For Immediate Release
Media Contact: Bob Cooper
Date: December 22, 2010
Vitruvian Investments Owner Sentenced to Prison for Grand Theft
(Boise) - Sheila Kilborn-Jones, 40, of Boise will serve at least 4 years and up to 14 years in prison for grand theft, Attorney General Lawrence Wasden said today.
On October 15, Kilborn-Jones entered a plea of guilty to the felony crime of grand theft by the exercise of unauthorized control. By pleading guilty, Kilborn-Jones admitted that, in 2008, she diverted $220,000 belonging to 45 investors for her personal use.
In addition to the prison sentence, Fourth District Judge Patrick Owen ordered Kilborn-Jones to pay to her victims restitution totaling $1.2 million. This amount was adopted from the damages calculated in a civil lawsuit by the Idaho Department of Finance.
Sheila Kilborn-Jones was a former mortgage broker associated with Vitruvian Investments and a fund manager with the Vitruvian Investment Group who conducted real estate and investment business in western Idaho. In August 2005, Kilborn-Jones purchased Home Mortgage Financial and changed the name of the business to Vitruvian Investment Group, LLC. She also formed another business known as Vitruvian Investments. Through these two business entities, Kilborn-Jones underwrote real estate loans and managed an investment pool involving funds from short-term real estate transactions. Both entities filed for bankruptcy in late 2008.
Vitruvian Investment Group offered investors an ‘Advantage Fund’ and promoted that it was “designed to create a solid yielding, asset-backed investment vehicle for investors who are unsatisfied with the volatility of the stock market.” Kilborn-Jones provided investors with other assurances that the fund would operate in a safe and prudent manner. For example, the fund prospectus stated that the Advantage Fund would have annual audits conducted by a CPA firm and the same CPA firm would reconcile the fund on a monthly basis. Additionally, as sole manager of the fund, she told investors that an advisory board would have to approve any significant deviations from the fund’s stated underwriting guidelines. Through these and other offering documents and representations, Kilborn-Jones presented investors with mechanisms that they believed would allow them to assess the risk of investing in the Advantage Fund.
However, the investigation revealed that Kilborn-Jones disregarded many of the mechanisms and procedures that investors relied upon in assessing the risk of an investment in the Advantage Fund.
In early 2007, Kilborn-Jones loaned herself $300,000 in Advantage Fund proceeds to remodel her home. She reported the loan to investors using an unfamiliar name and gave the investors a third position deed of trust on her property. Today, investors have no equity in the third deed of trust.
As the real estate market continued to decline in 2008, Kilborn-Jones deviated further from fund offering guidelines. Between March and September of 2008, Kilborn-Jones misappropriated at least $220,000 from VIG investors. She also used investor funds for other expenses, including a $1,000 clothing allowance for an assistant and airfare for a trip to North Carolina for herself, her husband and two of her friends.
The prosecution was the result of a joint effort by the Idaho Department of Finance, the Federal Bureau of Investigation, the Idaho Department of Insurance, the Meridian Police Department, the Office of the United States Attorney for the District of Idaho and the Office of the Idaho Attorney General.
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