Articles Posted in COMMERCIAL LITIGATION

The Securities and Exchange Commission has filed fraud charges in Federal Court in Miami, Florida against the owners and operators of Jay Peak Resort, a Vermont-based ski resort, and related businesses. The complaint alleges that millions of dollars were raised under the EB-5 Immigrant Investor Program.

According to the tramcomplaint, the main perpetrators were Ariel Quiros of Miami, and William Stenger of Newport, Vt., who raised in excess of $350 million from foreign investors on promises of green cards and returns on their invested monies. The money was to be used to construct ski resort facilities and a bio-medical research facility in Vermont.

The perpetrators promised that investor money would only be used to finance specific projects, but instead it is alleged that over $200 million was used for other purposes, $50 million of which Quiros used for personal expenses, including the purchase of a luxury condominium, income tax payments, and the acquisition of another Vermont ski resort, Burke Mountain, which he renamed Q Burke Mountain, and turned over to his son to manage.

 

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September 9, 2009 – Philip G. Barry and his business entities Leverage Group, Leverage Option Management Co., Inc., and North American Financial Services were sued yesterday by the Securities and Exchange Commission. The SEC has charged Barry with securities fraud alleging that he operated a Ponzi scheme, which commenced in 1978, involved approximately 800 investors with over $40 million in losses.


Barry, Philip.jpgThe fraudulent investment scam operated out of Barry’s Brooklyn, New York offices. The alleged victims include many residents and friends from his own Bay Ridge neighborhood, where he grew up and still resides.

According to the SEC’s complaint, Barry lured investors with promises of returns as high as 21% on investments in options and other securities. However, Barry apparently used investor funds for other investments including real estate, a mail order pornography business, and other personal uses. Allegedly, Barry ceased making investments in options and other securities as early as 1999.

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September 8, 2009 – Sidney S. Hanson and Charlotte M. Hanson and twelve fraudulent business entities, including Queen Shoals, LLC, have been charged with securities fraud by the Securities & Exchange Commission. The couple had been running a scam promising high interest returns on “private” loans. The SEC announced today that the United States District Court for the Western District of North Carolina had entered a September 3, 2009 Order freezing the Hanson’s assets as well as the assets of all twelve entities they controlled.


Gold Bars.jpgIn May, 2009, over $2 million in gold and silver bullion and coins had been seized from the Charlotte, North Carolina office of Queen Shoals Investments. Also, on July 28th, 2009, Sidney Hanson pleaded guilty to securities fraud, mail fraud, and money laundering. He has not been sentenced, but faces up to 20 years of imprisonment for each charge in addition to millions of dollars in fines.


The Hansons, through a network of 45 salespeople, were able to convince approximately 500 people throughout the country to invest $32.5 million from 2006 to 2009. Characterized as “private loan agreements,” the Hansons offered interest rates ranging from 8% to 30%, claiming that money was invested in low-risk treasury bills, precious metals, and foreign currency. However, a majority of clients’ money was used for high-risk private investments. None of the money was actually invested in treasury bills.

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Massachusetts Investment Fraud Lawyer, Keith L. Miller, reviews the latest court filings by the Receiver in the 
SEC vs. Millennium Bank action now pending in the U.S. District Court for the Northern District of Texas:

It appears that the Millennium Bank Receiver has begun the process of liquidating assets seized as a part of the SEC action against Millennium Bank, its affiliates, and the individuals who helped perpetrate this multi-million dollar ponzi scheme. On May 22, 2009, a set of motions were filed in the Northern Texas U.S. District Court seeking specific authority to sell off a range of personal property items. The Court has yet to rule on the motions

flying jet.jpgFor example, one
motion has been filed, seeking court authority to sell off the infamous
 Millennium jet airplane, which was seen and photographed in 2008 and 2009 in places as far and wide ranging as Caracas, Venezuela, Geneva, Switzerland, and Lyon, France. The plane flies no more and is presently stored and maintained in a hangar in Atlanta, Georgia.

The aircraft apparently has an appraisal of $5.6 million, but the Sovereign Bank has a secured lien of $4.3 million and the Receiver seeks the Court’s authority to sell it for a price not less than $3.7 million, which would still leave a debt owed to the bank. Thus, the sale of this valuable asset will bring no money to the Receiver’s estate, or end up reimbursing any monies to swindled investors.

Jewelry, cars and wine collections and a home owned by Jackie Hoegel are in the list of items, which the Receiver seeks to liquidate, some requested to be sold on Ebay. However, it seems unlikely that this collection of assets, and the hundreds of thousands, which might come in, will even put a small dent on the hundreds of millions taken as the result of this fraud.

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A closer look at the Millennium Bank Ponzi Scheme: Boston trial lawyer, Keith L. Miller, takes a look at the facts involving Caribbean based Millenium Bank, which operated out of offices in Napa, California until closed by the SEC in March, 2009.

 

willie wise.jpgWilliam J. Wise had a problem. In late 2003, his fledgling bank in tiny St. Vincent and Grenadines (SVG) was not generating sufficient income from investor deposits to support either the bank’s overhead or his own extravagant personal lifestyle. The island’s banking regulators had moved to suspend Millennium’s license to operate, and Wise was scrambling.

After filing an appeal of the bank’s suspension order, Wise appears to have struck a deal with the SVG banking authority, which gave the bank new life. The bank would re-capitalize and an outside controller would be put in place to oversee the Millennium’s operations. Many believe that the SVG banking authority made the deal only after Mr. Wise had made donations, some of it cash, to select members of the ruling party on the island.


Thumbnail image for napa2.jpgAt this point Wise needed a new strategy. And indeed it appears he came up with a new “business plan”. SVG would remain the titular base of the bank’s operations, but banking activity, and in particular the movement of money would go elsewhere, avoiding the watchful eye of the controller and the SVG authorities. Wise would move operations to Napa, California, and create fictitious Limited Liability Companies (LLC’s) in Las Vegas, Nevada, based loosely on Millennium’s purported Swiss parent, United Trust of Switzerland, in order to open bank accounts there. 

To promote new business, he would combine an aggressive internet and print advertising campaign with an irresistible banking product, “safe” high interest Certificates of Deposit (“CDs”), which no American bank could match or even approach.

The Millennium line of CD products could easily be found on a newly created interactive website, whose sponsored links began to regularly and prominently appear on popular search engines such as Google and Yahoo. Potential customers would type in keywords seeking “high interest CDs”, and Millennium’s three line ad would appear with a link to the bank website.

 Toll free numbers were provided on the Website, which directed calls to the Napa offices, and apparently the calls started coming in. Reluctant callers were referred to several U.S. based Milllennium Bank representatives, whose job was to reassure these potential investors and close new business, earning commissions on the gross amount of the monies deposited. These “finders” were authorized and instructed to develop personal relationships with clients, often traveling to have face to face meetings. Customers were assured that their money was safe, as the representatives advertised that they too were investors.

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Boston commercial and personal injury trial Lawyer, Keith L. Miller, takes a look at Caribbean based Millenium Bank, the latest banking Ponzi Scheme to have bilked U.S. and other investors seeking big returns on their investment monies.


On March 27, 2009, St. Vincent and the Grenadines (SVG), by its International Financial Service Authority (IFSA), appointed KPMG-International to assume control over the affairs of Millennium Bank (“Millennium”) in order “to preserve records and assets”. The IFSA was acting on information obtained from the U.S. Securities and Exchange Commission (SEC), after the SEC had issued a civil complaint against Millennium Bank, a number of affiliates and individual participants, including William J. Wise, Kristi Hoegel and Jackie Hoegel.


Thumbnail image for millennium ad.jpg

This, however, was not the first time that the IFSA had taken action gainst Millennium. In fact, in 2004, the IFSA had legally moved to revoke Millennium’s license, a decision the SVG government later reversed, allegedly after the prime minister of SVA intervened on its behalf. Court documents indicate that William Wise, representing himself as a duly licensed Canadian legal counsel appealed the suspension, and ultimately prevailed.

This is when things ostensibly turned for the better for the once fledgling offshore bank. Undertaking an aggressive international marketing campaign led by Wise, deposits grew dramatically based on the promise of high interest CDs, rates which no U.S. bank could even come close to matching. It appears that the plan was successful as deposits grew in dramatic fashion.

Unfortunately for investors, who believed they were buying legitimate certificate of deposits in exchange for their cash, it appears that the bulk of the funds were being diverted to accounts held by Wise, principally at Washington Mutual Bank in Las Vegas, Nevada, and used for the personal needs and extravagances of these individuals.

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Boston commercial and personal injury trial Lawyer, Keith L. Miller, takes a look at Caribbean based Millenium Bank, the latest banking Ponzi Scheme to have bilked U.S. and other investors seeking big returns on their investment monies.

On March 25, 2009 the United States Securities Exchange Commission commenced a civil action in United States District Court in Northern Texas against the The Millennium Bank, and it principals, alleging violations of the securities laws of the U.S. According to most recent information from  the SEC, it appears that there are now over 1000 investors who placed at in excess of  $100 million dollars in the bank and its affiliates, hoping to secure high interest rate CDs, rates at two to three times that of the highest rates available in the U.S.

millenium-bank-cd-rates.gifInformation is now emerging that Millennium nurtured customers with an internet marketing plan targeted at individuals shopping for the best returns on term Certificates of Deposit. One was www.Bankrate.com, which is a website widely used by investors to determine the prevailing rates for investment and mortgage products in the U.S. Millennium regularly ran banner ads on this site. Victims also report that google “sponsored ads” regularly appeared when the Google seach engine was employed in searches for “high interest CDs”

bankrate.jpgAccording to the SEC complaint, Millennium Bank also ran advertisements of its high-yield no-risk CDs in print magazines and their Internet counterparts, including The Wealth Collection, Wealth Management Agenda and Haute Living. For instance, Millennium ran a promotional article in the March 2008 edition of The Wealth Collection, a bi-annual magazine that touts the latest in “luxury lifestyle trends, investment opportunities and wealth management”.

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Boston commercial and personal injury trial Lawyer, Keith L. Miller, takes a look at Caribbean based Millenium Bank, the latest banking Ponzi Scheme to have bilked U.S. and other investors seeking big returns on their investment monies.


MapStVincent.gif
The Millenium Bank and United Bank of Switzerland have been marketing and offering highly attractive CD rates for several years now, advertising in glossy high end magazines as well as online, and it now appears that those interest rates that seemed too good to be true indeed were.

On March 25, 2009 the Securities Exchange Commission commenced a an emergency action in the United States District Court for the Northern District of Texas seeking to enjoin Millenium and its affiliates from carrying on any future business and taking steps to recover assets of the companies and the principals who ran them, who were located in California and North Carolina.

The
SEC Complaint 
alleges that Defendants William J. Wise, 58, of Raleigh, North Carolina and the Caribbean, and Kristi M. Hoegel, 34, of Napa, California, orchestrated the scheme through companies they control, including co-defendants Millennium Bank of St. Vincent and the Grenadines, its Geneva, Switzerland-based parent, United Trust of Switzerland S.A., and its U.S.-based affiliates, UT of S, LLC and Millennium Financial Group.

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Boston Accident Lawyer, Keith L. Miller, is investigating potential claims on behalf of individuals who were victims of the Bernard Madoff Ponzi scheme. Those who had direct investments in Bernard L. Madoff Securities, LLC are limited to the remedies offered in the bankruptcy proceeding now pending in New York. Claims for reimbursement of monies actually invested in the fund up to $500,000 can be recovered through the Securities Investment Protection Corporation (“SIPC”). However, there is an absolute filing deadline of July 2, 2009. 

ponzi.jpgFor those who did not invest directly with Madoff, there may be other potential remedies and sources of recovery available. Civil actions have been commenced against so called “feeder funds”, who filtered investment to Madoff in exchange for lucrative management fees. Such suits are now pending in state court in Connecticut, Florida, California and Arizona. The list of Defendants includes Tremont Capital Management, Inc., Fairfield Greenwich Group and Boston based Cohmad. Securities Corporation. The principals of these feeder funds have been sued as well and efforts are being made to tie up assets in the event of an eventual recovery.

 

images.jpgIn essence, the suits allege that these hedge funds failed to perform any meaningful investigation, due diligence or oversight of the Madoff fund, which reported consistent double digit gains year after year, notwithstanding questions about the trading strategies allegedly employed or the fact that Madoff enforced a veil of secrecy over his actual trading activity. In fact, it appears that there was no such strategy whatsoever.

 

The accounting firms who perform regular audits of these feeder funds have not been spared, having also been named as defendants in these civil actions. It appears that this is just the beginning and the dragnet will widen in an attempt to uncover insurance monies, which might be available to aid in the recovery of the millions in lost investments.

Several states have also joined in, filing administrative or other proceedings on behalf of defrauded citizens. In particular, the Massahusetts Secretary of State has filed administrative proceedings against Cohmad Securities and Fairfield Greenwich Group, its principals and affiliates. The attorney general of New York has also filed an action against J. Ezra Merkin and his Ascot Funds, alleging that he also clandestinely invested client funds with Madoff, while purporting to be trading on their behalf himself.

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This is Part Two of a two part Blogpost where Boston Personal Injury Lawyer, Keith L. Miller, reviews and analyzes a recent First Circuit U.S. Court of Appeals ruling, in which an insurer sought a declaration that there was no coverage for an personal injuries as the result of an accident involving a contract worker who severed his arm in a wool picking machine. The worker had sued the Massachusetts recycling company where he had been working for a number of months. (Click here to view Part One)

PART TWO :  THE COURT ANALYZES DISTINCTION BETWEEN “LEASED WORKER” AND “TEMPORARY WORKER” IN POLICY TO DETERMINE COVERAGE

Having reviewed the underlying facts of the case, the Court went on to analyze the express language of the insurance policy, attempting to discern whether the lower court had correctly determined that the the worker’s contract was indefinite and therefore not temporary, which was its basis for ruling that there was no coverage for the accident.

wool baling machine.jpgIn the policy a leased worker was defined as a person leased to you by a labor leasing firm under an agreement between you and the labor leasing firm, to perform duties related to the conduct of your business. A temporary worker was defined as a person who is furnished to you to substitute for a permanent “employee” on leave or to meet seasonal or short-term workload conditions.

The question then for the Court of Appeals was whether Torres was a “leased worker,” and thus excluded from coverage; or a “temporary worker,” thus obligating Scottsdale to provide a defense and coverage in Torres’s lawsuit. The district court had determined that Torres was not a temporary worker on the basis that the term “short term” worker, though not defined in the policy, suggested a brief and relatively finite period of time.

Based on deposition testimony of CTC’s president that Torres was to stay at CTC “for as long as he was needed”, and a Venturi manager’s testimony that Torres was assigned to CTC “indefinitely,” the lower court determined  that “indefinite” and “short-term” were mutually exclusive, that Torres’ stay with CTC was indefinite and that he was therefore not a “temporary worker”. Therefore his claim was not covered under the policy.

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