United States Attorney
Northern District of Texas

1100 Commerce St., 3rd Fl.
Dallas, Texas 75242-1699

Telephone (214) 659-8600
Fax (214) 767-0978

AMARILLO BUSINESSMAN CHARGED IN
30-COUNT FEDERAL INDICTMENT

Phillip D. Phillips Operated a Fraudulent Investment Company

Richard B. Roper, United States Attorney for the Northern District of Texas, announced that a federal grand jury in Amarillo, Texas, has returned an indictment charging Phillip D. Phillips, of Amarillo, Texas, with 30 counts of mail fraud related to his operation of a fraudulent investment company. It is anticipated that Phillips will surrender to federal authorities within the week and appear before a United States Magistrate Judge for his initial appearance.

Phillips owned and operated American Heartland Sagebrush Securities Investments, Inc. (“Sagebrush Securities”), a bogus investment company, located on West 9th Street in Amarillo. Sagebrush was not registered as a corporation nor was it a securities broker-dealer registered with the Securities and Exchange Commission (SEC). Phillips was a registered representative of Ironstreet Securities, a legitimate broker dealer of securities which was registered with the SEC. Phillips ran Ironstreet Securities out of the same office as Sagebrush Securities.

The indictment alleges that from January 2000 through March 2005, Phillips schemed to defraud and obtain money from his friends, relatives, and acquaintances by persuading them that he could invest their money by purchasing registered securities and making other investments through Sagebrush Securities in a safe and profitable manner. He told some investors that their money was being invested in legitimate, registered securities such as Southwest Airlines, Motorola and Texas Instruments. However, Phillips would take the investors’ money and deposit it into a bank account he controlled, co-mingle the funds, not purchase any securities or make any of the investments he’d promised, and withdraw the investors’ money and use it for his own personal living expenses. Sometimes, Phillips would get “cash back” when he initially deposited the investors’ checks and would use that cash for his own use.

To keep his scheme going, Phillips would lull investors into believing they really did own stock or have legitimate investments by issuing checks to them which were purported to be dividends, but were merely withdrawals from the Sagebrush Securities bank account. He also sent false and fraudulent monthly account statements to the investors detailing the investor’s account number, the name of the security owned by the investor, the quantity, the market price of the security and the dividends earned by the security or investment.

The indictment further alleges that when Phillips learned the SEC was investigating him, he made preferential payments to some of the investors, but not to the majority of the investors.

Between January 1, 2000 and March 31, 2005, Phillips collected approximately $2.8 million of investor money and deposited it into the Sagebrush Securities account.

An indictment is an accusation by a federal grand jury and a defendant is entitled to the presumption of innocence unless proven guilty. Each mail fraud count carries a maximum statutory sentence of 20 years imprisonment and a $250,000 fine, and if convicted, Phillips could also be ordered to pay restitution to the victims of his crime.

U.S. Attorney Roper praised the investigative efforts of the Federal Bureau of Investigation and the Securities and Exchange Commission. Assistant United States Attorney Vicki Lamberson of the Amarillo, Texas, United States Attorney’s Office is prosecuting the case.

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