The man charged in a federal fraud case, along with the prominent, late El Paso businessman Russell Vandenberg, told a judge Wednesday that he regrets following orders from his former boss.
He also apologized to investors hurt by the alleged fraud.
It was “inherently poor judgment in believing he would pay the money back in the next big deal,” Scott Anthony Stuart said of Vandenburg. “In hindsight, he was a master conman.”
“I never profited from the (misused) investor funds, other than keeping my job,” he said.
Stuart, 57, who now lives in Las Vegas, Nevada, was described in a court filing by his lawyer as an accountant for Vandenburg’s company, TVO North America, which was a large, national real estate management and property services company based in El Paso.
However, an inactive LinkedIn profile lists Stuart as vice president and controller when he worked at TVO.
It’s unclear if TVO or any of its affiliates are still in business.
Former TVO accountant pleads guilty
Stuart in October pleaded guilty to one charge of conspiracy to commit wire fraud as part of a plea agreement with the U.S. Attorney’s Office for West Texas, in which 10 other wire fraud charges were dropped.
The charges against Vandenburg were dismissed by the court May 3, 2023 because he died of leukemia in April 2023. In September 2022, he entered a not guilty plea, as is usual in federal criminal cases.
The two men were indicted by a federal grand jury in July 2022. Six of the fraud charges involved wire transfers of $160,000 in company funds to Vandenburg’s bank account and four of the charges involved financial and project plan emails to partners in hotel properties, the indictment shows.
Sentencing delayed due to credit cards’ debt
Stuart was scheduled to be sentenced Wednesday May 15. But U.S. District Court Judge Frank Montalvo postponed the sentencing to June 11, and ordered Stuart to cancel all his credit cards by that time.
Montalvo was disturbed that Stuart has about $47,000 of credit card debt. It shows irresponsibility, indicates he “continues to live high on the hog,” and could affect his ability to pay restitution to victims in the case, the judge said. A fine also could be part of the sentence.
Stuart told the judge that part of the debt was to pay his attorney. He said he’s working to get the debts paid off.
Probation sentence requested
Arthur Werge, Stuart’s lawyer, in a court filing and in court Tuesday asked Montalvo to sentence Stuart to probation because, he said, Stuart did not profit from the fraud and has cooperated with prosecutors in the case.
Montalvo said he had not yet decided if prison time will be part of Stuart’s sentence.
“I am appalled at this” credit card debt, the judge said.
The fraud charge carries a maximum sentence of 20 years in prison and a maximum fine of $250,000, a spokesperson for the U.S. Attorney’s Office for West Texas, said in an email.
In the plea agreement, sealed from public view by the court, federal prosecutors agreed not to oppose the maximum applicable reduced sentence under federal guidelines as long as Stuart “refrains from engaging in any conduct that may demonstrate a lack of acceptance of responsibility” of the fraud, the spokesperson said.
More: Federal sentencing postponed for El Paso man charged in deadly Capitol riot
Indictment: Fraud occurred over two years
The federal indictment accuses Vandenburg and Stuart of engaging for over two years (2015-2017) in a scheme to defraud ownership partners in various properties, including apartment complexes and hotels, in El Paso and other areas of the country.
No companies were named in the indictment, but Vandenburg was chief executive officer of TVO North America for 34 years until he stepped down in October 2017 for health reasons. He also headed a sister company, TVO Management Services.
He and his brother, Wayne Vandenburg, in 1983 started TVO Groupe, the Chicago-based parent company of TVO North America and affiliated companies involved in real estate investment and property services. He also was a prominent sports booster and donor for the University of Texas at El Paso.
Vandenburg and Stuart allegedly had money from individual property bank accounts improperly transferred to Vandenburg’s companies’ bank accounts to cover shortfalls in operations, to cover shortfalls for other properties, and pay personal expenses for Vandenburg, the indictment states.
The men also allegedly made false and misleading statements to partners in the involved properties, according to the indictment.
Investors ‘sophisticated,’ lawyer says
Arthur Werge, Stuart’s lawyer, wrote in a court filing: “The scheme was simple: Vandenburg and his family took investor funds for personal use by directing Stuart and others to book false financial entries transmitted to investors.”
In court, Werge said, “These were sophisticated, institutional investors” with impressive credentials.
But Vandenburg “was a very astute conman who sold himself so well” that the investors did not require third-party audits or surety bonds on projects, Werge claimed.
“When the house of cards came down, Mr. Stuart was there to answer all questions from the investors,” Werge said.
Scheme takes big toll, Scott Stuart says
Stuart told the judge that he “did everything I could to help them (investors) and the government (prosecutors) untangle Vandenburg’s fraud.”
“It’s something that will bother me (for) the rest of my life,” Stuart said.
It’s “taken an immense toll on me physically, mentally, and to my marriage and my family.”
Vic Kolenc may be reached at 915-546-6421; [email protected]; @vickolenc on Twitter, now known as X.
This article originally appeared on El Paso Times: Man charged in fraud case blames deceased El Paso CEO for scheme
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