An associate of a Texas financial adviser who committed suicide while under federal investigation in 2011 has pleaded guilty to a $1.4 million fraud in which the primary victim was the organization that raises money for athletic scholarships at the University of Houston.
Brian Bjork of Missouri City, Texas, pleaded guilty in federal court in Houston on Tuesday to a single count of wire fraud, acknowledging that his scheme included $550,000 stolen from the nonprofit Houston Athletics Foundation. Bjork was its treasurer from 2004 to 2011, according to court documents.
The remaining funds stolen by Bjork came from eight individual investors, the plea agreement says. They are identified in the document only by initials.
Houston athletic director Mack Rhoades cited the continued support of the school's donor base and said the losses suffered as a result of Bjork's theft shouldn't have a major impact.
"We still value our relationship with the Houston Athletics Foundation as an outside financial contributor to the program and know that unfortunately it was deceived in these recent incidents," Rhoades said.
Bjork, 43, was a business associate of David Salinas, the adviser who died of a self-inflicted gunshot wound at his home in the Houston suburb of Friendswood in July 2011. Salinas killed himself as the Securities and Exchange Commission was concluding an investigation of him.
Bjork and Salinas' estate are among the defendants in a civil suit in which the SEC alleges that Salinas was the mastermind of a $50 million Ponzi scheme involving the sale of bogus corporate bonds.
Salinas, 60, ran a summer basketball program for high-profile high school players, and many of his alleged victims are current and former college basketball coaches, including Baylor's Scott Drew, former Texas Tech coach Billy Gillispie and former Arizona coach Lute Olson.
Bjork, a former student manager for the men's basketball team at Rice, also was co-founder of Salinas' basketball program, Houston Select Basketball.
Bjork's plea agreement details his relationship with Salinas, but it says the $1.4 million fraud was a "scam within a scam" and that the government has yet to find that Bjork profited directly from the alleged bogus bond scheme.
According to the agreement, Bjork used his position as treasurer of the Houston Athletics Foundation to write checks disguised as bond investments. The money was then deposited in an account set up by Bjork "to support his lifestyle and pay prior investors," the document says. He also used his signatory authority with the organization to move funds to the account, according to the agreement.
To fool the foundation's auditors, Bjork generated fictitious statements for his transactions, the agreement says. The document adds that the foundation "was unfortunately also victimized in the larger Salinas bond scam by an even greater amount."
The Associated Press reported in December 2011 that the foundation may have lost more than 40 percent of its listed assets because of investments in Salinas' alleged scheme.
Salinas was one of the foundation's board members when the group was started in 1995, and he remained in that position until his death. Bjork also served on the board.
The plea agreement said Bjork took "certain measures" to "frustrate" the SEC investigation, including his actions regarding a note written by Salinas shortly before his death. The note, which absolved Bjork and another individual of wrongdoing, was provided to the SEC by Bjork, but he failed to disclose that Salinas had told him it would be left for him to "find," the agreement says.
Bjork's attorney, Matt Hennessy, declined to comment Wednesday on the plea and what it may mean for his client.
The single wire fraud charge carries a maximum sentence of 20 years in prison and a $250,000 fine. Sentencing is scheduled for June 14.