Quick Answer: Whole Bakers owner Patricia Stewart was sentenced to 60 months in federal prison for defrauding investors of over $2 million through false claims about gluten-free bakery investments. Key red flags included misrepresenting her securities license status and failing to disclose fund commingling practices to elderly investors.
Whole Bakers owner, Patricia “Patty” Stewart, was sentenced yesterday to the statutory maximum of 60 months in federal prison for running an investment fraud scheme. The scheme defrauded investors, including elderly Texas citizens, of more than $2 million.
According to documents filed in the case, from December 2005 through May 2010, Stewart, who owned and managed Whole Bakers, LLC and Stewart International Consultants, Ltd., offered and sold investments in stock of Whole Bakers, LLC. The investments were investment contracts because investors provided money to fund a common enterprise, and in return, they expected to receive a return generated by Stewart’s entrepreneurial efforts.
Stewart misled, deceived and defrauded prospective investors by misrepresenting and failing to disclose material facts. For example, Stewart prepared written materials that were sent to investors which stated investor funds would be used to fund Whole Bakers to further the creation and production of gluten and wheat-free bakery items; that she would operate Whole Bakers as a gluten and wheat-free baker and would develop and produce natural/organic food and gluten/wheat-free food; and that all funds raised would be used in implementing Whole Barkers’ marketing and acquisition strategy.
Every weekday I read the enforcement actions, filings and fine print the outlets skip, and turn them into the one or two moves that actually improve your position — a rate worth moving for, a fee you can refuse, a deadline to beat before it costs you.
In the latest issue (Oct 6): When fear picks your debt plan
I write Your Money Actually most weekdays — actionable money information you will not find anywhere else, and the small decisions that compound. It is free, I sell nothing, and I take no money from any company I write about.
However, Stewart, who represented herself as a licensed securities dealer, even though she was no longer registered as such, failed to advise investors that their funds would be comingled with other funds, that investor funds had been, and would be, diverted for unrelated purposes, and that she and others would use the funds for their own personal benefit.
The Daily Money Brief — Free, at 10 AM
Money you may be owed, scams to dodge, and the fine print decoded — the consumer money news that affects your wallet, every weekday.
Stewart was ordered to surrender to the Bureau of Prisons by March 28, 2012 and to pay $2,027,796 in restitution to the victims of her crime – Source.
If you have been scammed and would like to file a scam report, please click here.
Before You Sign Anything: Run any debt relief contract through the free Contract Decoder to spot hidden fees and unfair terms. Check the company’s complaint history with the Scam-O-Meter.
Compare Your Real Options: Most debt relief companies won’t tell you about all your options — especially the ones they can’t profit from. Credit counseling has a 21-27% completion rate. Settlement resolves about 1% of enrolled debts fully. Bankruptcy has a 95% discharge rate — and protects your retirement. Take the Find Your Path quiz for a recommendation based on your actual numbers.
