Business - Nebraska Broker betrayal? Fraud case to proceed against former brokers

By Josh Funk

AP Business Writer

OMAHA, Neb. (AP) -- A judge has decided prosecutors have enough evidence to try two former Nebraska City brokers accused of defrauding investors out of more than $20 million.

Rebecca Engle and former Nebraska football player Brian Schuster are accused of improperly selling risky investments in several interrelated Florida companies to more than 130 investors.

The two had argued that the evidence didn't support the eight felony counts of securities fraud they each face because investors acknowledged the risks in writing. Prosecutors say many of the clients told investigators they were never fully informed about the hazards, so the written records don't tell the full story.

Gage County District Court Judge Paul Korslund ruled last week that the cases should proceed. He is hearing the Otoe County case because the judges in Otoe and Sarpy counties all excused themselves because of possible conflicts of interest.

Most of the investors involved in these cases were nearing retirement age or had already retired, so they wanted conservative, stable investments with little risk. They claim Engle and Schuster instead invested their money in high-risk enterprises and never fully explained the risks.

Schuster, who played fullback for Nebraska from 1992 to 1996, worked with Engle in Nebraska City for several years. The two sold securities in American Capital Corp. and Royal Palm. According to court documents, Engle and Schuster described the Florida companies in glowing terms such as "can't-miss deals" or "mini Berkshire Hathaways," referring to the Omaha-based conglomerate run by billionaire Warren Buffett.

PrimEdge Inc. later bought American Capital and Royal Palm, and Schuster became the president and chief executive of PrimEdge.

Engle lost her securities dealing license in February 2008 as part of an agreement with state regulators. She filed for Chapter 11 bankruptcy protection in Arizona in the summer of 2008. In the bankruptcy filing, Engle said she had assets worth between $500,000 and $1 million, but estimated that she owes between $10 million and $50 million.

Published: Fri, Mar 5, 2010