U.S. jury accuses man of fraud

Alleged scheme linked to Under Armour IPO

December 14, 2007|By Matthew Dolan | Matthew Dolan,SUN REPORTER

A federal grand jury indicted the owner of a Georgia-based financial services company yesterday and accused him of defrauding potential investors who thought they were getting in on the wildly popular initial stock offering of Baltimore-based Under Armour Inc.

Ronald Kevin Bowen, 42, of Baltimore, faces mail fraud charges connected to an alleged scheme to swindle investors seeking to cash in on the athletic apparel maker's 2005 IPO, which was the hottest offering for an American company in five years as measured by the first-day stock price rise.

Bowen remained in state custody yesterday in Gwinnett County, Ga., on unrelated theft charges, according to the FBI's Baltimore office.

"The indictment alleges that Mr. Bowen used Under Armour's name, without the company's knowledge or permission, to entice unsuspecting investors to give him money to purchase Under Armour stock. Through this scheme, Mr. Bowen allegedly bilked investors of over $230,000," Maryland U.S. Attorney Rod J. Rosenstein said in a statement.

Messages left for a company spokesman were not immediately returned last night.

Bowen co-founded Reiley & Bowen, a limited liability company organized in Atlanta in May 2005, according to court papers. Court records show he had filed for Chapter 7 bankruptcy in 2001 in Colorado.

His girlfriend, who is identified in court papers only as "C.S.R.," was also a founding member and organizer of the company. She moved to Baltimore sometime after they met in January 2005 and began work at Under Armour as a manager of sales operations in August of that year, court papers say.

It was unclear last night whether Bowen's girlfriend, who has not been indicted, still works for Under Armour.

Law enforcement officials allege that Bowen convinced 11 customers that he could purchase stock on their behalf in a category known as "friends and family" through his girlfriend's affiliation with the company. Reiley & Bowen would have a "unique opportunity to purchase 150,000 shares of friends and family stock," according to a document he sent to prospective clients quoted in yesterday's indictment in U.S. District Court in Baltimore.

A "friends and family" sale is built into many initial public offerings, but Under Armour did not have one as part of its offering, prosecutors said.

On Jan. 9, 2006, prosecutors allege, Bowen sent an e-mail to investors falsely stating that Under Armour stock had been purchased at $13 a share. The e-mail also provided a false breakdown of how many shares were being held under the names of particular investors.

On May 16, 2006, to conceal that his company had not purchased any stock for investors, Bowen told them that certificates of ownership in Under Armour would be unavailable until November 2006 because of a government regulation that mandated a "lockout period of one year from the anniversary of the IPO," according to the indictment.

If convicted, Bowen faces a maximum sentence of 20 years in prison on each of the five counts in the indictment.

matthew.dolan@baltsun.com

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