Keith B. Kovick, 61, Williston, North Dakota, pled guilty to mail fraud, wire fraud, and money laundering on April 25, 2012, before U.S. District Judge Donald W. Molloy. Sentencing has been set for July 26, 2012. He is currently released on special conditions.
…Kovick and Congdon received substantial commissions for placing borrowers with investors. When a borrower contacted Cornerstone with a need for funding, Kovick and Congdon marketed the potential investment opportunity to investors through verbal and/or written communications. When the investment transaction was completed, the investors placed their funds with Cornerstone. Cornerstone would take a 10 percent commission, withhold first year interest payments owed to the investors (which were required by the promissory notes to be placed in an escrow account) and then remit the remaining funds to the borrower. The borrower would then issue a promissory note created and provided to the borrower by Cornerstone. In some cases, the notes were secured with real property.
The State of Montana prohibits any person from selling or offering any security for sale unless the security is registered. Montana’s registration process protects potential investors by requiring the full disclosure of all material information.
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