A southwest suburban man was found guilty on seven counts of wire fraud Friday for bilking investors out of more than $100 million through his website development business, The Income Store, which federal prosecutors alleged was a Ponzi scheme.
Kenneth Courtright, a polished pitchman who operated The Income Store out of his Minooka home, lured more than 500 investors with promises of high annual returns in perpetuity if they paid a six-figure upfront fee used to build and operate websites, according to the February 2020 indictment.
The jury verdict followed a seven-day criminal trial in Chicago federal court. A separate civil complaint filed by the Securities and Exchange Commission against Courtright and The Income Store is ongoing.
The scheme began in January 2017, with The Income Store marketing its website investment offering through radio and online ads, according to the criminal complaint. Investors paid $100,000 or more in upfront fees for buying, developing and running an assortment of commercial websites, with guaranteed annual returns of 13% to 20% in a revenue-sharing agreement.
But instead of website revenue, the complaint alleged, the returns were funded by upfront fees from new investors until the business model unraveled and the SEC froze the company’s assets in December 2019. The criminal complaint revolved around the upfront wire transfers from seven investors.
The Income Store created and operated more than 3,100 mostly obscure websites, ranging from KeepingCarsClean.com, a waterless car washing e-commerce site, to HoneyBeeStings.com, an ad-supported site for beekeepers.
Website revenues were “insufficient to make guaranteed investor payouts,” generating about $9 million in advertising and product sales revenue through October 2019 — far less than The Income Store paid to investors over the same time, according to the federal complaints.
In December 2019, Courtright’s scheme became unsustainable and he notified investors via email that the company would put a temporary “moratorium” on the payment of returns due to unspecified “challenges and headwinds,” the criminal complaint alleged.
The Income Store took in $144 million from investors and paid out about $44 million over three years before it ran out of money, according to the court-appointed receiver in the SEC complaint. There was less than $2 million left when the SEC froze the company’s assets.
Courtright spent some of the investor funds to pay his mortgage and school tuition for a family member, the criminal complaint alleged.
Michael Leonard, a Chicago attorney representing Courtright, expressed disappointment at the guilty verdict Friday, and disputed the allegation that the business model was a Ponzi scheme. The Income Store’s downfall, he said, was rooted in unsustainable high-interest loans that Courtright took out to prop up the business.
“Stupidity and bad business decisions don’t equal an attempt to defraud,” Leonard said. “That was kind of the centerpiece of our closing argument.”
The jury was apparently unmoved, finding Courtright guilty on all seven counts of wire fraud, each carrying a maximum sentence of 20 years in prison.
Sentencing is scheduled for Oct. 4. Leonard said Courtright plans to appeal the verdict.
