI employees tasked with making cold calls, as discussed below. ‐10‐