Former Yellowstone Partners CEO sentenced to federal prison
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POCATELLO — Former Yellowstone Partners CEO David Hansen was ordered to spend five years in federal prison on Wednesday.
Chief U.S. District Judge David Nye handed down the sentence after Hansen pleaded guilty to a federal charge of wire fraud.
Hansen will not go straight to prison but will appear at a date determined by the Federal Prison Bureau.
Between 2008 and 2016 Hansen defrauded the clients of Yellowstone Partners, according to court documents. Hansen would fraudulently bill clients for fees Yellowstone Partners wasn’t supposed to get under the terms of the investment agreements.
“I’m remorseful for my actions and all the pain that I caused,” Hansen said in court. “I do not have an excuse. I lost my way and as a result, I negatively affected others.”
Hansen was a 90% partner in Yellowstone Partners, LLC, an investment management firm headquartered in Idaho Falls. He had ownership in the company until 2017.
“Through this over-billing scheme, Hansen fraudulently obtained client funds from a third-party custodian and used them to enrich himself and to fund Yellowstone Partners’ operations,” according to court documents.
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Hansen personally submitted or was carbon-copied on at least 50 fraudulent overbilling requests, resulting in a loss of $2,675,856, according to court documents.
“I was obviously aware we over billed accounts; however, I wasn’t aware of the extent,” Hansen said.
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A grand jury indicted Hansen in Nov. 2018 on 17 counts of wire fraud and six counts of tax fraud. In December, Hansen pleaded guilty to just one of the counts of wire fraud. With the plea agreement, he agreed to pay full restitution to the victims and cooperate with the IRS to pay any unpaid 2012 and 2013 taxes along with interest.
“I will work night and day until every penny is paid,” Hansen said.
Nye said Hansen’s actions were not a mistake, but a calculated scheme to defraud his clients. Nye called Hansen a millionaire wanting to live like a billionaire.
In addition to the prison sentence, Nye ordered Hansen to pay a $50,000 fine and restitution that will be determined at a later date.
CORRECTION: A earlier version of this story mentioned COVID-19 was a determination in delaying Hansen’s report to prison. Clarification from court staff determined this not to be a factor.