Investors bilked of more than $6 million
LA FAYETTE — A former Lafayette contractor turned investment company president was sentenced Wednesday to 2½ years in federal prison in a scam that bilked scores of Acadiana investors out of more than $6 million.
U.S. District Judge Richard Haik also ordered Herbert “Steve” Fouke, 55, to repay $6,380,808 in restitution — a figure Fouke, his attorney and the judge all acknowledged will never be repaid in full, especially considering payments were set at $500 a month.
“We are going to spend years trying to recover what we lost,” said Andy Naquin, a Lafayette city-parish councilman who was among the roughly 100 investors lured by Fouke into the questionable investments.
Naquin said he lost more than $20,000, savings he handed over to Fouke based on trust in a man once considered a close friend.
“He coaxed us to bring in every dollar we had,” Naquin said in comments to the judge at the Wednesday sentencing hearing.
A federal grand jury in 2011 indicted Fouke and businessman Richard Joseph Buswell on fraud charges in a federal probe of Bowman Investment Group, which Buswell founded in 2006.
Buswell pleaded guilty in the case last year but has not been sentenced.
Prosecutors said his company promised big returns to clients who were never made aware their money was being put in high-risk investments.
Many of the investments never panned out, sucking up the clients’ money even as the company raked in commissions for what prosecutors said were “frequent and excessive stock trades.”
Fouke had worked as a residential building contractor, and his initial association with Buswell was as a client of the Bowman Investment Group, according to a summary of the allegations filed by prosecutors.
Fouke later began working for Buswell as president of the investment company, tapping as clients his extensive network of friends and associates from his years in the construction businesses.
Fouke told the judge Wednesday that he lost everything he invested with Buswell and was as much a victim as anybody else.
Fouke said he never made money from commissions and was paid a set salary by Buswell. He said he was paid $1,000 a week at first and later got $1,500 a week.
Even that money stopped coming when the investment scheme began to fall apart, he said.
“It’s cost me dearly,” Fouke said. “The friendships. The respect. The trust. I’ll never get that back.”
Prosecutors did not accuse Fouke of directly misleading investors but rather of failing to act when he became aware Buswell was not being straightforward with clients.
Assistant U.S. Attorney Kelly Uebinger told Haik that although Fouke was not the mastermind behind the scheme, he told lies that kept the scheme afloat while clients continued to lose more and more of their money.
“He bet on a criminal, but he was there every step of the way,” Uebinger said.
Fouke’s attorney, Carol Whitehurst, said Fouke never intentionally misled clients and was only repeating information from Buswell he believed at the time was true.
“At some point during that relationship, he should have seen some signs,” Whitehurst said. “... He feels terrible about that.”
“Well, he should,” Haik replied.
The judge ordered Fouke to report to federal prison by July 14.
Buswell also pleaded guilty last year to unrelated federal charges for a synthetic marijuana business launched in 2011.
Prosecutors said he helped oversee the distribution of about $5 million worth of synthetic marijuana sold as “Mr. Miyagi” during 10 months in 2011 at Curious Goods, a smoke shop with franchises throughout Acadiana.