Written by Wolf Point Herald
Keith Kovick and Robert Congdon were recently sentenced for crimes of mail fraud, wire fraud and money laundering.
Kovick received a sentence of 30 months in prison with three years of supervised release, a $2,000 special assessment fine, and owes $1,169,092 in restitution.
Congdon received 24 months in prison with three years supervised release, and owes $1,600 for a special assessment fee and also owes $1,169,092 for restitution.
A press release stated the men incorporated their company, Cornerstone Financial Inc., in 2000 but failed to ever register it with the Montana State Securities Department.
The business was identified as a hard money/private money broker company located in Polson.
Essentially, Kovick and Congdon allegedly provided loans for borrowers who wanted to purchase property, whether it was commercial, industrial or some other type. The release said they would obtain the money for the loans from a variety of investors, and then issue promissory notes to all borrowers.
It is illegal to sale or offer any security for sale unless the security is registered. This law is in place in order to protect potential investors.
It also said none of the promissory notes, which would be considered securities in Montana, were registered or eligible for exemption under Montana law.
Cornerstone apparently began having financial difficulties in 2008 and resorted to using new investors’ funds to pay previous investors and using that money for its own personal expenses as well.
Kovick and Congdon could no longer keep the operation running and the façade came crashing down in 2008 when they began pledging their assets and were unable to make interest payments to their investors.
Since the men were prosecuted federally, and the federal judicial system does not offer parole, they would likely serve their entire sentence unless they received a reduction for good behavior while incarcerated.