Last week the Securities Department of the Montana State Auditor’s office filed an Amended Notice of Proposed Agency Disciplinary Action against Missoula businessman Shawn Swor and Hamilton businessman Dan Two Feathers.

The document alleges Swor and Two Feathers, along with their companies DTF Consulting Group Trust and TLT Holdings Corporation, committed securities fraud against at least five investors. Swor and Two Feathers are charged with convincing these investors to invest in excess of $1 million in a fraudulent scheme claiming investors would receive a weekly return of at least between 200-400 percent.

The notice also alleges Swor and Two Feathers used a fraudulent “line of credit” document to back their scheme, a document they claimed was personally signed by U.S. Treasury Secretary Henry Paulsen and provided them a $1.5 billion line of credit. Swor also allegedly took $100,000 from one investor in the form of a prepaid loan fee, promising the investor that in return for the fee, Swor would provide him a $10,000,000 loan. The alleged scheme operated by Swor and Two Feathers involved the trading of U.S. Treasury zero coupon bonds, bonds that accrue no interest. Investors were told that a $100,000 investment would earn them at least $30,000 a week, with a total return on investment of more than $5,000,000 by the 40th week. Investors were instructed to wire funds to various brokerage firms located around the country.

The Auditor’s Office alleges that, instead of trading U.S. Treasury zero coupon bonds as promised, investors’ funds were deposited into accounts owned and controlled by Swor, Two Feathers or their companies and then bonds and cash were wired offshore to a Swiss Bank. Once the bonds reached the Swiss account, Two Feathers and DTF Consulting pitched another sale of the zero coupon bonds to European citizens. The department was contacted by one Swiss citizen residing in Poland regarding dealings with Two Feathers after reading the department’s original complaint on the State Auditor’s Web site.

Allegedly, none of the investors have received any return on their investments and Swor has not provided the $10,000,000 loan nor has he returned the $100,000 prepaid loan fee. In late October, the Securities Department sought and was granted District Court injunctions, freezing assets in two of the brokerage accounts used by Swor, Two Feathers and their companies to operate the alleged scheme.

“During these difficult economic times it seems folks are ready to believe they can find an investment that will reap incredibly high returns on their dollars,” says State Auditor John Morrison. “Our constant mantra is ‘if something appears too good to be true, it likely is.’ Certainly in this case, it appears things may have been exceedingly too good to be true.”

Morrison encourages Montanans to contact the State Auditor’s office before making investments in any operation that promises tremendously high rates of return.