April 2, 2014

DBSI Update (Subtitle: Manipulating Audits)

Filed under: Probable Cause — Tags: — Bill @ 8:51 am

DBSIUnless you’ve been reading the Idaho Statesman newspaper’s reporting of the DBSI trial in Boise, you may be unaware of the scope of the securities fraud, wire fraud, mail fraud, and interstate transportation of stolen property the government alleges defendants Douglas L. Swenson, Mark A. Ellison, David D. Swenson, and Jeremy S. Swenson committed from the headquarters of DBSI in Meridian, Idaho.

As the Idaho Statesman newspaper reported in its April 11, 2013, article headlined How Meridian Company DBSI’s ‘house of cards’ fell, DBSI was “… a once-respected local company that lost millions of dollars invested by thousands of people who were attracted by DBSI’s promises of sure-fire profit on their purchases of pieces of shopping centers and office buildings around the country” including Virginia, Illinois, Georgia, Missouri, North Dakota and Texas.

Today’s Idaho Statesman story by John Sowell is headlined Lengthy DBSI trial winding down this week.  As the headline suggests, the defense may rest its case by the end of today, and closing arguments are expected to begin on Friday.  The jury could get the case early next week.  But even as the trial is winding down, today’s story also contained very eye-opening disclosure.

[DBSI Senior Sales Director Josh] Hoffman said he wasn’t aware of a DBSI practice in which large amounts of cash were added to accounts to inflate the company’s net worth for year-end audits, and then removed a few weeks later.

So if a business’s or public entity’s auditors are so thorough, so all-seeing and all-knowing, how could DBSI’s year-end audits have been manipulated so easily as suggested in the Idaho Statesman’s story?  Should that disclosure get the attention of citizens in Coeur d’Alene and Kootenai County?

We think so.

When citizens here in Coeur d’Alene have questioned the finances of public entities such as the school district, our urban renewal agency, or our community college, we have always been assured that the auditors have given them a clean bill of health.  All of the audits conform to this standard or that standard.  We know what’s best for the community.  Nothing to see here.  Move along.  Don’t ask questions.  Don’t be so negative.

In our  posts on March 23 and March 25-26,  OpenCdA wondered why our local and regional skewspapers, the Coeur d’Alene Press and The Spokesman-Review, had not given their readers any timely reporting on this large federal fraud trial.  If nothing else, we thought those two skewspapers would at least be curious to determine if there were any local victims of the frauds alleged to have been committed.

Perhaps today’s Idaho Statesman’s story unintentionally provides the answer to our question about the local and regional skewspapers’ motivations for underreporting this and other news stories:  An informed public represents a threat to the personal pecuniary benefits of those who benefit from the public’s remaining uninformed.

One thing we are absolutely sure of:  We in Coeur d’Alene and Kootenai County need to seriously question if the sometimes very cozy personal and professional relationships between principals in local auditing companies and public officials (including foundation board members) are resulting in private interests being put ahead of the public’s.  The truthful answer, if we can get at it,  may be either reassuring or unsettling.


  1. The public only becomes informed by TV, radio and the newspaper. CDA has no TV station and no radio station and the CDA Press prefers to write about the personality clashes in the Republican Party. How important for the community to be aware of any illegal self-servicing antics. I believe that “audit companies” should be like sacred cows. After finding dollars missing from the county and city employees should be an awakening to the public, but most assuredly to the auditors themselves.

    Comment by Sharon Culbreth — April 2, 2014 @ 9:51 am

  2. Aside from manipulating audits in Kootenai County, I read this morning, an article by Taryn Thompson in the CdAPress – Follow the Money, that kind of struck me as dumb and dumber (not Taryn). Meaning, we evidently have a ghost of an employee on the payroll, while Commissioner Tondee admits that he (Kenneth Stone) is “currently” employed with the county, there is no record anywhere of his employment but that does not matter, because he is working for Kootenai County. Human Resources is not offering an explanation, either. Evidently, this man’s (Stone) ghostly but public employment is protected by ICRIMP (Idaho County Risk Management – Insurance Company) because it is in the settlement. Taryn filed public records requests and nobody wants to own up to his alleged employment that we as taxpayers are footing. The article struck me as funny because while Taryn maintained the integrity of the article, there was evidence of some great satire. Stone filed a federal lawsuit against Kootenai County because he was accused of “… unwanted shoulder touching” and was wrongfully fired back in 2011. Then, the county tried to force a “psychosexual evaluation” because of the unwanted shoulder touching which is reserved for “heinous sexual predators.” Stone is working for Kootenai County, but no one knows where or what he really does or who is rubbing whose shoulders. Seriously …, where is that audit?

    Comment by Stebbijo — April 2, 2014 @ 6:05 pm

  3. Stebbijo,

    It sounds as if the County has taken a “bury him in the basement sharpening pencils until he retires, then let him go very quietly” position. In other places it’s called “buying silence.” Here it’s SOP.

    Comment by Bill — April 2, 2014 @ 7:09 pm

  4. I was foreperson on this jury and after being discharged found this website. The webhost has done an amazing job offering information and insight into the case. It was a very complex case and the jury took its time dealing with each defendant on each issue. Judge Winmill informed us about Agent Morse’s suicide/death yesterday after we were released. Some of the jurors knew but most did not and a few took the information very hard. If there are any questions that I have the answers to….feel free to ask.

    Comment by mkjcrich — April 16, 2014 @ 12:51 pm

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