BSU gets a securities fraud repayment

MUNCIE – Ball State University finally has received some restitution from one of two criminal defendants convicted of securities/wire fraud that cost the university $13.1 million.

The university announced on Tuesday that it had received a check for $694,763 in restitution from Seth Beoku Betts, a Florida investment adviser serving a prison sentence for securities fraud.

“We are grateful to federal authorities, who have relentlessly pursued this case and the recovery of assets,” Bernard Hannon, BSU treasurer, was quoted as saying. “We will continue to cooperate with authorities in their investigation.”

The university wrote off $2.9 million of the total $13.1 million lost in fiscal year 2011 and wrote off the remainder in fiscal year 2014, according to Hannon. The recovered funds will offset some of the written-down losses.

Ball State has not yet received any restitution from George Montolio, Bronx, N.Y., who was convicted of wire fraud in connection with an additional $5 million university investment.

The university continues to cooperate with federal law enforcement agencies to recover any additional funds, Hannon said.

Meanwhile, a third suspect, Gale Prizevoits, has been identified as the target of a criminal investigation conducted by Indiana Secretary of State Connie Lawson's office

Prizevoits is BSU's former director of cash and investments.

Ball State has characterized Prizevoits as a rogue employee who concealed the illegal investment of university funds from everyone at the school.

At his sentencing hearing, Betts told a federal judge, “For all intents and purposes, I'm a pauper. I'm destitute. I'm broken ... You will never see me in front of you ever again. That's all I have to say."

To make partial restitution of the $8.165 million he stole from Ball State, Betts sold a waterfront house that he purchased in Palm Beach County, Fla., with money he stole from the university.

The BSU funds that Prizevoits wired to Betts to be invested were hijacked by a California attorney, according to Betts' attorney.

Assistant U.S. Attorney Tim Kasulis called Betts, whose prior record included arrests for drunken driving, ticket scalping and illegal use of credit cards, "a schemer who was intentionally defrauded by other schemers, which, as your honor knows, does happen with some regularity, unfortunately."

Montolio forfeited Mike Tyson-autographed boxing gloves, a Mickey Mantle-autographed baseball glove and New York City apartment buildings to the government, but it appears that the proceeds from the sale of the apartment buildings went to a lender who made loans against them.

Court records indicate no restitution payments being made by Montolio.

"Just, I apologize to my family, my parents, my fiancee and also apologize to all of the corporations I have defrauded," Montolio said at his sentencing hearing.

"The defendant had investors wire millions of dollars into an account he controlled to purportedly purchase U.S. Treasury STRIPS," federal Judge Deborah Batts said at the sentencing hearing. "The defendant never purchased any Treasury STRIPS but used the money to buy real estate and other assets. One of his investors was, yes, a state university ..."

Betts purportedly invested BSU's funds in highly risky collateralized mortgage obligations.

In January, Lawson’s office acknowledged that its securities division's prosecution assistance unit was investigating Prizevoits after a state representative complained that she was being let off the hook.

At the time, Delaware County Prosecutor Jeff Arnold questioned why the federal government didn't prosecute her.

Contact Seth Slabaugh at (765) 213-5834.