By LEVI PULKKINEN, SEATTLEPI.COM STAFF
Feds raid Portage Bay home; fraud alleged
Federal agents have raided the home of a Seattle investment manager alleged to have tricked clients into investing in startup companies he managed, then lost much of their money when one of the firms collapsed.
Mark Spangler and his firm, The Spangler Group Inc., went into receivership earlier this year, admitting in court that he and the company were not able to pay their bills. Now, according to recently unsealed law enforcement statements, Spangler is the subject of an FBI fraud and money laundering investigation as well as a Securities and Exchange Commission inquiry.
In a statement filed in U.S. District Court at Seattle, an FBI agent assigned to the white collar crimes division contended Spangler led several clients to believe he’d invested their money in relatively safe, diversified funds.
Instead, the agent said, it appears Spangler directed millions to two privately held, cash-poor companies in which he had a leadership role. One of those firms appears to have closed in March and cost Spangler’s investors at least $46 million.
Documents filed in state court by Spangler show he was managing the fortunes of more than 100 investors spread around the country when he was forced to file for receivership earlier this year. Since then, a court-appointed attorney has been in charge of selling Spangler’s assets – including a 64-foot yacht valued at $850,000, and a $1.3 million house in Seattle’s Portage Bay neighborhood – in an effort to settle the 56-year-old’s debts.
In March, Spangler’s firm told federal regulators it had $106 million in assets under management. As of August, a review prompted by a civil suit in King County Superior Court showed the firm’s assets had dwindled to $20 million to $60 million, meaning at least $46 million of the investors’ money had been lost.
Requesting a warrant to search the Portage Bay home Spangler shared with his wife, the FBI agent contended Spangler misled his clients and kept them in the dark about the risky investments he was making with their money.
“My investigation to date shows that Spangler invested in high risk private companies contrary to formal agreements with investors, contrary to their wishes, and without requesting consent or notifying investors,” the FBI agent told the court on Sept. 22.
Spangler, the agent continued, “provided false and misleading written statements that reflect that the investors’ funds remained invested in funds holding publicly traded securities … and provided false and misleading written statements which misrepresented to investors the value and growth of their investment portfolios.”
Contacted for comment, Spangler’s attorney Ronald J. Friedman declined to discuss the allegations in detail but said his client is cooperating with investigators.
"Mr. Spangler regrets this turn of events in regard to his business and intends to fully cooperate with authorities in their ongoing investigation,” Friedman said. “It is too early in the investigation to say more."
Spangler has not been charged publicly with any crime. The FBI agent told the court Spangler is suspected of mail, securities and wire frauds, and money laundering.
Investor: Don’t ‘take chances’ with my money
Key to the allegations against Spangler is the contention that he moved investors’ money to a now-defunct Georgia firm, TeraHop Networks.
Describing himself as a "nationally recognized expert in financial planning," Spangler contends he has appeared on CNN and national radio, and been a source for content published in The Wall Street Journal, The New York Times and Fortune Magazine.
According to court filings, Spangler launched the inventory-tracking equipment maker after buying the intellectual property of another failed venture he was involved in. Spangler’s various funds invested at least $51 million in TeraHop. One fund, SV11, accounted for nearly $40 million of that amount.
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Mark Spangler and his firm, The Spangler Group Inc., went into receivership earlier this year, admitting in court that he and the company were not able to pay their bills. Now, according to recently unsealed law enforcement statements, Spangler is the subject of an FBI fraud and money laundering investigation as well as a Securities and Exchange Commission inquiry.
In a statement filed in U.S. District Court at Seattle, an FBI agent assigned to the white collar crimes division contended Spangler led several clients to believe he’d invested their money in relatively safe, diversified funds.
Instead, the agent said, it appears Spangler directed millions to two privately held, cash-poor companies in which he had a leadership role. One of those firms appears to have closed in March and cost Spangler’s investors at least $46 million.
Documents filed in state court by Spangler show he was managing the fortunes of more than 100 investors spread around the country when he was forced to file for receivership earlier this year. Since then, a court-appointed attorney has been in charge of selling Spangler’s assets – including a 64-foot yacht valued at $850,000, and a $1.3 million house in Seattle’s Portage Bay neighborhood – in an effort to settle the 56-year-old’s debts.
In March, Spangler’s firm told federal regulators it had $106 million in assets under management. As of August, a review prompted by a civil suit in King County Superior Court showed the firm’s assets had dwindled to $20 million to $60 million, meaning at least $46 million of the investors’ money had been lost.
Requesting a warrant to search the Portage Bay home Spangler shared with his wife, the FBI agent contended Spangler misled his clients and kept them in the dark about the risky investments he was making with their money.
“My investigation to date shows that Spangler invested in high risk private companies contrary to formal agreements with investors, contrary to their wishes, and without requesting consent or notifying investors,” the FBI agent told the court on Sept. 22.
Spangler, the agent continued, “provided false and misleading written statements that reflect that the investors’ funds remained invested in funds holding publicly traded securities … and provided false and misleading written statements which misrepresented to investors the value and growth of their investment portfolios.”
Contacted for comment, Spangler’s attorney Ronald J. Friedman declined to discuss the allegations in detail but said his client is cooperating with investigators.
"Mr. Spangler regrets this turn of events in regard to his business and intends to fully cooperate with authorities in their ongoing investigation,” Friedman said. “It is too early in the investigation to say more."
Spangler has not been charged publicly with any crime. The FBI agent told the court Spangler is suspected of mail, securities and wire frauds, and money laundering.
Investor: Don’t ‘take chances’ with my money
Key to the allegations against Spangler is the contention that he moved investors’ money to a now-defunct Georgia firm, TeraHop Networks.
Describing himself as a "nationally recognized expert in financial planning," Spangler contends he has appeared on CNN and national radio, and been a source for content published in The Wall Street Journal, The New York Times and Fortune Magazine.
According to court filings, Spangler launched the inventory-tracking equipment maker after buying the intellectual property of another failed venture he was involved in. Spangler’s various funds invested at least $51 million in TeraHop. One fund, SV11, accounted for nearly $40 million of that amount.
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