Mortgage scammer concocts new scam while serving sentence for old scam

In 2011, Christopher D. Hales was sent to federal prison for masterminding a sweeping mortgage scam. In 2018, Hales was released from prison, moved into a halfway house as part of his sentence – and promptly set up another multimillion-dollar scam.

Hales, 39, of Lehi, Utah, has pleaded guilty to wire fraud conspiracy and money laundering conspiracy in connection with a scam he masterminded while still living in the halfway house. The con resulted in a loss to investors of at least $7 million, federal prosecutors said. Hales is headed back to prison for another 10 years.

Starting in 2005, using phony appraisals and straw buyers, Hales engaged in a scheme that bilked multiple individuals and lenders for more than $12.7 million. Prosecutors said that he used the money to live a lavish lifestyle, including throwing parties in Las Vegas at $100,000 a pop, according to a 2011 report by The Deseret News.

Hales was convicted in 2011, sentenced to 90 months in federal prison and 60 months of supervised release, and ordered to pay back the $12.7 million as restitution to his victims. He was released in February 2018 and moved into a halfway house to complete his sentence. While living there, Hales, together with an unidentified co-conspirator, engineered a scam in which they convinced investors to invest in entirely fictional sports betting software that Hales purported to own and which he said would “beat the house.” The Department of Justice said Hales made “a variety of false statements” to investors, including telling them that 100% of investor funds would be used to place bets. In fact, Hales diverted nearly all the money to his own pocket, and to make payments to other investors in a Ponzi-style scheme.

Hales also told investors his name was Chris Christian, “when in fact, he was Christopher Hales, a convicted felon on supervised release,” the Justice Department said. Hales told investors he would match all investor funds; he did not. He also told investors that the betting was producing a rate of return of around 10% a week; this was false. He told them that there were potential buyers willing to purchase his software for tens of millions of dollars; these buyers existed only in the realm of fantasy.

When he was sentenced in 2011, Hales said that his actions in the mortgage fraud were “selfish” and “despicable” and vowed to reform. Special Agent in Charge Paul Haertel of the Salt Lake City FBI registered no surprise that the reform didn’t happen.

“A judge once told Christopher Hales he was addicted to defrauding people,” Haertel said. “The reality is that most fraudsters have no remorse or conscience, and they often reoffend. That’s why it’s so important for the public to do their due diligence when looking to invest and immediately report fraud to police or the FBI.”