A fraudster who invented colleagues, investment returns and industry licenses and is already serving time for home invasions received a 16-year prison sentence for his financial scheme.
Joshua Louis Rupp raised nearly $4 million from about 20 investors between 2015 and 2019 by touting an “iron condor” strategy, his false association with brokerage and trading firms, a made-up uncle who was his supervisor and a cellphone app that showed fictitious returns from dummy accounts, according to court documents filed by the
“Joshua Rupp preyed on people close to him as well as other members of his community, convincing some of his victims to turn over hundreds of thousands of dollars to his care by lying to them about his credentials and the nature and status of their investments,” U.S. Attorney Andrew Birge said in a statement. “The court’s sentence will protect the public and serves as a cogent warning to those contemplating similar schemes.”
His term came a month after another
Agencies such as the SEC often get “bogged down” with issuing new rule proposals when they haven’t addressed the persistent problems with bad actors, many of them unregistered, barred from the industry or even with felony convictions in their past, according to Bill Singer, a securities attorney and former regulator who writes the “
“They operate on the fringes,” Singer said, expressing fascination with the idea that investors allegedly trusted Rupp with their money. “They go to jail, and then we're supposed to take comfort that the court has ordered millions of dollars in restitution. They're never going to get that money back. … The public gets this impression that there's this omniscient eye watching over everything. Is it really that easy to rip off the public?”
Substance abuse problems
An attorney who represents Rupp didn’t respond to requests for comment on the allegations.
“This is not a case of malice, rather an unfortunate story of the way the world perceived Mr. Rupp. Mr. Rupp had always wanted the world to perceive him as an important man who had the world in his palm — being a successful businessman and a successful father,” according to a sentencing memo for the defense. “In reality, Mr. Rupp’s world was crashing down around him, with daily abuse of alcohol and cough medicine. Perception often precedes reality, but in the case of Mr. Rupp, his mental health and substance abuse issues led him down a path of self-destruction, rather than success.”
Rupp is a resident of the Central Michigan Correctional facility after he drew a sentence of 3.75 to 20 years for the 2019 home invasions in Polkton Charter Township, according to state prison records and a
Rupp pleaded no contest to charges of home invasion, assault with a dangerous weapon and resisting or obstructing a police officer. While dealing with financial straits and under the influence of cough medicine he took with antidepressants, Rupp entered two homes and, in one of them, touched a woman’s breast and said something lewd at her, according to police reports cited by the local newspaper. As he drove away from the homes, his car sideswiped another vehicle with a woman and a child inside, police said.
Fraud scheme
Rupp had filed for bankruptcy protection in 2012 and 2016, and he worked in construction and as a home builder who had his own company from 2007 to 2011, according to court records. It’s not clear what gave him the idea to begin searching for potential clients with investment ideas, although SEC investigators say he met prospects through the construction business and later referrals. Rupp sold about 20 investors on the
He “solicited Main Street investors and depleted their retirement savings by using fake credentials and false documents showing extremely high returns,” Jennifer Leete, an associate director with the SEC’s Enforcement Division, said in a statement.
Besides those assurances, he presented himself as working with made-up people such as “Mark Shureen” or an uncle named “Gary Hansen,” who was his supervisor, according to the criminal information in the case. He created a phony “Securities Prop 55” license supposedly issued by the state using a residential builder’s license he had from his business, used an unidentified brokerage or investment firm’s logo and even maintained a couple of offices, investigators say. The app, fake account statements and “market updates” from Rupp gave clients the impression that their investments were adding value, investigators say.
In fact, he misappropriated about $500,000 of their money toward groceries, electronics and vacations, with stops at Best Buy, Home Depot and Meijer and tabs of $2,503 at Walmart and $1,786 at Disney Resorts, according to court documents. Separately, his actual trades built up losses of more than $1.4 million from January 2018 to July 2019, investigators say.
Rupp “obtained millions of dollars through fraudulent means, misappropriated some of that money for personal use, and lost much of the rest in securities trading for which he was unqualified,” Josh Hauxhurst, the acting special agent in charge of the FBI’s Michigan’s office, said in a statement. He thanked the U.S. attorney’s office and the Ottawa County Sheriff’s Office for their assistance in the investigation.
Admitting to the crimes
He pleaded guilty in November to one count of securities fraud under a plea agreement with prosecutors. Rupp has paid back more than $1.23 million, although 19 investors would receive a combined $2.73 million in restitution if he’s able to compensate them for their losses one day, according to his sentencing memo. At the time of the crime, Rupp was “under an immense amount of stress and attempting to provide for his family, all while battling an addiction to cough medicine,” the memo states. He cooperated with the sheriff’s department in the days after his arrest for the home invasion, handing over a flash drive with his business records.
Rupp defrauded the investors “due to a lapse of judgment and not being able to find a way out,” the memo states. “Mr. Rupp has expressed his remorse for his actions and is determined to mend his relationship with people he has harmed.”
The defense asked for a range of 135 to 168 months, while the government recommended 180 months in a range of 168 to 210 months, according to the memo. The sentence of 192 months, or 16 years, would end just before his latest possible discharge date on the term for the home invasion in July 2039. As part of the sentence, U.S. District Judge Hala Jarbou ordered the restitution and advised the Bureau of Prisons to give Rupp access to substance abuse, mental health and job-training programs.
