YAKIMA, Wash. — Dan Gaub died owing a lot of people a lot of money, perhaps as much as $40 million or more. Many may not have realized until too late they were participating in a scam.
Now, newly released records in U.S. District Court in Yakima confirm suspicions that when FBI agents raided Gaub’s West Valley home after his death in a motorcycle crash last year, they believed he was operating a Ponzi scheme.
What they think of the case now is anyone’s guess. In court records, federal prosecutors described the investigation as “completed,” but a spokesman at FBI regional headquarters in Spokane deferred comment to the U.S. Attorney’s Office, which has not returned calls seeking comment.
Meanwhile, more than 200 claims by investors have piled up in probate court against the estate of Gaub, the 53-year-old son of evangelist Ken Gaub, whose promises of 4 percent interest every month were supposedly possible due to his self-described status as a “living legend” in high-risk foreign currency trading, or “forex.”
Indications are the estate has nowhere near enough money to compensate the claimants.
Three lawsuit have also been filed in Yakima County Superior Court, including one that also names a Tacoma investment services firm as a co-defendant. All eight of the county’s Superior Court judges have recused themselves due to conflicts of interests.
Gaub died May 4 in a collision with a semi-truck on Summitview Road, and within weeks of his death the blogosphere was buzzing that he crashed into the truck deliberately. The alleged cause: that Gaub was a con man who had perpetrated perhaps the biggest fraud in local history. Many of the victims were said to be fellow congregants at Stone Church, one of Yakima’s largest evangelical congregations.
Much of the buzz was the result of an FBI raid on Gaub’s home on Englewood Avenue two weeks after his death. The agency carted off computers and boxes of records. Assets, including Gaub’s 70-foot yacht in Seattle and a collection of cars and motorcycles were also seized.
In an affidavit to a search warrant, an FBI agent said the investigation began after he was approached by a man named Lance Johnson the day of Gaub’s death.
The agent said Johnson related that he had known Gaub for almost 30 years, had recently invested $100,000 with Gaub from an insurance settlement and that Gaub had just died in a motorcycle crash that was most likely a suicide.
According to the agent, Johnson said he had gotten a bad feeling about his investment, which was backed by a receipt Johnson described in hindsight as worthless, and had been pressing Gaub to return his money for several days.
He said he had gone to Gaub’s home to get his money back the day before the crash and that Gaub began quoting Biblical scripture, stated he was having trouble accessing the funds and then made what appeared to Johnson to be a pretend call to his attorney.
Johnson said he returned the next day unannounced and was told by Gaub’s wife, Dawndee, that her husband was out riding his motorcycle and would be back soon.
Johnson told the FBI agent that he confronted Dawndee Gaub about his suspicions her husband was running a Ponzi scheme and that Dawndee Gaub replied her husband “cannot give you what he doesn’t have.”
After reaching her husband on his cellphone, Dawndee Gaub told Johnson her husband was returning home to speak to him but reported he was having mechanical problems with his motorcycle. Moments later, his assistant arrived at the Gaub home and said Gaub had just been killed in a crash.
The FBI agent reported that a distraught Johnson left the Gaub home and came upon a crash-scene roadblock on Summitview manned by Yakima County sheriff’s Chief of Detectives Stew Graham, who happened to be a personal friend.
Graham allegedly confirmed Gaub had died in the crash and further told Johnson that it was most likely a suicide. The veteran deputy also allegedly had recovered Gaub’s cellphone at the scene and had seen several messages indicating Gaub was being pressed to return money by other investors as well.
Following further complaints alleging fraudulent activity on Gaub’s part, the FBI agent said he got a search warrant for at least two bank accounts maintained by Gaub, who also did business as R&R Investments.
The agent said at least one account showed commingling of large investor deposits with checks written for personal expenses of Gaub’s.
Based on his experience and that of other investigators, the agent said, “the financial activities demonstrated in the account are not consistent with investments, forex, or securities trading. The activities in this account are consistent with a Ponzi scheme.”
Among the suspicious activity, the agent wrote, were debits in excess of $100,000 for Ken Gaub Ministries. Ken Gaub, who filed a $40,000 claim against his son’s estate and is named as a co-defendant in one of the lawsuits, did not return a call Friday seeking comment.
The Gaub family has maintained that Gaub did not commit suicide. A State Patrol report in October reached no firm conclusions about what caused him to swerve into the side of the truck.
Also known as a pyramid scheme, a Ponzi scheme is a common investment scam that generates high rates of return for early, initial investors at the expense of new investors. Eventually the scam collapses as it becomes harder and harder to find new investors to pay off older investors.
As part of the raid that followed, the FBI seized most of Gaub’s assets, including the yacht moored in Seattle called “4CURRENTSEA” and a 2006 Bentley Spur luxury sedan.
Also seized were four motorcycles, including a 2005 Harley Davidson, five more cars, including a 2000 Porsche Boxter and a 2007 Mercedes Benz SUV, and a Chase Bank account containing $844.77.
Those assets were officially released back to the Gaub estate a week ago at the request of U.S. Attorney’s Office. The attorney for the estate, Patrick H. Vane of Seattle, did not return a call Friday seeking comment.