Prime Examples

Schemes, Scams, Frauds.

Home Up Prime Examples 2 Tim Harper

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Actions Against Prime Bank Scam Investment Fraud Scheme Examples Offering High-Yield Instruments


Consider all of the complaints listed to be condensed paraphrasing of actual court documents, government advisories, or litigation releases. They are to be taken as allegations even if not specifically noted as such. All defendants are presumed innocent unless proven otherwise in a court of law.

Numerous government agencies, including the Commission, the Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve System, however, have warned the public that trading programs in prime bank instruments do not exist and are fraudulent.

An excellent article by members of the SEC, John Reed Stark and N. Blair Vietmeyer, in PDF format on Prime Bank Securities Frauds.


02/01 - The SEC filed an action in federal court and obtained an emergency asset freeze against Advance Local Development, Edmund Burton of New York, and Thomas Wescott, and Ralph Odom both of Nevada for allegedly operating a prime bank fraud which from February 1999 through April 2000 raised $16.5 million from investors by promising annualized rates of return as high as 2,600 percent per year, with no risk to capital.

Funds were to be placed into a federally approved "bank to bank" trading program with Advance's share of the profits used to promote humanitarian efforts but as no such program exists, they simply made undisclosed payments to themselves, placed some into a brokerage account where they financed unsuccessful day trading activities, and made Ponzi payments to investors.


09/01 - The SEC instituted cease-and-desist proceedings against John F. Smart, of Pennsylvania, the branch manager and sole employee of a home-based branch of a registered broker-dealer. A hearing will be scheduled to determine whether the allegations are true.

They allege that during several months in mid-1999, he engaged in a fraudulent offering scheme targeted against three nonprofit and/or charitable institutions, including a church, a religious-based family crisis center and a substance abuse center.

Essentially, Smart offered these charities an opportunity to obtain between $5 million and $9 million each by jointly participating in an alleged $15 million bond offering which was in reality a prime bank scheme.

In order to participate in this program, each charity had to submit a business plan and pay a $50,000 application fee if accepted into the program. However, Smart was unable to raise any funds from these charities.

He told the charities that a European charitable trust, with $3 billion in assets, raised money for charities worldwide through the issuance of "5 year, AA rated" bonds, which were guaranteed by a top 200 World Bank.

The proceeds from the bond offering were to be placed into a trading account maintained by, or on behalf of, a European bank which could then leverage these funds at ten times their face value in credit facilities, overnight trading and short-term loans in much the same way that United States banks can leverage money obtained from the Federal Reserve.

By leveraging these funds, the banks could purportedly earn interest on a principal amount ten times greater than the funds actually possessed. Smart claimed that the banks, through this leveraging and trading, could generate enough profits: 

blue bullet point (i) to pay the principal amount (i.e. the face value of the bonds) to the charities;
blue bullet point (ii) to repay the bond investors their entire investment plus a reasonable rate of return; and 
blue bullet point (iii) to pay the promoters of the program a fee equal to 10 percent of the offering.

Who's Minding the Store?

Though he had kept none of the money, was himself a victim of the scam, and was not a willing part of the core conspiracy, the 41 year old former chief financial officer of Australian exhibitor Village Roadshow's US subsidiary, has been jailed for 30 months for his part in a massive sting that cost the company $11 million.

Using his position of trust, he wired amounts of up to $20 million out of the film company's account in Los Angeles on four occasions thinking that he was putting the money into a "prime bank" scheme, described to him as a "very close-knit network of high-worth individuals" who invested parcels of $10 million with a guaranteed return of 5 per cent a week for 40 weeks "at absolutely no risk".

Instead, after he wired the millions out of Village's account, it flew around the world from bank to bank, company to company, and country to country until most of it vanished somewhere between a Caribbean tax haven and Cyprus.

The frauds were not discovered until two months after he left the company. For his part he pleaded guilty to federal charges of wire fraud and "deprivation of honest services".

At least twelve people and companies in Australia and the US were involved in the operation, including a retired US Federal Court judge Quentin Morgan and Robert Wachtel, a California finance broker with a long history of promoting failed investment schemes.

Village has obtained two judgments in the Supreme Court of Victoria against Australians involved in the scheme: $1 million against interests associated with Sydney investment broker, William Stanley McKay, and $846,000 against Queensland financial advisers Raymond and Phyllis McGregor.

The SEC estimates that more than $8 billion has been stolen using this concept in the past decade.


No WIN Situation

The World Investment Network (WIN) Ltd and its promoter, Mr. Theodore O Pollard of Palo Alto California are under investigation by the SEC for suspected fraud in connection with the sale of Prime Bank Securities on the WIN website.


Supersonic Scammers

Concord Capital Enterprise(s), dba Concord Capital Inc., of Cerritos, California, and Scott Yoshizumi, a twice-convicted felon, are alleged to have raised at least $1.5 million from at least 25 investors nationwide in a fraudulent scheme involving an investment in a Bank Debenture Program.

It was said to involve the "top 200 world banks" and that investors, who were told that their funds will be placed in a "special account" until sufficient funds were accumulated to enter into the program, would receive two or four percent profit per month.

In fact, their Bank Debenture Program was a fraudulent investment scheme and investor funds were commingled into several Concord accounts and immediately withdrawn for various business expenses and personal uses including the purchase of a $1.3 million home for relief defendant Ann Ta and a $145,869 Mercedes Benz automobile for relief defendant Dionisia Pappas. About $800,000 was paid as sales commissions.

In addition to the preliminary relief, which imposes a freeze on their assets, the Commission also sought a judgment of permanent injunction, disgorgement and civil penalties.

11/24/00 Civil Action No. SA CV 00-1131 AHS (EEx) (C.D. Cal.)


Scam At"TAC"k

02/00 - From the summer of 1996 until August of 1997, TAC International Ltd., a Bahamas corporation, and its senior officers sold over $12 million in fraudulent "prime bank" securities which duped thousands of United States residents out of at least $1,500 each.

Douglas R. Walker, TAC's former president and owner along with Larry B. Richardson and Jan Harry "Jack" Wilde, national vice presidents, represented that by buying a Bahamian International Business Corporation ("IBC"), investors could participate in certain securities trading programs not available in the United States.

These trading programs supposedly enabled investors to obtain phenomenal returns, as much as $20,000 from the original $1,500 investment -- an annual return of over 1,300%, at no risk to principal, by participating in purported trading in high yield debentures between and among banks.

They did not however engage in any trading, but instead used the money to pay for their lifestyle expenses.

Craig Southwood, TAC's current president and owner, supervised operations at its headquarters in the Bahamas and created a second fraudulent investment scheme which he named the "Southwood Program" under which investors were required to wire a minimum of $50,000 in return for a promised return of 600% within thirty days of the initial investment.

TAC, Southwood and Walker were each required to account for and disgorge $8,419,367, representing profits gained as a result of the alleged conduct, together with prejudgment interest of $2,579,087, for a total of $10,998,454 along with civil penalties of $550,000, $110,000 and $110,000, respectively.

Walker and Southwood were indicted for 17 felony counts each, for federal conspiracy, mail fraud, wire fraud and money laundering.

Wilde, who, along with Richardson, trained TAC's United States sales force to market the fraudulent programs and supervised the marketing efforts, consented, without admitting or denying the allegations, to a final judgment permanently enjoining him from this conduct, waiving disgorgement and declining to impose a civil monetary penalty based on his demonstrated inability to pay.


Better Than Raising Taxes

It was alleged by the SEC that Louis Bethune, Charles Howard and John Jackson, participated in a fraudulent scheme to pledge $300 million in revenue bonds purportedly secured by prime bank securities and issued by the Redevelopment Authority of White Hall ("Authority") in an attempt to obtain a $255 million margin loan from a Sarasota, Florida office of Smith Barney, Inc.

They were said to be "Bank Guaranteed," and backed by "Prime Bank Securities, issued by a an acceptable institution in good standing."

John Jackson, the Mayor of White Hall, Alabama, consented to the entry of a permanent injunction against him without admitting or denying the allegations of the complaint.

Civil Action File No. CV 95-2509-S (September 29,1995)


Prime Candidates For Firing Squad

An SEC Complaint of 11/21/96 alleged that Joseph A. Bremont and Jimmy B. Sanchez, directly or indirectly, falsely represented to investors that they and Comcar International Ltd. and Commercial Capital Resources, Inc. would use investors' money to arrange for the purchase and sale of so-called "prime bank securities" which would yield enormous profits for the investors.

They fraudulently obtained more than $2.1 million since 1993 from investors, including residents of New Hampshire, Indiana, and a group of cadets at the U.S. Military Academy at West Point. At least $97,000 of that was paid to RPS Financial Group, Inc. as compensation for Michael J. Spector's services as a finder of investors and more than $1.7 million was diverted overseas.

They promised investors that upon completion of the transaction they would be paid a percentage of the face value of the prime bank securities sold, thereby earning returns of up to 2000 percent on their initial investment plus the opportunity, as "collateral providers", to share in additional profits from subsequent resales of the prime bank security in a secondary market. No such market for prime bank securities exists.

In each instance, they fraudulently withdrew the investors money from an escrow account by either fabricating a default by the investors or arranging for the issuance of a counterfeit purchase order.


Soaked By The Oak

05/11/99 - Since at least early 1998, Richard J. Briden, a Massachusetts business consultant and his two corporations, Empowerment Funding Group, LLC and Infopro Group, Ltd, offered fraudulent prime bank trading programs which required a minimum $1 million investment.

Briden falsely promised investors as much as a 100% return per week in risk-free trading programs which he advertised on websites, electronic bulletin board postings and e-mails. He claimed that no funds would leave the investor's bank account. His commission was to be based on up to 30% of the investor’s return.

He actually convinced at least three individuals to provide him with proof of $1 million to invest and the signed powers of attorney giving him the authority to "commit" the funds in a prime bank trading program but never successfully invested any funds in these "Million Dollar Programs."

Seven other investors invested $295,000 in another "risk-free" prime bank trading program, known as "Acorn," symbolic of the fact that it was willing to accept investments of less than $1 million.  Here he promised the investors a return of 640% per 40 week period, with his take the standard 30% of any returns.

In October 1998, he wired their money to a bank account in the name of Mutual Assets Limited in Guernsey in the Channel Islands. The investors have since not received any of their promised return, only excuses which range from bank holidays, the sickness of some of the traders, bank mix-ups and various other reasons. According to the Commission’s Complaint the funds are now beyond Briden’s control and will never be invested in any legitimate manner for the benefit of the investors.


Time to Think About Talking

On December 20, 2000, a Final Judgment ordered Relief Defendant C. Kelly Olsen to pay disgorgement in the amount of $1,827,933, plus prejudgment interest in the amount of $333,990 based on his participation in a fraudulent Ponzi scheme involving the offer and sale of nonexistent "prime bank" securities.

After being fined $50,000, having his filed pleadings struck, and held in a federal detention center since May, on December 12, 2000 Olsen finally purged himself of contempt and was released after providing a detailed statement, under oath, concerning his present assets and his use of investor funds.

The scheme, developed and operated chiefly by Benjamin Franklin Cook of Carefree, Arizona doing business as Dennel Finance Limited, raised more than $45 million from approximately 300 investors throughout the United States, targeting religious groups and persons investing retirement funds.

Cook was also indicted August 30, 2000 by an Arizona grand jury on 37 counts of racketeering, fraud and theft in connection with the scheme. He was previously incarcerated for contempt after being arrested in a Las Vegas casino.

The final judgment enjoined him from further securities violations, ordered him to pay disgorgement in the amount of $36,724,494 plus prejudgment interest of $5,616,807, and imposed a civil penalty of $110,000. On April 2, 1999, a Preliminary Injunction appointed a Temporary Receiver to take control of the assets for the benefit of investors.

Also named were Gerald Lee Pate, Ellsworth Wayne McLaws, Alan Clagg and relief defendants FPC-1 Limited Partnership, Samuel Limited Partnership, Alliance Investments Corp., Cornerstone Management LLC, International Business Consultants Limited and Highlander Limited Partnership.

07/01 - The SEC has alleged that from 1997 through March 1999 Ellsworth Wayne McLaws and Alan Clagg were acting as unregistered brokers and they along with others raised more than $30 million through the offer and sale of unregistered securities in a nonexistent "prime bank" trading program. The Complaint alleged that investment funds were misappropriated for personal and unauthorized uses, such as making Ponzi payments.


Investment Horror Story

On March 2, 2001, Richard J. Fulcher was sentenced to two years in prison for his role in a prime bank/Ponzi scheme conducted by Terry V. Koontz, Jeffrey A. DeVille, Mykael Deville and others.

The charges arise out of a vast prime bank Ponzi scheme in which they induced more than 80 individuals in 16 states to invest over $20 million in a fictitious "international bank debenture trading" program called Private Pool, LLC.They promised investors a return of 1% per week for a forty-week period, that their funds would be secured by government bonds in a two-to-one ratio, and that they would receive a security interest in the bonds evidenced by a UCC-1 financing statement filed with the State of New York.

Koontz falsely represented himself to be affiliated with Barclays Bank and that he traded "international bank debentures" which, in fact, do not exist. He provided others with various fraudulent documents for distribution to investors then used the invested funds to pay Ponzi distributions, sales commissions and at least $9.9 million for personal purposes, including the purchase of homes, jewelry, and automobiles, including Cadillacs, BMWs, and a Mercedes Benz.

Koontz, formerly a registered representative associated with World Marketing Alliance, Inc., pled guilty in Tampa to charges of conspiracy, securities fraud, and wire fraud relating to the $20 million Private Pool scheme and a follow-up prime bank/Ponzi scheme in which he orchestrated the sale of an additional $3 million of fraudulent securities, and was sentenced to 15 years and eight months in prison. He also agreed to forfeit various assets purchased with proceeds of the fraud.

He is the fifth defendant to be charged as a result of this scheme. Fulcher (mail fraud), DeVille (securities and wire fraud), Stewart Koral (false statements), and Joseph Papasidero (misprision of a felony), have all entered guilty pleas and been sentenced in U.S. District Court in Tampa, Florida.

Richard J. Fulcher, of Virginia, Thomas J. Dolan, of New York, Lawrence E. Seppanen, and Walter G. Lapp, both of New Jersey, all former registered representatives with World Marketing Alliance, Inc. consented to the entry of permanent injunctions. The four sold a total of over $7.7 million of unregistered securities of Private Pool to approximately 39 investors.

While Fulcher agreed to pay disgorgement of $660,553 plus interest and a civil penalty of $75,000, the Court waived payment and did not impose a civil penalty against Dolan, Seppanen, and Lapp based on their demonstrated financial inability to pay.

The Commission also entered an administrative order permanently barring Jeffrey DeVille from associating with a broker or dealer. The DeVilles consented, without admitting or denying the allegations of the Commission's 09/98 complaint, to the entry of final judgments permanently enjoining them from further violations. On January 31, 2001, Jeffrey DeVille was sentenced to two years in prison for his role.

Although the Court ordered the DeVilles, along with relief defendant Purr Trust, to pay disgorgement, which includes the forfeiture of various assets the DeVilles purchased with proceeds of the fraud,  based on their demonstrated financial inability to pay, the Court waived partial payment of disgorgement and prejudgment interest by the DeVilles and Purr Trust and did not impose a civil penalty against the DeVilles.

SEC v. Terry V. Koontz, et al., Civil Action No. 98cv11904NG


Darker Motives

On September 3, 1997, the SEC sued Rob Nite, age 46, Philip L. Thomas, age 43, and David V. Sims, age 47, alleging that from July 1994 through October 1994, they offered and sold interests in a bogus program to trade securities purportedly issued by major international banks, amassing approximately $3.7 million.

For their investment, victims were guaranteed that for an initial investment of either $50,000 or $150,000, they would receive returns of $1 million per week for 40 weeks, or $40 million. Contrary to the promises, they did not invest the  funds, but instead misappropriated most, if not all, of the funds for their own personal benefit.

Nite is currently in federal prison in Arizona serving a 44 month sentence for mail fraud, wire fraud and conspiracy, conduct unrelated to this lawsuit. Sims, who resides in Beverly Hills, has previously been sued administratively by the Commission for causing a public company to file false financial statements.


Jerked Around By The Juniors

On February 8, 2001, Edward J. Paradis, Jr. and Walter R. Snyder, Jr., of Massachusetts, were arrested on charges of mail fraud, wire fraud and conspiracy in connection with a prime bank scheme conducted between January 1995 and March 1998 in which they raised more than $600,000 from four individuals.

They falsely represented that they could obtain funding for business projects by acquiring letters of credit from international "prime banks" but that these could only be obtained if the applicants made substantial up-front payments,  as high as $200,000, to pay issuance fees charged by the "prime banks".

Applicants were assured that the payments would be maintained in escrow accounts administered by Snyder, an attorney in Massachusetts, and refunded if the promised financing did not materialize within seven to thirty days.

Contrary to these assurances, the funds were withdrawn from the escrow accounts shortly after being deposited and used for their own benefit.

Final judgments against them required them to disgorge their ill-gotten gains and imposed monetary penalties. In addition, Snyder was disbarred as a lawyer.


The Six of Us Keep Your Capital

On November 12, 1997 the SEC entered an order of permanent injunction against Six Capital Corporation and Anthony Bukovich, its president and controlling shareholder from further violations of the Securities Act relating to prime bank fraud.

The complaint alleged that Bukovich, Six Capital, Jerome C. Pinckney, Richard L. Arnold, Donald E. Elder, Fernando Cruz and Shaun K. R. Maxwell violated the antifraud statute by offering for sale investment contracts which were part of a prime bank scheme which involved trading in supposed "bank guarantees" issued by the top 15 banks in western Europe, that the investment in the bank guarantee program was a "clean, neat, safe, legitimate transaction", and that they had sold prime bank instruments in the past.


More Like Profane

The SEC filed a complaint against W. Ralph Wills, III and ProFinancial Advisors, Inc., a registered Investment Adviser and are also seeking disgorgement of all ill-gotten gains, prejudgment interest thereon, and civil penalties.

Two Investment Clubs run by ProFinancial and Wills, the president, sole shareholder and only employee of ProFinancial came under scrutiny. Additionally, Wills, through ProFinancial, violated the antifraud provisions of the securities laws while offering and selling investment contracts in early 1994.

His scheme supposedly involved the purchase of prime bank notes with a face value of $200 million which would be purchased at a discount and then resold for a profit. He said they were virtually risk-free while offering unrealistic predictions of the exorbitant profits to be made.


Combining Cheat and Steal Gives No Relief

02/00 - A temporary restraining order and asset freeze was issued by the SEC against Nancy J. Cheal based upon allegations that she operated a Prime Bank-like investment fraud. She was also arrested on seven criminal charges, including five counts of mail fraud and two counts of wire fraud then released on a $100,000 secured bond.

Since at least October 1999, Cheal, doing business as Relief Enterprise, fraudulently offered and sold investments in a bank debenture trading program by making baseless promises of a 100% weekly return for twelve weeks on a website and through other means of solicitation.

She falsely told investors that the extraordinary investment return would be paid using the profits from the trading activity of a licensed bank debenture trader with whom she was purportedly associated while assuring investors that their funds were not at risk and were 100% guaranteed by the U.S. Government when in fact a substantial amount of the money raised was simply used to pay various expenses, including debit card withdrawals at a casino.

Operating from two of her mobile homes in Florida she obtained more than $2.1 million from hundreds of investors in forty-eight states and ten foreign countries. A substantial amount of the money raised from investors was deposited to a bank account controlled by Richard L. Birmingham.

During the hearing, the Court held a non-party, Lindsey Springer in contempt for violating a prior asset freeze after he admitted spending travel expenses to appear.


03/00 From just April through August 1998, Kay L. Cahill, a convicted felon, and other defendants, raised approximately $9.5 million from 10 investors nationwide for a purported "trading program" in foreign bank instruments promising returns of as much as 1,000%.

In reality, the trading program did not exist and investor funds were used to make "Ponzi" payments and for personal use such as his purchase of an 11,000-square-foot house, at a cost of approximately $1.2 million, along with furniture and automobiles.

In a related matter, the SEC entered a Final Judgment of Permanent Injunction and Other Equitable Relief against Robert H. Alberding, 50, which ordered him to pay disgorgement of $125,000, prejudgment interest of $4,986 and a $10,000 civil penalty.

As a self-employed sales and marketing consultant in Arizona conducting business under the name CanAmerican Business Capital, Inc. he solicited investors for the scheme on a commission basis.


10/00 - The SEC entered a summary judgment in Utah against Anthony J. Marino, Mousa International, AJM Global, and Consortio Intranacional which permanently enjoins them from violating the Securities Act and orders them to disgorge $28 million in ill-gotten gains, plus prejudgment interest of $3,480,098, for a total of $31,480,098.

The complaint of April 20, 1999, alleged that they raised money from the sale of interests in "investment enhancement programs" in which funds were to be pooled and invested in "prime bank instruments" through a "prime bank" or a "major world bank in Europe."

Investors were promised rates of return of as high as 20% per month, and were falsely told that their investments were not only approved by the Federal Reserve Board but were risk-free in that Lloyds of London would issue an insurance policy on the programs. Marino also failed to mention his prior conviction for securities fraud in Nevada.

A civil bench warrant for the arrest of Anthony J. Marino, who is in prison in Costa Rica, remains outstanding. The case remains pending against defendants Gregory C. Johnson and Richard Ames Higgins.


The "Commission" of a Crime

A prime bank scheme operated out of southern Ontario by Warren and Joan Wall got more than forty people to invest a total of $1.5 million dollars - some of them their life savings.

The Ontario Securities Commission charged them with making "misrepresentations to investors" so they possibly face fines of up to $2 million each and jail sentences up to four years but they're still operating a financial services business in Barrie.

The Walls were introduced to the whole idea of prime bank instrument schemes and paid $150,000 by Allan Huppe of Oakville, Ontario who was charged with two prime bank instrument frauds where investors lost over two million dollars.

He was recently convicted in New York State and is facing a jail sentence for using a prime bank fraud to embezzle $750,000 U.S. from the Highland Nursing Home in Massena employee's pension plan part of which went towards a palatial home west of Toronto.

The case involved transfers of the retirement plan's funds to banks in Canada and Bermuda, which Huppe and others later transferred to other banks and partnerships in Nigeria, Japan, and elsewhere. On repeated occasions Huppe provided written confirmation to the trustees of the retirement plan that deposit balances at his company, Navy Street Bancorp were in excess of $750,000 when in reality the funds had been disbursed for personal purposes.

The maximum penalty for the embezzlement and wire fraud violations is five years' imprisonment. Sentencing was scheduled for November, 1999.

Ironically, back in 1997 Warren Wall was head of the Better Business Bureau of Toronto.


Current Ops Using Prime Bank Fraud Terminology:

Broadway Capital - e-moneybrokers.com

worldwide-investment.com - THIS IS A GUARANTEED NUMBER ONE PAYING OFFSHORE PRIVATE PLACEMENT OPPORTUNITY!  PROFIT FROM EXPERIENCE OF PROFESSIONALS, WHO EARN MILLIONS A DAY!  (#1 principal secured investment) PASSIVE income, RETIRE soon!


04/02 Wisconsin - Gerald J. “Jay”Stock, 35 of Manitowoc is one of five men named in an SEC lawsuit filed in U.S. District Court in Dallas, Texas pertaining to the defrauding of about 1,300 investors of nearly $100 million in a Prime Bank scheme.

Stock and Kevin W. Lynds from Texas own Blackwolf Holdings, LLC, a Nevada business through which they convinced investors to invest more than $100,000 each in bogus “high yield trading programs.”Lynds is registered with Wichita County under the assumed business name Capital Ideas.

Resource Development International, or RDI - a now-defunct limited liability corporation - is also named as a defendant and the principal entity through which the the Tacoma, Wash.-based father-son duo of James Edwards and David Edwards and other defendants conducted business. In all, six individuals and nine corporations, one of which is located in Nevis, West Indies, were named as defendants.

They falsely claimed that investors’ money would be used in Europe to trade financial instruments with “top 25”or “top 50”banks in a “prime bank”program sponsored by the Federal Reserve and global organizations, generating annual returns of 48 percent to 120 percent.

While initial investors may have received high interest rates paid from the investments of subsequent participants they eventually found that the instruments do not exist despite being told the money in their accounts was unavailable because of restrictions on money transfers from foreign countries imposed after the Sept. 11 terrorist attacks.

In addition to violating the SEC antifraud provisions the Edwardses, Lynds and two other defendants, Gerald Stock and William Whelan, violated the broker-dealer registration provisions of the Securities Act.

The SEC accuses Lynds of acting as Gerald Stock's partner in raising funds for RDI through three defendant corporations, Intercoastal Group I, Intercoastal Group II and Blackwolf Holdings. He is accused of being a managing member of the two Intercoastal companies and the managing partner of Blackwolf.

In a letter to the SEC attorney, Lynds claims not only to reside in the "Texas Republic" but to have a copyright and trademark to his own name, "Kevin Wadsworth Lynds" and issued cease and desist orders against the usage of his name and threatened a $500,000 fine for each occurrence of infringement of his copyright.

While referring to himself as "the living, breathing, sentient man known by the appellation 'Kevin Wadsworth; Lynds,' hereinafter Secured Party" he claims that "Secured Party" is "indemnified and held harmless by 'Kevin Wadsworth Lynds' ... against any and all claims, legal actions, orders, warrants, judgments, demands, liabilities, losses, depositions, summonses, lawsuits, costs fines, liens, levies, penalties, damages, interests and expenses whatsoever ... as might be suffered by, imposed on, and incurred by 'Kevin Wadsworth Lynds' for any and every reason, purpose, and cause whatsoever."

The Republic of Texas made headlines in 1997, when West Texas separatist Richard McLaren declared himself chief ambassador of the Republic of Texas and spearheaded a revolution of sorts that led to a highly publicized standoff with law enforcement officials near Fort Davis.
Now an inmate, he has described himself as a "political hostage."

Several of Lynds' co-defendants have invoked the "Republic of Washington" name in court filings alleging that the SEC doesn't have jurisdiction over the case although this argument hasn't held much merit in the past.


Take ( Better ) Care Investing

After reading your informative web site I have some concerns over a possible investment opportunity which a close friend got involved with two years ago. The promoter was selling the Global Prosperity (scam) and is now working with New-Shore, but the investment vehicle my friend chose is called "TCI Investments" www.tciinvestments.com.

This investment, run by a Charles Gordon, is doing extremely well, rates of between 4-10% per month. My friend has received all of his initial investment back and the TCI Investment Club has made strong claims they are not affiliated with Global at all.

I am contemplating investing myself based on the good record over the last 24 months after having seen bank statements showing the rate and accumulated interest.

Can good advice come from anyone involved with these groups?  Any information would be a great help. I will continue to read through your site trying to educate myself.

Rich Bak 04/20/02

Reply: Read the Prime Bank and Ponzi Scheme sections and save your money. To see the standard but clever application form for this operation go to TCI Investment Club.


7 accused of fraud costing $56 million

Kris Hudson - Denver Post

03/19/04 - Victims of an alleged high-yield investment scam say they are pleased but not comforted by the indictments of seven people in Denver this week.

Some of the victims said they have postponed retirement because they lost their savings in the alleged $56 million scam. Others took second mortgages on their homes to make the bad bets. Many had given up hope of recouping anything.

"We're pleased to hear that something's finally happening," Clyde Thompson of McGregor, Iowa, said Wednesday. "It almost sounded like it was going to be a complete loss for us. Hopefully, we'll be able to recoup something from this experience."

Thompson's family invested $100,000 in the alleged scheme in 2000.

State and federal law-enforcement authorities on Tuesday indicted seven people they say helped run a high-yield investment scam, also called a prime-bank scam. About 1,000 victims were caught up in the alleged scheme, in which investors were promised high returns with little risk and insurance against losses.

Officials on Tuesday announced the indictments of Norman Eugene Schmidt, 68, of Denver; his wife, Jannice McLain Schmidt, 66, of Denver; Charles Franklin Lewis, 68, of Littleton; George Beros, 36, of Shaker Heights, Ohio; George Alan Weed, 68, of Benton, Ill.; Michael Duane Smith, 40, of Colbert, Wash.; and Peter A.W. Moss, 62, of London. Each person faces 57 counts of fraud, conspiracy and money laundering.

Suthers said some of the defendants have criminal records. A search of Colorado Bureau of Investigations records shows a February 1998 arrest of Lewis on charges of securities fraud, and arrests of Norman Schmidt on suspicion of driving under the influence of alcohol in 1980, 1986 and 2001 and larceny in 1982.

Assets that federal authorities seized in the investment- scam case are cumulatively valued at $24 million. Chief among them is the Redstone Castle, which some of the those indicted and the late Leon Harte bought at auction on April 1, 2000, for $6 million. The 106- year old destination hotel in Redstone, south of Carbondale, is listed on the National Register of Historic Places.

Racing cars, trucks and trailers operated by Smitty's Racing were also seized. Norman Schmidt's son, Steve, is a professional racer.

The ability to liquidate those assets will determine how much can be returned to the victims, which include people from around the world and all walks of life. Their losses range from $5,000 to $500,000 each.

Roughly 200 of the victims live in Colorado.

"It was certainly a huge loss to us," said Orvalee Farris, a registered nurse in Portland, Ore. She and her husband lost $200,000 in the alleged scam. "A lot of things were said that weren't true."


Evil Incarnate Incarcerated

02/05 - James Edwards, 73, and his son, David Edwards, 49, both of Washington state, have been sentenced to prison for the maximum penalty they faced -- 27 years and 8 months -- after being convicted in San Jose of swindling more than a thousand investors out of more than $73 million.

The two were found guilty of 16 counts of fraudulently selling or offering an investment security, six counts of first-degree burglary, and one count of conspiracy.

The two were top officers of Resource Development International, which conned people into buying so-called "prime bank notes."

In handing the father and son the stiff sentence, Santa Clara County Superior Court Judge Rene Navarro noted they had spent years "stonewalling" authorities. He called the Edwards "evil incarnate."

The Santa Clara County case -- one of several criminal and civil cases against the Edwards by state and federal agencies -- involved local victims who were persuaded to transfer money from retirement funds or home equity loans to Resource Development International, based in Tacoma, Wash., or its predecessor, Dennel Finance Limited, based in Phoenix, Ariz.


 

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