This week, Rolf Heartburg, 41 and Larry Heartburg, 68, of Scottsdale, Ariz., were both sentenced by U.S. District Court Judge Neil V. Wake to a year in prison and ordered to pay $257,000 in restitution.
Heartburg previously pleaded guilty to one count of conspiracy to commit wire and mail fraud and Larry Heartburg previously pleaded guilty to five counts of willfully failing to file a tax return. Rolf Heartburg was immediately taken into custody following the imposition of his sentence.
Rolf Heartburg was a Phoenix based financial planner who solicited his own clients to invest in a speculative real estate fund. The fund allegedly generated profits by selling mortgage notes it had acquired at a discount. Unbeknownst to the investors, Larry Heartburg served as the manager of the fund and he did not purchase any mortgage notes. Instead, the Heartburgs used nearly two thirds of investor money for their own personal expenses. Additionally, Larry Heartburg failed to file taxes on the money received from investors and other income for tax years 2008-2012.
“Rolf Heartburg exploited his position of trust as a financial advisor by directing the victim investors to a risky real estate investment controlled by his father Larry who used the money for this own personal expenses,” said IRS Criminal Investigation Special Agent in Charge Dawn Mertz. “Larry Heartburg then failed to file income tax returns and failed to pay taxes on that income. Honest and law abiding citizens are fed up with those who use deceit and fraud to line their pockets with other people’s money and then skirt their own tax obligations.”
The investigation in this case was conducted by the Internal Revenue Service-Criminal Investigation.