Examples of Ponzi Scheme
Sorry Doesn't Cut It
Andrew P. Bodnar faces more than 11 years in a federal penitentiary
after he pleaded guilty to charges of securities and mail fraud,
conspiracy to commit fraud and tax evasion.
The 49-year-old former Akron financial planner and lawyer apologized
in court but he couldn't face any of the people who he defrauded of $41
million in a Ponzi scheme which he ran from 1994 to 1998, where he sold
securities, including so-called promissory notes, to investors in Ohio
Money from later investors was used to pay off initial investors
and also to buy homes, pay mortgages and car loans, and pay for
golf club memberships and other lifestyle enhancements by him and
others in the firm. Three other men who worked with him, including
former Wadsworth Mayor Anthony P. Perry, were sentenced to prison
earlier this year.
Though ordered to make restitution of $20 million it's unlikely he has
any money to give back, officials said. For while some believe Bodnar
has a stash of money somewhere his lawyer contends his client does not
have any money to repay the defrauded clients because a lot of the money
was spent repaying original investors.
"He knows where all the money is," said Beverly Kleinholz, who was
among the somber-faced audience members. Though she and her husband successfully
sued Bodnar, they haven't been repaid the hundreds of thousands of dollars they
are owed, she said.
A court-appointed receiver has returned about $1.3 million to 600 investors,
representing about 6 cents on the dollar.
In pleading guilty to new charges of tax evasion, prosecutors said Bodnar
filed tax returns saying he made $287,515 from 1994 to 1997, while failing
to report more than $1.8 million in additional income.
Magical Mystery Tour
Nancy Trousdale, 51, who faces up to 10 years in prison if convicted
of helping scam 121 investors out of $3.7 million in a Ponzi scheme
reached a plea agreement in which she will confess to a single
charge of securities fraud.
Trousdale, owner of Nancy Tours, was indicted on 313 counts of
criminal wrongdoing, including 169 counts of securities fraud and
100 counts of first-degree theft but after she pled guilty to 85
counts of a Grand Jury indictment for her actions only the charge
of securities fraud will stand under the plea agreement which also
forgives the involvement of her son and daughter-in-law.
People from Alabama and Tennessee invested money in a company
called Travel International which promised that their investment
would double in 30 days. She and her associates told the investors
they were buying tickets for cruises and sporting events at a huge
Designed as a Ponzi scheme, the result was that a few investors
made money and the rest lost millions. Overall, more than 200 investors
put in $7.4 million of which 121 of them lost $3.7 million over
Trousdale was placed into immediate custody and sentenced to 12
consecutive years of imprisonment and ordered to pay restitution
of over $3.7 million dollars to victims who invested in her travel
For his cooperation with authorities during the investigation,
Donald Trowbridge, a partner in the venture who pled guilty, was
sentenced to only six months in a work release center and ordered
to pay over $2 million in restitution to victims.
Lost or Gone
(Portland, OR 10/01) - Jeffrey L. Grayson, the Portland investment
manager accused of bilking his clients out of hundreds of millions
of dollars, pleaded not guilty to 22 counts of mail fraud, witness
tampering, conspiracy, money laundering and making illegal payoffs
to John Abbott, a former union pension fund trustee for whom prosecutors
are seeking a 15 month sentence.
Grayson entered his plea thirteen months after federal regulators shut
down his company (9/00) and accused him of running a Ponzi-like scheme
to conceal the fact that Capital Consultants lost an estimated $355 million
of its clients' money in failed and allegedly fraudulent investments.
After spending $328,747.63 so far on legal fees, victims of Capital Consultants'
failed investments argued that every dollar spent on his defense will
mean one less dollar returned to investors.
Barclay Grayson, his son and former president of Capital Consultants,
pleaded guilty to mail fraud and agreed to cooperate with prosecutors
in return for an 18-month sentence.
In the fall of 1998, the SEC filed a lawsuit against Robert Cord,
Funding Resource Group a/k/a FRG Trust; MVP Network, Inc. a/k/a
MVP Network (Trust); FMCI Trust; Funders Marketing Company, Inc.;
Fortune Investments, Ltd.; Winterhawk West Indies, Ltd.;
IGW Trust; which were accused of violating various securities laws
by engaging in alleged high yield investment schemes which were,
in actuality, nothing more than elaborate Ponzi schemes.
A criminal forfeiture seized various funds, real property, cars,
boats and other property belonging to Robert Cord and his various
entities. In connection with his role in running the scam, he pleaded
guilty to mail fraud.
On 11/24/99 the SEC got a temporary restraining order to protect
its ability to recover over $16.5 million raised from approximately
625 investors in the fraudulent securities scheme run by Cornerstone
Prodigy Group, Inc. and its principals Gary D.
Reeder, a convicted felon with numerous offenses, including
forgery, theft and burglary, and Sandra Reeder, a licensed securities
professional. Executive Netprofits, Inc., a Texas entity owned
and controlled by them was listed as a defendant solely for purposes
of equitable relief.
Cornerstone's scheme involved sales of investments through its
website, cold-calling of potential investors, and the payment of
cash for investor referrals.
They promised that funds would be pooled and used for various
business operations which would generate enough profits to pay
investors a 10% monthly return which was in fact paid out by check
for a period of time.
They touted a "100 percent success ratio," which as
a ponzi scheme it had, as long as funds of recent investors were
used to make purported profit payments to earlier investors. This
encouraged many more of the elderly victims, who hoped to supplement
their retirement income, to increase their investment, often through
the use of credit card payments, which were promoted.
On April 14, 2000 a U.S. District Judge entered a Permanent Injunction
which enjoins Cornerstone and the Reeders, who, without admitting
or denying guilt, consented to the issuance of the order, from
future violations of the anti-fraud and securities registration
provisions of the federal securities laws.
The Court also ordered them to disgorge $16.5 million, less the
approximately $6 million of investor funds recovered to date by
a receiver, but waived the balance based upon their demonstrated
financial inability to pay.
This inability to pay has not stopped them from establishing a
new program of wealth distribution with religious overtones called
Operation Jericho which is detailed at their new website and ministry
Despite the original settlement, most Cornerstone customers recovered
only about 47 percent of their original investments, likely leaving
them short of the funds needed to purchase the jewelry now being
sold at the new site with the logo of the original operation.
(Australia 05/01) After the judge commented on his ruthless arrogance
in dealing with people and their money, Geoffrey Robert Dexter
was given a 10-year jail sentence after being found guilty of inducing
people to invest in the Wattle Group investment scheme on the basis
of false pretences, willful false promises and dishonest inducement.
He was also banned as an adviser and declared bankrupt.
The Wattle Group investment scheme had around 2,700 investors
across Australia and raised in excess of $160 million prior to
being shut down in March of 1998. Investors were told they their
funds were loaned on a short-term basis to provide a return of
up to 50 per cent. Instead, it was a 'Ponzi-type' scheme that paid
interest and refunds to investors entirely out of the incoming
funds of new investors entering into the scheme.
In related news:
Moreton Pearce was sentenced to three months imprisonment
and released on a two-year good behaviour bond 04/00;
committal of a further 13 people for trial on charges relating
to the scheme, and 3 more who are awaiting committal hearings;
banning of 10 investment advisers, for periods of between
1 and 5 years, who were involved in the scheme.
In August 2001
accountant Barry Alan Elms was banned by the Australian Securities
and Investments Commission (ASIC) from acting as a representative
of a securities dealer or an investment adviser for three years.
He managed to bring about $4.25 million into
the failed Wattle Group investment scheme as well as offering
investments in an unformed company, Future Mortgage Holdings
Limited, where he and his partner were trustees. That company
was ultimately wound up with no return of funds to investors.
03/00 The SEC obtained judgments against all
five remaining defendants in this investment fraud case filed in
Susan and Charles Browne, of California and New
Mexico, formerly owned and operated Alliance Leasing Corporation which
raised over $46,000,000 from more than 1,500 investors throughout
the U.S. through the fraudulent sale of unregistered equipment
They defrauded investors by failing to tell them key facts about
the investment, including:
of investor funds would be paid in sales commissions;
had violated the securities laws in earlier investment offerings;
had previously filed for bankruptcy; and
owned or controlled many of the companies to which Alliance
supposedly leased equipment.
The Court also ordered them to
disgorge $477,467 (plus interest) of their ill-gotten gains to
investors and pay a matching civil money penalty of $477,467
The Court also entered judgment against Prime Atlantic,
Inc., and its owners, David Halsey and Braccus
Giavanno, of Jacksonville, Florida for running the sales
organization that sold the unregistered Alliance investment to
individuals in return for an undisclosed 30% commission.
They were ordered to disgorge (plus interest) as follows: Prime
- $12,182,820; Halsey- $1,615,999; and Giavanno - $1,691,011.
The Court also ordered Prime to pay a civil penalty of $500,000
and Halsey and Giavanno to pay a penalty of $100,000 each within
In addition, the judge ordered that more than $22 million
in Alliance and Prime bank and brokerage accounts be frozen, most
of which was distributed to investors by the Chapter 11 trustee.
Crime Might Factor Into This Investment
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Must be USA, Hawaiian or Canadian Resident and over 21
(11/25/01) BRADY, Texas – At 28, Brian Russell Stearns,
was, by his own account, self-taught in the esoteric world of international
Residents of Brady, a ranching town of 6,000, now acknowledge
that they never understood precisely what it was that Mr. Stearns
did for a living and at least a few admit that greed may have obscured
their common sense.
Stearns' own explanation was disjointed and complex. He portrayed
himself as a man who had taken only a few college courses, but
who nonetheless had engineered multimillion-dollar packages for
insurance companies and even the Pakistani Air Force. His financial
contacts, he boasted, ranged from Hong Kong to Poland.
What was obvious, though, were the lavish symbols of his success.
He would show up at his girlfriend's parents' in chauffeur-driven
limousines and sometimes shuttled into town in a helicopter or
a Learjet. A $2.2 million Mediterranean-style villa overlooking
Lake Austin was his gift to his teen-age bride.
Soon the story circulated around town that her parents had pooled
$125,000 from the recent sale of their home with another $81,000
they borrowed and invested it with their new son-in-law. Eleven
days later, Brian Stearns wired $1,029,377 – a 500 percent
return – into their bank account.
Then her aunt and uncle and a handful of friends invested $250,000
with him, and raked in $947,840 – a return of nearly 400
percent, in a little over a month.
As word of this spread, people from all walks of life – more
than 350 people all told – dipped into their savings, cashed
in their pension plans, and borrowed against their houses. Of all
these hundreds of people who invested, only about ten had ever
A few of the initial investors made staggering profits, which
naturally gave him credibility. Inevitably though, virtually everybody
who made money from the first deal gave it back to Stearns for
He flew prospective investors to Las Vegas and other places in
a private jet or helicopter. Around Austin, he chose from a Lamborghini
Diablo, two BMWs, a Mercedes-Benz SL600 convertible, or a Toyota
There were other props, too, that convinced people.
Using a computer supposedly linked to the Bloomberg financial
network, he showed a prospective British lender that he owned a
$40 million Federal Home Loan Bank bond, which he offered for collateral.
He also produced a copy of a brokerage house's account that showed
he had access to Barclays Bank bonds worth $2.3 billion. Neither,
the FBI discovered, was remotely true.
According to confiscated bank records, it was proceeds from a
$20 million loan by a British corporation, Ivor-Wolfson, that paid
the initial investors the staggering profits that triggered the
investment whirlwind in Brady.
But those earlier returns weren't from investments. Indeed, there
were no investments. The "profits" were actually funds
contributed by other investors who ultimately were destined to
receive nothing. Soon, this town's $4.7 million, along with another
$45 million taken in from presumably sophisticated international
investment brokers from Canada to Great Britain and the Channel
Brian Russell Stearns was ultimately convicted of 82 counts of
fraud in federal court and sentenced to 30 years in federal prison
and ordered to pay restitution of $36,054,990 – the money
still unaccounted for after the government seized all the other
assets it could find.
While he was locked up awaiting trial, Mr. Stearns stated that
investors needed to be patient: He protested that he was
worth millions and simple logistical problems accounted for the
fact that several hundred people on two continents hadn't received
their profits. "You will get the money that is due you. I
have never failed on repayment of a loan."
The judge in the case quoted from an administered psychiatric
report: "Indeed, it seems likely that the defendant generally
refrains from resorting to the truth whenever a lie will do."
Information taken from an excellent article by HOWARD SWINDLE
/ The Dallas Morning News
04/02 -- Four men accused of running an Orlando-based Ponzi
scheme that targeted about 2,000 victims and brought in $200-million
have agreed to plead guilty to federal criminal charges.
Thomas Spencer, 51, and Robert
W. Boyd, 55, both of Orlando, created the scheme
and agreed to plead guilty to four counts including conspiracy
to commit securities fraud, court records stated. They
each face a maximum of 30 years in prison and more than
$1-million in fines.
Spencer and Boyd turned the scheme over to Martin W. Boelens
Jr., 45, of Orlando, in 1998. Boelens agreed to plead guilty
to similar charges and faces up to 25 years in prison. Boyd and Boelens
Anthony V. Micciche, 72, a Tampa-based broker
who did not run the program but helped facilitate it, agreed to
plead guilty to one count of sale of unregistered securities. Many
of the brokers and salesmen who sold the investments apparently
thought it was legitimate based on the promotional videos and glossy
brochures they were provided with to market the investment.
The decade-long scam was set up in 1991 and promised high returns of
10 to 12 percent on "guaranteed," government-backed bonds but
instead, much of the money was stolen, and the rest invested in high-risk
The men marketed the investments to investors from 17 states and
many foreign countries under several names including Evergreen
Security and Worldwide Bond Partners Ltd.,
which took in $35-million in the Tampa Bay area, court records
showed. A few of the 2,000 victims invested more than $1-million
each while many investors cashed out their retirement accounts
to invest with the companies.
At first, many investors received monthly payments and often rolled
over their investments when the men marketed new investments unaware
that up to 70 percent of their money was being stolen and diverted
through more than forty offshore entities in the Caribbean and
Central America to both hide it from investors and make it hard
for law enforcement to eventually track.
Like most Ponzi schemes, the incoming money could not keep up
with the monthly payments to investors and in the fall of 2000,
after checks began to bounce and payments weren't made, Boelens
put the company into bankruptcy, which is when authorities became
suspicious and an investigation began.
Pulling It Over Down Under
The Ponzi Device was also used 2 years ago in Australia by a Geoffrey
Dexter of the Wattle Group, who promised better than usual dividends
and paid them, from a diverse manufacturing/investment base.It was so good he got in many people, including about 200 mostly
country policemen, before the authorities acted.
He got 10 years.It is easy to offer say 2% per month, and pay it quarterly at
6%, thus 4 times better than bank interest at 24%, and this still
leaves the scammer a 76% pure profit ( as he intends to keep it
all ) after a year from the first investors, who by then would
have told a huge number of friends.
This gives you 4 years before the PONZI SCHEME runs out of
funds (less postage of course).Then 'legitimize' the theft by issuing false invoices for expenses in a business venture... Get an auditor 'onside'... a
'mate' or 'buddy' as you say..."Now don't you worry about that!" is a fairly famous saying here in Queensland.
Thirty-two of us dinki-di Aussies were also 'ponzied' in Sydney
NSW when we lost $2 million after investing in a manufacturing
operation to exploit an invention, and were paid 'ponzi' interest
from our own capital to deceive us that all was well.
The interest on subscriptions was logical. Just a refund of interest
to the company on unused working capital, and at 12.5% pa
not so high at times of 20% interest ~1990. Why be too greedy?
Make exposure less likely...But they were 'nicking the loot', $1 million in all, and without
funds to complete the work everything fell apart. As well as overcharging
huge amounts using false invoices, they stole small sums from $1,000
Graham Keir BSc. 04/12/03
Making Investors Cry in the Night
06/06/03 NEW YORK (Reuters) - New Jersey
said Friday it sued two dozen companies and individuals, charging
they swindled hundreds of investors, including best-selling author
Mary Higgins Clark, through a phony investment scheme.
In a complaint filed in a New
Jersey court, Attorney General Peter Harvey accused eight
people and 16 firms of defrauding hundreds of investors
by "luring" them into purchasing $80 million
worth of securities with promises of 15-percent returns.
New Jersey officials
said in a press statement on Friday that the
suit charges that Thomas Giacomaro and
seven others used the cash to lease a Mercedes-Benz,
a Lexus and Cadillacs for themselves and relatives,
and to buy extravagant homes.
to recoup the defendants' ill-gotten
gains and to return as much money as
we can to the victims," Harvey said
in the statement.
statement said that Clark and
her family were swindled out
of $20 million.
from setting up a scheme
that involved several
security sales to raise
money to pay off previous
investors, New Jersey
said the suit charges
the defendants with selling
in the state, and also
with not being registered
to sell securities of
50, pleaded guilty
Friday to money
serving an 18-month
for a previous
a spokesman for
the New Jersey
of Criminal Justice
Accountant admits guilt in scam of investors
By AMY KLEIN - North Jersey
03/06 - An accountant on Monday admitted helping a convicted con
man from Saddle River hide millions of dollars in investor money
by falsely recording business expenses.
Richard Antoniotti, 52, of Hasbrouck Heights told a federal judge
in Newark that he knew that the chief financial officer at Wellesley
Services LLC routinely directed a co-conspirator to sign checks
for funds that would end up in the hands of Thomas Giacomaro.
Giacomaro, 51, was sentenced in February 2004 to 14 years in prison
for bilking $80 million out of 200 investors, including best-selling
author Mary Higgins Clark and senior citizens living on fixed incomes.
In pleading guilty to conspiracy, Antoniotti said Monday that
CFO Anthony Bianco directed him to record the payments on Wellesley's
books as legitimate business expenses -- even though he knew that
the checks would be cashed and given to Giacomaro as spending money.
Antoniotti also admitted that alleged co-conspirator Peter Dobbins
signed checks and authorized wire transfers to pay the personal
credit card bills of Giacomaro and his wife, and to buy expensive
homes and fund costly real estate improvements for Giacomaro, Bianco
and other alleged members of the scheme.
Authorities said Giacomaro was secretly helping the FBI investigate
organized crime when he headed the multimillion-dollar pyramid
scheme, creating businesses that offered exorbitant returns but
instead funneled the money to the conspirators.
At the center of the scheme was Wellesley Services, which billed
itself as a specialist in purchasing small firms in the transportation,
trash, courier and fuel oil industries.
Antoniotti pleaded guilty to one count of conspiring to defraud
the United States and faces a maximum of five years in prison and
a $250,000 fine. U.S. District Judge John C. Lifland set sentencing
for June 19.
02/04 - Hawaii - A La'ie woman who was accused of being a chief
promoter of a Ponzi scheme that bilked about 5,000 investors from
Hawai'i, American Samoa, Japan and the Mainland out of more than
$66 million was sentenced in federal court yesterday to nearly
20 years in jail.
U.S. District Judge Manuel Real, who presided over a jury-waived
retrial of Montez Ottley, 57, found her guilty in December of 14
criminal counts including mail fraud, wire fraud, money laundering
Her bogus program promised an 8 percent profit in 13 weeks in
exchange for a minimum investment of $1,000.
Scam nets woman 57 months in prison - Fremont resident
must also pay $2.5 million
03/27/04 - A 39-year-old Fremont woman was sentenced Friday to
57 months in prison and ordered to pay more than $2.5 million in
restitution stemming from an investment scam that targeted dozens
of people, including several local residents.
Nimfa Montes Beredo, also known as Patricia Beredo, was arrested
last year and pleaded guilty to wire fraud, credit card fraud and
money laundering in November.
Fremont police learned of the scam in 1998.
"We had two victims who called the police saying they were
being defrauded," said Detective Bill Veteran of the Fremont
He said the case was later forwarded to the Fremont police's fraud
division, and then the FBI and Internal Revenue Service.
Veteran said Beredo worked out of World Destiny Travel in Fremont.
On Friday, Beredo apologized for her actions during her sentencing
at the U.S. District Courthouse in Oakland.
Prosecutors said Beredo had falsely told "investors" --
most of whom were from the Bay Area -- that she had contracted
with airline companies to buy discounted air travel tickets in
bulk. Scam victims were talked into giving money to Beredo, who
promised to resell tickets at a profit that would be shared.
She told various investors they'd earn returns of 5 percent per
day, per week or per month, but then would use the money to pay
off earlier victims.
She also convinced some of the victims to provide her with personal
information, such as credit card numbers, which she would then
use for her own benefit. Beredo has admitted to charging more than
$120,000 in unauthorized charges on victims' account.
Oakland Tribune - CA
Old Cons Never Die, They Just Go On to
a Bigger and Better Scam
01/05 - California - Contra Costa County authorities issued an
arrest warrant Wednesday for the alleged architect of an elaborate
scheme that bilked scores of people out of millions of dollars
and cost St. Mary's College a $112 million pledge.
Prosecutors charged John Banker, 84, with eight counts of grand theft.
Authorities believe he fled to Mexico months ago, and the FBI will issue
a warrant charging him with unlawful flight to avoid prosecution.
"John Banker was the mastermind behind an elaborate scheme," said Greg Leonard,
the Walnut Creek police detective who led the five-month investigation into Banker's
alleged scam. "He's a very charismatic man. He involved several high-powered,
high-dollar individuals that lent credibility to the investment scam. The pledges
to St. Mary's also added credibility."
Banker was already in trouble. A Contra Costa Superior Court judge ordered
him in November to pay $12.7 million in damages and other payments to
Ed Ageno, an alleged victim of the bogus real estate deal who died in
Prosecutors said the scam began that year when Banker and Conrad Colbrandt
-- who has been cleared of criminal wrongdoing -- persuaded more than
100 people to invest roughly $8 million in a deal to buy land that would
be leased to PepsiCo. St. Mary's never invested in the scheme and PepsiCo
has said its name was used fraudulently.
However, Colbrandt made a series of pledges to St. Mary's totaling $112
million, prompting the college in Moraga to build a $26 million science
facility and legitimized the real estate deal in the eyes of investors.
The debacle lead to the resignation of the college president and has
forced St. Mary's to scale back its building plans.
Colbrandt said Banker duped him along with everyone else. He has since
sold his two businesses and is defending himself against two civil lawsuits
and expects there will be more over time, said his attorney Rick Madsen.
Some investors handed over investments that reached as much as $300,000.
Police interviewed about 100 investors but said there may be as many
as 110 groups with 200 victims. Most were from the Bay Area but others
came from Hawaii, Oregon, Nevada, Colorado, Texas, Indiana and Tennessee,
The fiasco may have been avoidable, Leonard said, if people had simply
asked more questions and checked with places like the Securities and
Exchange Commission as well as some of the owners of property Banker
claimed to be selling.
"Here's where it was such a great scam," Leonard said. "Banker told everyone
that no one should talk to anyone about this because if word got out that these
properties were going to sell, it would crumble."
Nearly 25 years ago, Banker served three years in prison for fleecing
clients in a real estate deal a prosecutor at the time called "one of
the largest and most notorious thefts in the history of Alameda County." In
that case, he also sold property he wasn't authorized to sell, Leonard
"Ultimately, I can see how some of the investors got caught up in it, but with
due diligence, they could have avoided it," he said.
Carrie Sturrock - SFchronicle
E-Gold Internet Currency Ponzi Scheme
01/05 - (CNET news.com) - A lawsuit claiming that a "gold backed" Internet
currency scheme bilked investors out of more than $250 million
can proceed against a bank implicated in it, a federal judge has
At the height of its popularity, the OSGold currency boasted more than
60,000 accounts created by people drawn to promises of "high yield" investments
that would provide guaranteed monthly returns of 30 percent to 45 percent.
But around July 2002, the eve of the maturity date for the investment
program, the company that offered the accounts suddenly ceased payouts.
David Reed, who had founded the company called One Groupe International,
eventually was discovered to have relocated from the United States to
Concluding they had been fleeced, a group of OSGold investors banded
together to sue Reed and 19 other defendants including two Latvian banks
that allegedly lent their imprimatur to the project. It was "fronted
by the sale of a nonexistent gold-backed Internet currency and was fueled
by a mammoth 'Ponzi' scheme disguised as a guaranteed high-yield investment
program," the OSGold investors say in court documents.
U.S. District Judge Lewis Kaplan ruled on Friday that the lawsuit could
proceed against the Latvian Economic Commercial Bank (Lateko), which
had attempted to dismiss the charges. Kaplan, in New York, dismissed
some charges against Lateko, including breach of fiduciary duty, but
permitted the rest to stand.
"Lateko's apparently false denials to a possibly important business partner and
its continued cooperation with (Reed and other defendants) even after the scheme
suspiciously began to collapse tend to show conscious disregard or recklessness
and give rise to a strong inference of fraudulent intent," Kaplan wrote.
Lateko's involvement began in December 2001, when it allegedly inked
a deal with Reed and other defendants to provide anonymous debit cards
that could be used to withdraw money from OSGold accounts from ATMs linked
to the Cirrus network. Lawyers for Lateko in the New York offices of
Baker & McKenzie did not respond to an interview request.
Suspecting something odd was going on, some companies involved in providing
gold-backed Internet currencies tried to distance themselves from OSGold
early on. In May 2001, the Gold and Silver Reserve (responsible for the
e-gold currency) announced it would no longer link to companies that
did business with "or make reference to" OSGold.
"Paid Off" Ponzi Prompts Police
COLUMBIA, SC (WIS) - 06/07 - Three men have been arrested in connection
with the suspected Ponzi scam.
Tony Pough, 45; Tim McQueen, 49; and Joseph Brunson, 43, all of
Columbia, are charged with selling unregistered securities.
Pough and McQueen were arrested without incident Friday by State
Law Enforcement Division agents. Joseph Brunson turned himself
in the same day.
The three men were named in a restraining order sought last month
by the Attorney General's Office. The order enjoined Capital Consortium
Group, Inc.; 3 Hebrew Boys, LLC; Tony Pough, Tim McQueen, and Joseph
Brunson from liquidating or moving over $17 million in funds from
accounts with First Citizens Bank in Columbia.
McMaster alleged that the individuals listed above "have
violated the State Securities Act by engaging in fraudulent sales
practices and by selling securities in and from the State of South
Carolina without properly registering them."
He says none of the funds raised have ever been invested as originally
advertised to investors. Rather, McMaster says that bank records
suggest that the money has been converted to the personal use of
The defendants allegedly targeted churches and military bases
in the region, and recruited members to attend large meetings,
where multiple investment opportunities were offered. Most of the
investment offerings claimed that the money would be invested in
foreign currency. Some of the securities presented at the meetings
involve the opportunity to:
a certain amount of money and then get a 10% monthly return
on the money after 91 days.
a fee and have the mortgage on the investor's home paid off
after sixteen (16) months.
a fee and have the investor's credit cards paid off after
twelve (12) months.
a fee and have the investor's car loan paid off after twelve
None of these securities have ever
been registered with the Securities Division of the Attorney
General's Office, nor have any of the defendants ever been registered
with the office in order to sell securities in or from the state.