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OIG: Office of Inspector General
   Current Section

Investigative Reports

THE UNITED STATES ATTORNEY'S OFFICE
WESTERN DISTRICT OF MISSOURI

FOR IMMEDIATE RELEASE

September 16, 2011

KC Man Convicted of Attempted $100 Million Fraud Scheme

KANSAS CITY, Mo. – Beth Phillips, United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., man was convicted in federal court today of creating false obligations and of mail fraud as part of an attempted $100 million fraud scheme.

Denny Ray Hardin, 52, of Kansas City, was found guilty of 21 charges contained in a May 5, 2010, federal indictment.

Hardin produced and issued numerous “Bonded Promissory Notes” (BPNs), which are completely fictitious financial instruments that Hardin claimed to be backed by an account with the U.S. Department of Treasury. Hardin falsely claimed that he was authorized by the U.S. Department of Treasury to produce and issue the worthless documents, which he claimed had monetary value and could be used to eliminate debt..

Hardin claimed to have produced and issued more than 2,000 bonded promissory notes, totaling more than $100 million, from September 2008 to September 2009, for himself as well as for his girlfriend, his daughter, and many customers who paid a fee. Hardin created the notes on his computer and used them to attempt to discharge student loan debts, to purchase a car and a house, and for other personal items and debts. Hardin charged purchasers of the notes a fee – initially $100 per note, which was later increased based on the amount of debt Hardin falsely claimed to be discharged by the note.

Hardin falsely claimed that he was authorized to issue the bonded promissory notes because he was a private banker. As part of his scheme to defraud both the individuals for whom he created BPNs and the creditors to whom he issued BPNs, Hardin claimed that he had created his own private bank – The Private Bank of Denny Ray Hardin, which operated out of his residence.

Hardin defrauded customers by selling them BPNs with the false promise that these fictitious instruments can discharge debts. Hardin defrauded creditors by presenting them with worthless BPNs.

Hardin operated a Web site for the purpose of marketing BPNs to potential purchasers. On his Web site, Hardin claimed that BPNs had been accepted by various institutions, which was false. Hardin marketed this scheme by spreading false stories to make his fraud sound legitimate and to try and force creditors into accepting BPNs through threats of legal action.

As part of the fraud scheme, Hardin would mail a BPN to creditors, along with various other documents that included a letter from Hardin stating that the account had been paid in full by the note. When he was notified that the BPN had been refused as payment, Hardin threatened the creditor with a lawsuit.

U.S. District Judge Gary A. Fenner found Hardin guilty of 11 counts of creating fictitious obligations and 10 counts of mail fraud at the conclusion of a bench trial that began Monday, Sept. 12, 2011.

Under federal statutes, Hardin is subject to a sentence of up to 25 years in federal prison without parole, plus a fine up to $250,000 for each count of creating fictitious obligations, a sentence of up to 30 years in federal prison without parole, plus a fine up to $1 million, for each of the four counts of mail fraud affecting a financial institution, and a sentence of up to 20 years in federal prison without parole, plus a fine up to $250,000, for each of the remaining counts of mail fraud. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorneys Brian P. Casey and Patrick D. Daly. It was investigated by the FBI, the U.S. Department of Education – Office of Inspector General, the Kansas City, Mo., Police Department and the U.S. Postal Inspection Service.


 
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Last Modified: 09/20/2011