David Wehrs, Sr., a title company owner in Annapolis, Maryland, pleaded guilty Monday to wire fraud in connection with a scheme to defraud investors and financial institutions of more than $2.3 million.  Wehrs used a Ponzi scheme to fraudulently induce investors to fund his day trading habit, and then eventually used funds from escrow accounts and earnest money to cover up the scheme.

From 2007 to October 2009, Wehrs induced individuals to invest money through his company, Maryland Title and Escrow Company, Inc., into a purported FDIC-insured money market fund that Wehrs “guaranteed” would pay monthly interest payments of 10.85%. But instead of investing funds as promised, Wehrs deposited investor funds into one his title company's bank accounts, then transferred most of the money into a brokerage account.

Wehr then used this money to "day trade" stocks. Wehr traded millions of dollars worth of stock per month, often buying and selling the same shares within minutes.  Unfortunately, he was not a particularly successful day trader-- he racked up approximately $1 million in losses from early 2008 to mid 2009. 

Meanwhile, Wehrs was also using some investor funds to pay business and personal expenses, and to buy real estate and other personal property

To keep his investors in the dark, Wehrs used some of the investor funds to: pay “monthly interest” and “redemptions” to other investors.

After he ran through all his investors' money through losses in the stock market and outright theft, Wehr started raiding his title company's escrow accounts.  In June 2009, he diverted $630,611 from his company's escrow accounts, converting it to personal use and to continue to cover up his fraudulent investment scheme.  He also stole $100,000 which a home buyer had entrusted to Maryland Title and Escrow as earnest money.

In all, investors and Maryland Title's underwriter have absorbed losses from Wehr's illegal activities totaling $2,371,061

Wehrs faces up to 20 years in prison, He also must pay restitution of $2,371,061 and forfeit any assets derived from the scheme. Any forfeited assets will be applied to the restitution amount.  U.S. District Judge Benson Everett Legg has scheduled sentencing for May 19, 2010 at 3:00 p.m.