CONCORD, N.H. – Karl Edward Hahn, 44, of Manchester, Connecticut, and formerly of New Castle, New Hampshire, admitted to ripping off a client for a staggering $2 million. The ex-investment banker pleaded guilty Tuesday to wire fraud, bringing a close to a scheme that spanned from March 2009 to July 2010.
Hahn, while employed at investment banks in Portsmouth, New Hampshire, pitched the victim a clandestine “off the books” investment. He spun a tale of a high-yield loan, promising a hefty return on a $2 million investment shared between himself and the client. The supposed loan was to be secured by residential real estate, with borrowers supposedly eager for funds at rates well above market value. The catch? It all was a lie.
To keep the scheme under wraps – and his employer in the dark – Hahn insisted the victim transfer the funds not directly to him, but to the bank account of one of his relatives. He claimed this was necessary because his firm wouldn’t allow outside dealings with clients. The victim, believing Hahn’s story, wired a total of $2,035,000 in four separate transactions: $300,000, $1,600,000, $100,000, and $35,000. Instead of investing the money, Hahn simply pocketed it, using it to cover his personal expenses.
The deception didn’t stop at the initial fraud. Hahn doubled down, feeding the victim a stream of lies to buy time and prevent him from alerting authorities. He falsely claimed the borrowers had defaulted, that he possessed the deeds to their properties, and that a hedge fund was poised to purchase the properties and return the money with interest. He even falsely stated in 2010 that the victim would have their money back by early August. These were all fabrications designed to keep the victim quiet and prolong the con.
Hahn’s career as a securities advisor came crashing down in 2011 when the New Hampshire Bureau of Securities Regulation barred him from practicing. Now, he’s facing the consequences of his criminal actions. Under the terms of the plea agreement, Hahn is scheduled to be sentenced on November 8, 2017, and will serve 18 months in federal prison. The investigation was a joint effort by the FBI and the U.S. Secret Service, with the prosecution handled by Assistant U.S. Attorney Arnold H. Huftalen.
This case serves as a harsh reminder that even those in positions of trust can succumb to greed. The Secret Service, often associated with protecting dignitaries, also plays a crucial role in combating financial crimes that threaten the integrity of the American financial system. This wasn’t about protecting a person; it was about protecting a victim from a calculated and devastating betrayal.
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Key Facts
- Agency: U.S. Secret Service
- Category: Fraud & Financial Crimes
- Source: Official Press Release
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