Actions Against Prime Bank Scam Investment Fraud
Scheme Examples Offering High-Yield Instruments
A One Way Gate
04/01 - The SEC filed a civil fraud action against The
Gateway Association Inc., an Illinois corporation, and
The Gateway Association (Illinois) Inc., a Florida corporation, Richard
J. Collins and Bill Wilson, both of
Illinois; and Jerome Coppage of Indiana for
the fraudulent sale of over $10 million in non-existent prime
From approximately November 1997 through March 1999, Gateway,
Collins, Wilson and Coppage solicited primarily Hispanic investors
and induced approximately 400 investors to invest more than $10
million in the Gateway program.
At meetings held across the country, they described the Gateway
investment as a guaranteed, risk-free, high yield trading program
in which a $100,000 initial investment would yield $1.25 million
in ten months. Promotional materials provided by Gateway representatives
explained to investors that their funds would be pooled to invest
in an overseas bank debenture trading program involving medium-term
bank debentures issued by the "top one hundred world banks."
In fact, this type of investment program does not exist and the
investors' funds were simply used to fund various individual and
corporate accounts, to purchase cars, and to pay for various other
At least six relief defendants received investor funds from Gateway. David
A. Morgenstern, of Florida, is alleged to have received
$1.7 million of these funds; William J. Windsor,
of Florida, $325,000; Linda A. Fehl, of Georgia,
$1.7 million; Malcolm Silverman, of Illinois,
$120,000; Janet Collins, Collins' wife, of Illinois,
$325,000; and Christine J. Todd, Collins' daughter,
$200,000, all amounts approximate.
In a related event, according to its liquidator, Bahamas-based Americas
International Bank Corporation Ltd. is insolvent and
was used primarily as "a vehicle to launder funds" received
from investment fraud.
While the balance sheet indicated that the Bank had net assets
of $2.56 million, it included loans and overdrafts totaling $4.36
million that are either unsecured or inadequately collateralized,
including an overdraft of $1.19 million to Americas Fidelity
Assurance Company, a company apparently controlled by
It is unlikely that these loans and overdrafts will be recoverable
and the Bank's liabilities may exceed its assets by approximately
05/01 - The SEC filed and settled a civil fraud
action against Paul Shingeldecker of Michigan
for his participation in a widespread fraudulent "prime bank" scheme
known as The Gateway Association.
For about a year he offered and sold these non-existent securities
to at least eleven investors and raised over $500,000 for Gateway
for which he received approximately $140,000 in commissions.
Shingledecker participated in several meetings in the Michigan
area, and at least one meeting in the Minnesota area, where he
described to investors a 1,250% rate of return on a ten-month investment.
He detailed a payout schedule promising a ten percent compounded
monthly return on a $100,000 investment, with a $759,768 balloon
payment at the end of the ten months.
Without admitting or denying the allegations in the complaint,
he agreed to stop violating the Act and pay disgorgement in the
amount of $140,000 plus prejudgment interest of $25,148 but then
the court waived disgorgement in excess of $25,000 and did not
impose a civil penalty based upon his sworn statements demonstrating
his inability to pay.