Published Sunday February 6, 2011

http://www.omaha.com/article/20110206/MONEY/702069935

A Boulder, Colo., investment fund manager whose clients included friends and family members in Fremont, Neb., has accepted a plea agreement and pleaded guilty to a multi-million dollar scam.

If a judge accepts the plea bargain during sentencing scheduled for April 15, Mark Hamilton Yost would serve up to 14 years and seven months in a Littleton, Colo., federal prison. He also would pay more than $10.8 million in restitution and fines.

Yost, 47, pleaded guilty to four counts of falsifying financial reports and one count of bank fraud, wire fraud and money laundering.

The charges typically carry a prison term of 30 years, but according to the plea agreement filed with the court, Yost would serve between 78 and 175 months.

Yost is a son of Dr. Howard Yost, a well-known obstetrician-gynecologist who now lives in Prairie Village, Kan. Mark Yost married Maggie Diers, whose father, Charlie Diers, founded Diers Ford in Fremont.

According to court documents, Mark Yost pleaded guilty to a scheme that started in early 2005 when he was manager of Yost Partnership L.P., a private investment fund that included assets of friends, family members, business associates and his college roommate.

Yost provided investors with falsified quarterly financial statements that vastly overstated the value of the partnership’s assets.

According to court documents, in February 2005, a certified public accountant working for Yost audited and approved the partnership’s year-end report for 2004 but noted inconsistencies in the documents. A year later, the same CPA told Yost that his annual report “violates a number of basic accounting principles.”

Yost sent the report to his clients anyway. Shortly after, he fired the accountant and ceased having the partnership’s books audited.

Court documents show Yost overstated the value of the partnership’s assets by $19 million in 2005, $25.5 million in 2006, nearly $28 million in 2007, $23.7 million in 2008 and $27 million in 2009.

Some investors relied on those overstatements to make additional investments of a total of $455,000 between 2005 and 2010.

According to court records, Yost used the partnership’s money to buy homes, luxury automobiles and airplanes.

Beginning in September 2008, according to the lawsuit, Yost submitted false documentation to First State Bank and Trust and American National Bank, both of Fremont, and to banks in Mora, Minn., and Mason City, Iowa, in order to secure loans and lines of credit that he used to pay investors and to continue the scheme.

The total amount involved in the loans and lines of credit was $4 million.

He also used some of the money to purchase Flatirons Bank in Boulder, Colo. with a group of investors, documents show. Yost had the largest ownership share and was the bank’s president and a member of its loan and audit committees from September 2008 until April 2009.

According to court records, in early 2009 Yost arranged for Flatirons Bank to issue two lines of credit worth $1.5 million each to L. John Drahota, a Fremont dentist who grew up with Yost, and Peter Gotsch, a managing partner at Ellipse Capital in Chicago.

Gotsch and Yost were classmates at the University of Chicago, where he received a master’s degree in business administration, and worked together afterward.

Yost forged the signatures of Drahota and Gotsch on loan documents and instructed the bank’s notary public to authorize the signatures, even though she didn’t witness them, according to court documents.

Yost ultimately received more than $3.8 million from the two lines of credit, which he authorized to increase.

Neither Drahota nor Gotsch ever knew about the credit lines or gave Yost permission to utilize the funds. Drahota declined to comment Friday, and Gotsch did not return a phone message seeking comment.

Yost remained chairman of Flatirons Bank until August 2010, when he was suspended by the Colorado State Banking Board.

His attorney, Richard S. Vermeire, and assistant U.S. Attorney Thomas O’Rourke declined to comment on the case or the plea agreement Friday.