Kinseth Pleads Guilty

Jeffrey J. Kinseth, a 58-year-old man from Cedar Rapids, Iowa, has pleaded guilty to defrauding investors through his company, Virtual Vision, Inc.

Kinseth was convicted of one count of wire fraud in federal court in Cedar Rapids. According to a plea agreement, Kinseth admitted to soliciting and accepting hundreds of thousands of dollars from at least eleven individual investors between March 2008 and September 2009.

Kinseth falsely told investors that all of their money would be invested through Virtual Vision as a purported pooled investment vehicle. However, he admitted to using some of the money to make payments to earlier investors and for other purposes, despite knowing that he would not invest all of the investors’ money.

Kinseth also admitted that, of the investor funds actually traded, he consistently sustained losses. To conceal his misappropriation and trading losses, Kinseth created and issued false account statements to investors that falsely reflected purported profits from their trading.

Sentencing for Kinseth will be set after a presentence report is prepared. He remains free on bond pending sentencing and faces a possible maximum sentence of twenty years’ imprisonment, a fine equal to the greater of twice the gross gain or loss resulting from the offense, or $250,000, and three years of supervised release following any imprisonment.

The case is being prosecuted by Assistant United States Attorney Peter Deegan and was investigated by the Federal Bureau of Investigation in cooperation with the Commodity Futures Trading Commission and the Office of the United States Trustee. Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl, with the case file number being 13-51 LRR.

This guilty plea is a significant development in the case, and it remains to be seen what sentence Kinseth will receive. The investigation and prosecution of this case demonstrate the commitment of law enforcement agencies to holding individuals accountable for white-collar crimes.