Five-year sentence is ordered in investor fraud


Willard Hall was searching for a sound investment in 1992 when he turned to Iris K. Rounsaville, a financial counselor who came highly recommended by a relative.

With his father ailing and his disabled sister in a nursing home, the Waldorf truck driver knew that investing his nest egg wisely could help assure their future care. Rounsaville sold the Hall family on what she described as a "no-risk" investment plan that might quickly triple their $155,000 in savings.

Today, the money is gone. Mr. Hall's father and sister have been forced to seek state medical aid, and Mr. Hall is selling his father's home to help pay the bills.

Prosecutors say they are among 90 victims in a dozen states who entrusted their money in recent years to the 43-year-old Chesapeake Beach woman, who had no known financial training but posed as an investment wizard.

In all, investigators say, more than $4.7 million has been lost.

Many of her victims are people with limited incomes who lost their entire savings and have little or no ability to replenish them. Some were among Rounsaville's closest friends.

U.S. District Judge Benson E. Legg sentenced Rounsaville to five years in federal prison for mail and wire fraud yesterday.

Her con-artist habits were colored by personal obsession and delusion, say prosecutors and clients.

"She still maintains to this day that she is not a criminal and that if they let her free, she would make back all this money," said Assistant U.S. Attorney Susan M. Ringler, who handled the case with co-prosecutor Virginia B. Evans.

Rounsaville promised investors large returns but instead apparently squandered most of the money on herself and her friends, according to court records and testimony.

She bought a $37,000 Corvette and put a sizable down payment on a $930,000 waterfront home in Anne Arundel County.

By early 1993, she had written checks payable to herself or cash for more than $599,000.

Besides her own living expenses, she paid for the extravagances of friends. Her American Express account for early 1992 showed $37,000 spent on airfare between Los Angeles and Hong Kong for friends, who charged another $43,000 to her account for their stay at a luxury Hong Kong hotel. She also helped out a boyfriend, who quit his job with the Chesapeake Beach water department and accepted $200,000 in support from her.

For the Halls, the most painful aspect of the theft was the realization that Rounsaville drained them, knowing the hardship it would cause.

"It has actually had a more severe affect on our lives than would an armed robbery," Willard Hall wrote to prosecutors. His was among 30 letters detailing pain and loss written by Rounsaville's victims.

Rounsaville's run-in with authorities in Maryland followed a nearly identical operation in California, for which she was sentenced to three years in prison. Even her indictment here did not stop her. On the day she and her lawyer were negotiating a plea agreement with prosecutors, she tried to cajole $300,000 from a client for an "overseas investment opportunity" that did not exist. Judge Legg ordered her jailed in September after the client notified authorities.

When police first caught up with Rounsaville in San Diego in 1984, she had conned an estimated $180,000 from clients. Rounsaville told her probation officer that she lost much of it at a racetrack.

After serving her sentence for grand larceny, she returned to Maryland, her home state. Rounsaville wasted little time setting up in business here. She opened Iris Rounsaville Investments in early 1989 from a gray clapboard house she rented on a Chesapeake Beach cul-de-sac.

She promised potential investors a 25 percent to 350 percent return within 30 to 90 days. Her list of clients grew as she was referred to their friends and families.

"We found several instances of three or four members of a family giving her lots and lots of money, then it was all gone, and there's no way they can help each other out now," said Ms. Evans.

At first, Rounsaville appeared to deliver the returns she had promised. But, as in any Ponzi scheme, the money she paid back to clients was generated through new customers, not from the fruits of investment. Later, when clients pressed her for the money they were owed, she stalled them with assurances that it was tied up in an overseas deal and they'd see it soon.

Her activities came to the attention of the Maryland Attorney General's office in April 1992 after a lending firm inquired about her status as an investment agent, and officials discovered she had no license.

When she ignored a Securities Commission order to stop doing business, the case was turned over to federal prosecutors and U.S. postal inspectors. She pleaded guilty in September to wire and mail fraud.

Only about $35,000 in money and property has been recovered. Investigators have found no evidence that she invested a cent of the her clients'money.

What remains are the wrenching stories of her investors:

* A 52-year-old bricklayer and his wife, who lost their life savings -- $106,000. "It took us 30 years to save it. It took her 30 minutes to steal it from us," he wrote to the judge.

* A 70-year-old widow who had bypass surgery earlier this year and had planned to retire must continue to work because Rounsaville lost her $25,000 nest egg.

Rounsaville tearfully expressed remorse before she was sentenced yesterday. She said she had never intended to cheat anyone and insisted that there might be a happy ending after all.

"There's still a very good possibility that some of my projects will work out," she told Judge Legg. "I'm surprised they haven't come in long before now."

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