A former Huntington Beach man was one of two people sentenced in federal court today for hiding money that came from a foreign currency trading fund that operated like a Ponzi scheme. Michael L. Putnam, a 68-year-old who now calls St. George, Utah, home, was sentenced to 12 months and a day in prison and ordered to pay $10 million to fund investors and $3 million to the Internal Revenue Service (IRS).
Putnam cooperated with the government in the prosecution of others associated with his Genesis Fund, which may help explain why his partner David L. Johnson, 73, of Yorba Linda, was sentenced to more than double the prison time: 30 months or 2.5 years. Johnson was also ordered by Judge Dale S. Fischer in Los Angeles to pay $2.3 million in restitution, with $1.9 million going to investors and $400,000 to the IRS.
The 10th and 11th defendants convicted for their roles in the Genesis Fund, Johnson and Putnam received significant distributions that they hid in foreign bank accounts and did not report to the IRS, according to a statement from the U.S. Department of Justice.
Johnson and Putnam had previously pleaded guilty to receiving more than $2.4 million and $1.5 million respectively. Johnson, who failed to disclose the money he transferred to a bank in Costa Rica, essentially copped to filing two false tax returns. Putnam pleaded guilty to conspiracy and tax fraud.
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