Federal officers this morning arrested Brian Thomas Reynolds at his Leesburg-area home after a grand jury handed up indictments on 11 counts of wire fraud related to his efforts to recruit investors for the Loudoun Tribune newspaper.
According to the indictment and a statement by the Department of Justice, Reynolds is accused making several materially false and fraudulent representations to actual and potential investors and lenders regarding the existence and value of advertising contracts held by the company, and that he created fake advertising contracts when no such agreements existed.
Reynolds also allegedly made materially false and fraudulent representations regarding the company’s historical advertising revenues and the amount of money that Reynolds and others had invested in the company, falsely claimed that another individual had agreed to “match” the investments of certain investors, falsely claimed to at least one investor that the company lacked any debt, understated the amount of debt owed by the company to other investors, and materially overstated the amount of money held by the company in its bank accounts.
Prosecutors say Reynolds fraudulently raised at least $512,500 through this conduct.
Reynolds, who was previously convicted on federal wire fraud charges in 1996, also was charged unlawful possession of eight firearms by a convicted felon and with making false statement to the FBI.
The indictment also alleges that Reynolds created altered loan documentation to defraud an individual who had lent money to the company by changing the language of the loan agreement to conditions that were materially more favorable to Reynolds and his company than had actually been agreed to by the lender. According to the indictment, Reynolds also made materially false representations regarding the number of issues previously distributed by the newspaper, and falsely claimed that a prominent businessperson served on the company’s advisory board, when in fact that individual held no position on the board and played no role in the operation of the business.
If convicted, Reynolds faces a maximum penalty of 20 years in prison for each count of wire fraud, a maximum penalty of 10 years in prison for the unlawful possession of firearms, and a maximum penalty of 5 years in prison for making false statements.
The investigation began more than a year ago, when federal agents executed a search warrant on the Tribune office in Sterling.
Later, agents visited several Loudoun businesses asking if they had signed contracts with the newspaper committing to purchase advertising during 2017. Several business owners interviewed by Loudoun Now at the time said they were shown contracts purported to have been signed by them, but disavowed any knowledge of the contract and denied their intent to purchase advertising.
According to the indictment, Reynolds used the false contracts to support his claim to investors and potential investors that the newspaper had $1 million or more in advertising commitment.
While the allegedly defrauded investors are identified only by their initials in the indictment, one couple filed a civil lawsuit last year alleging that, after they invested $25,000 in the company, they provided an additional $25,000 loan. David and Lisa Butcher claim that Reynolds failed to repay the loan and then altered or fabricated the loan agreement to include terms of favorable to the company. That allegation also is included in the federal indictment. The Butchers’ lawsuit, which has not been served nearly a years after its filing, seeks $50,000 in damages and $100,000 in punitive damages.
The Loudoun Tribune, which has continued to operate as a website, printed and mailed two issues in 2016. A third issue was printed, but was not mailed because of lack of funding. According to the indictment, Reynolds touted the three issues as a “proof of concept” in his pitch to investors, however, he also misled them on the amount of revenue the newspaper had secured.
This case was investigated as part of Project Safe Neighborhoods, which is the centerpiece of the Department of Justice’s violent crime reduction efforts. PSN is an evidence-based program proven to be effective at reducing violent crime. Through PSN, a broad spectrum of stakeholders work together to identify the most pressing violent crime problems in the community and develop comprehensive solutions to address them. As part of this strategy, PSN focuses enforcement efforts on the most violent offenders and partners with locally based prevention and reentry programs for lasting reductions in crime.