Man guilty of fraud; told to pay almost $1 million

December 22, 2012

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by mark wilson

A Hood County man will serve 51 more months in federal prison and was ordered by pay almost $1 million in restitution among more than 50 individuals after pleading guilty to wire fraud, according to the U.S. Attorney’s Office of the Northern District of Texas.

Karl G. Pratt, 53, of Contrary Creek Road just south of Granbury, was sentenced on Monday in Dallas by U.S. District Judge David C. Godbey in connection with fraudulent statements made about trailer hitch products offered by the company he founded, Safety Sentry, Inc. (SSI), U.S. Attorney Sarah R. Saldana said.

Pratt’s time served will bring his total term of incarceration to 63 months. He is not eligible for early release because it was a federal offense. He was arrested in January 2012 in connection with the fraud scheme, which spanned from January 2009 up to the time of his arrest, Saldana stated.

More than 50 individuals invested in Pratt’s company, Saldana said. That included a number of Hood County residents, as well as others from states as far away as California.

He was ordered to pay approximately $979,000 in restitution, but one of the investors – Granbury businessman Keith Grisham – indicated he doesn’t think that will ever happen.

“He has no visible means to pay it back,” Grisham said. “It’s highly unlikely anyone will receive any restitution.”

According to plea documents filed in the case, Saldana said, “Pratt falsely represented to investors that he had patented and produced a safety device” for the purpose of preventing a trailer from slipping off a hitch, or from being stolen.

“Pratt, however, failed to advise potential investors … that while he had applied for a patent, his applications had been denied,” Saldana said. “Pratt admitted that he solicited investors by promising Master Distributor (MD) rights with SSI for $12,000 per MD. Investors were told that they would receive approximately 270 devices per MD to sell to distributors and retailers. Investors were led to believe that their investments would almost immediately double. These promises were false.”

Saldana added that Pratt admitted using money from investors for personal expenditures.

The wire fraud conviction could have resulted in a prison sentence of up to 20 years.

Grisham and Fort Worth resident Robert Yonke, who became friends after both invested in SSI and realized something was wrong, didn’t object to the length of Pratt’s sentence.

“Based on wire fraud being a non-violent offense under the standards of sentencing guidelines, it’s fair,” Grisham said. “It certainly doesn’t replace the money people lost – and especially those who couldn’t afford to lose the money.

“Of course, I’m upset about losing money, but I’m glad that Bob and I were able to play a role in putting an end to any more people being victimized by Safety Sentry.”

Yonke, who said he invested more than $100,000 in SSI after paying for 10 Master Distributorships, said he thought justice was served with Pratt’s sentence. He referred to statements in a November 2011 Hood County News article made by Gwendolyn Cannon, who is Pratt’s partner and CEO of SSI with 51 percent ownership.

“As Ms. Cannon was quoted in her earlier interview with HCN, ‘the truth will come out,’ and it surely did for one of the owners of Safety Sentry, Inc., and Mr. Pratt will now suffer the consequences for the wrongdoings,” Yonke said. “Based on the wire fraud charges, I think the punishment fits the crime. What Safety Sentry and its owners did to the victims is inexcusable, as most individuals lost substantially all that they invested.”

Yonke added, “There is an ongoing lawsuit in federal bankruptcy court challenging Ms. Cannon’s attempt to discharge her debts to my company and the debts to other creditors of Safety Sentry, Inc.”

Pratt, Yonke and Grisham all previously commented on accusations that Pratt contacted Grisham in September 2011 regarding Pratt’s alleged desire to see Yonke dead. Although Grisham arranged for the FBI to get involved in recording phone conversations he had with Pratt, that aspect of the case won’t be prosecuted, according to Yonke and Grisham.

“There were negotiations for murder for hire, however there was never an overt act to continue the furtherance of that offense,” explained Grisham, who worked 25 years in law enforcement in a large police department in the Metroplex.

Grisham stated in a previous HCN article that, “He (Pratt) and I had face-to-face meetings in which he discussed having Bob Yonke killed. Karl told me he had someone that could take care of the problem, meaning Yonke.”

Grisham said he enticed Pratt to continue those discussions in a phone conversation by telling him, “Yeah, we can make him (Yonke) disappear.”

When Pratt questioned why Grisham said that, the former officer fabricated a story on the spot that he thought would sound believable. Grisham explained that he tried to convince Pratt that he also was angry with Yonke by creating a big fib that his wife was having an affair with Yonke.

“There was never an affair between myself and Ms. Grisham,” Yonke stated Wednesday. The Grishams both affirmed that as well.

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