Bank Fraud—John Byors

On December 20, 2005, John Byors was arrested “on a federal bank fraud complaint based on an incident, according to an FBI affidavit, where [Mr.] Byors deposited an investor’s check for $360,000 knowing that the investor couldn’t fund the check.”^[1]

According to the affidavit, Mr. Byors is accused of taking “as much as $7 million from as many as 75 investors in several New England states as part of [his] marble investment plan.”^[2] Mr. Byors allegedly promised investors 100% interest on their contributions, and some investors allegedly lent him $600,000 over several months.^[3] The idea, it seems, was to extract “a deep crimson marble known as Swanton red” out of the earth in Vermont.^[4] The quarry, it was hoped, would yield beautiful “window sills, kitchen counters and other architectural elements.”^[5]

The rare and coveted marble was treasured in the 1800s, some of which comprised “six polished columns” for a baptismal font in a Montreal church.^[6] The market died in the mid-1900s, as tastes changed, but desire for different colors has made that particular shade of marble lucrative again; the quarry, which was sold in 2000 for $75,000 is now worth an estimated $130 million.^[7] Which makes this case extremely interesting.

Unlike some other mineral- and wildlife-based investment plans, such as Jack Summers’ indoor fish farm, the commodity actually seems to exist. Some people blame Mr. Byors,^[8] whose legal problems continue to mount.

After being arrested in December, he was released and ordered to “seek the court’s approval before soliciting personal or business loans.”^[9] However, after allegedly “persuad[ing] long-term investor, Tatiana Berchard … to guarantee a $50,000 loan for legal fees on Dec. 29,” Mr. Byors was rearrested, and this time, jailed.^[10] US District Court Judge William Sessions III told Mr. Byors that he had “flagrantly violated” his conditions of release, and that “[t]here appears to be absolutely no conditions at this point that would assure [him] that the public would not be put in jeopardy.”^[11] The revocation of Mr. Byors’ release is very insightful.

When an individual is arrested and brought before the court, he undergoes a detention hearing. The court must determine whether the individual poses a flight risk or somehow threatens the safety of the community.^[12] Normally, threats to the community involve some sort of violence, but in this case, it appears that investment schemes qualify as threats to the community. If the defendant violates his conditions of release, the individual is “subject to a revocation of release, an order of detention, and a prosecution for contempt of court.”^[13] Revocation of release is initiated by an attorney for the government, and the court holds a hearing where it determines whether the defendant has either committed a crime while on release, or has violated the conditions of his release.^[14] The court must also determine whether there is no manner in which the defendant can be released.^[15] Clearly, that is what the court determined in Mr. Byors’ case.

Mr. Byors, it stands to mention, is still facing a federal indictment. US Magistrate Judge Jerome Niedermeier has given federal prosecutors until mid-April to secure an indictment from a grand jury because “the facts of the case are so unusual and complex that it is unreasonable to expect the return and filing of an indictment within the period specified.”^[16]

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[1] Erica Jacobson, Judge Orders Marble Entrepreneur Held, Burlington Free Press, Feb. 17, 2006.
[2] Erica Jacobson, Federal Prosecutors Granted More Time to Indict Byors, Burlington Free Press, Jan. 20, 2006.
[3] Id.
[4] Erica Jacobson, Scheme Built on Fine Marble, Burlington Free Press, Feb. 12, 2006.
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] Jacobson, supra note 1.
[10] Id.
[11] Id.
[12] 18 U.S.C. § 3142(b).
[13] Id. § 3148(a).
[14] Id. § 3148(b)(1).
[15] Id. § 3148(b)(2).
[16] Jacobson, supra note 2.