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Colorado Springs woman sentenced to 8 years in prison on fraud charges

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DENVER -

A Colorado Springs woman and owner of Homesource Partners Inc. was sentenced to 8 years in federal prison Friday for her involvement in a $14 million investment fraud scheme.

A U.S. District Court Judge sentenced 59-year-old Karen Lynn McClaflin to 8 years in prison with 3 years of supervised release as well as a $14,528,206.39 restitution payment.

McClaflin pleaded guilty in June 2017 to one count of wire fraud and one count of engaging in a monetary transaction in property derived from wire fraud.

Prosecutors said McClaflin started Trademark Properties and Trademark Realty in Colorado Springs in 2005. She eventually declared bankruptcy with the business in 2011 and rolled investors from Trademark to Homesource Partners Inc. in late 2010. 

According to prosecutors, she told investors that banks would not invest in her plans to flip houses and then duped investors saying the company had a team of contractors to improve the homes to sell for a profit.

Attorneys also said McClaflin told investors each property would be financed by an individual investor and the investment would be secured by a deed of trust on the property, which she recorded. However, court documents say McClaflin knowingly and intentionally had multiple people invest in the same properties and had multiple deeds of trust on those houses. They said she also forged signatures of investors without their knowledge or consent so that McClaflin could remove deeds of trust from a property.

They say she sometimes would not inform investors when the properties sold and did not return payments to investors upon sale.

"Karen McClaflin took advantage of innocent investors by knowingly and wittingly creating a deceptive home investment scheme for personal gain," said FBI Denver Special Agent in Charge Calvin Shivers in a news release.  "Investigations of those who commit fraud schemes to mislead innocent investors is a felony and those who do will face the consequences of their actions."

The FBI and the IRS investigated McClaflin.

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