Suspect in Fraud Given His Freedom Unexpectedly

Donald Lee Carpenter, the president of La Jolla-based Monarch Equity Corp. who was arrested on a fugitive warrant Monday during a raid on his investment firm, was released from County Jail Wednesday after prosecutors in Las Vegas declined to seek an extradition order so he could face embezzlement charges there.

The decision by the Clark County, Nev., district attorney’s office, announced at Carpenter’s felony arraignment hearing in Municipal Court, caught San Diego law enforcement officials by surprise.

On Monday, state and federal agents closed Monarch down for allegedly defrauding investors of millions of dollars. Carpenter bought the firm in June, using the name Kyle Whidden, and is known under that name in his San Diego area business dealings.

According to the Nevada arrest warrant, the 44-year-old Carpenter was wanted in connection with an alleged embezzlement of funds from Verner R. Collins of Las Vegas, who had “entrusted” them to Carpenter in 1984 for investment in “short-term loans.”

Clark County Deputy Dist. Atty. Bob Koot said Wednesday that the criminal case against Carpenter is still open, but that his office declined to press for his extradition because San Diego authorities seem to be on the verge of bringing their own case against Carpenter. The Nevada arrest warrant will be enforced if Carpenter returns to Las Vegas, Koot added.

“Clark County has declined to expend taxpayer funds to extradite Mr. Carpenter in this particular instance. There seems to be an interest in San Diego in a criminal investigation,” Koot said. “My decision is, let California charge him.”

No criminal charges have been brought against Carpenter in San Diego, but the case remains under investigation by the San Diego Boiler Room Investment Fraud Task Force.

Koot said that Collins received a civil judgment of $7,900 against Carpenter in Las Vegas last month. That civil award influenced his decision against seeking extradition.

Deputy Dist. Atty. Robert J. Sullivan of the task force, which led Monday’s raid on Monarch, said the Nevada prosecutor’s decision represented an about-face: “The decision is a new one that was made this morning and was contrary to the information that was given to our Police Department and to this office. As of 5 p.m. (Tuesday), we had confirmation that (the extradition) was all go.”

Carpenter’s attorney, Ronald Stout, said that the relatively small amount of the civil judgment won by Collins may have led Las Vegas authorities to realize that “they didn’t really have a crime.”

Carpenter’s company, which claimed to trade in precious metals futures contracts, was shut down and its assets were seized Monday after the federal Commodity Futures Trading Commission obtained a federal restraining order barring Monarch from doing business. U.S. District Judge John Rhoades also granted the FBI warrants to search Monarch offices and Carpenter’s Bonita home.

According to affidavits filed in support of the warrants and restraining orders, Monarch sold investors “worthless” and illegal futures contracts, fraudulently guaranteeing them returns as high as 44%. Investors’ funds were also commingled and used for the personal benefit of Monarch principals, according to the affidavits.

Carpenter was unavailable for comment Wednesday night. Stout declined comment on the allegations contained in the federal affidavits.