The man scammed more than $17 million from investors
A Colorado man has been sentenced to 120 months in federal prison for his role in a fraudulent scheme related to collateralized mortgage obligations (CMOs), the US Attorney’s Office for the District of Colorado announced.
In addition, Daniel Coddington was ordered by US District Court Judge Brooke Jackson to spend three years on supervised release and to pay about $18 million in restitution for wire and securities fraud.
Jesse Erwin Jr., a co-defendant, was previously sentenced for the same charges to serve 58 months in federal prison, followed by three years on supervised release.
The sentence stems from CMO trade and loan programs that Coddington operated from at least early 2010 through late 2011, holding himself out to investors and intermediaries to be the principal and owner of a company called Golden Summit Investors Group.
Coddington said that investor money would be used to purchase CMOs, which would be “hypothecated” to obtain loans exponentially larger than their purchase prices and market values. He told most of the investors that they would receive pre-trade distributions from the proceeds of the loans, with the remainder to be placed into a high-return investment program.
Additionally, Coddington told investors that they could transfer their CMOs to Golden Summit for the purpose of participating in the trade program. In one instance, he told an investor that $60 million of the loan proceeds obtained from “monetizing” the CMOs would be provided to the investor in the form of two non-recourse loans in the amount of $30 million each. The investor eventually invested $9 million with Golden Summit.
Coddington obtained more than $17 million from investors for both programs. Despite his failure to complete either program, he did not return most of the investors’ money or any CMO purchased.
Instead, Coddington diverted substantial amounts of investor money for his own personal use. Additionally, he kept most of the monthly interest that was paid out on CMOs he received from investors while they were in his and Golden Summit’s possession.
