Articles Posted in INVESTMENT FRAUD

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January 7, 2010 – Richard Elkinson, 76 of Framingham, Massachusetts, was allegedly operating an investment scam out of his home through his company Northeast Sales. The criminal complaint filed by U.S. Attorney, Carmen M. Ortiz’ office claims that Elkinson raised $29 million from 130 investors over the last 20 years. On Tuesday, Elkinson was arrested in Mississippi and will be arraigned in Massachusetts in the near future.

Northeast Sales claimed investor capital was used to broker contracts with a uniform manufacturer in Japan. Many of the victims of the alleged scheme were friends and long time colleagues of Elkinson.

According to the Federal Bureau of Investigation (“FBI”), in 2003 or 2004, Elkinson recruited Jay Fialko and Jeff Ross to work as “finders” to induce more investors. Fialko and Ross were both investors in Northeast Sales since 1997 and the two men operate Ross Fialko Capital Partners in Newton, MA. According to the FBI, the two men raised about $10 million for Northeast Sales and received about $200,000 for their referrals. Ross and Fialko cooperated with the FBI and are not expected to be charged criminally.

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December 21, 2009 – Michael Bowen, 57 from Rancho Cucamonga, California, operated a Ponzi scheme by selling unregistered securities, purportedly investments in helicopter and storage facilities. These included Eagle Development Enterprises, Inc., Eagle Storage & Development, LLC, and Eagle Aviation Sales & Leasing, LLC. The SEC‘s complaint, filed in a federal court in central California, alleges that from 2003 to 2009 Bowen raised over $28 million from at least 500 investors nationwide.

According to the SEC, Bowen lured investors by selling securities and membership interests in his
Eagle Logo.jpgcompanies. The SEC claims that these offerings were backed by misrepresentations about an upcoming public offering in the United Kingdom, inflated financial disclosures, and falsities about how investor funds would be used. The SEC complaint also claims that Bowen used a sales team who made cold calls to solicit investors.

According to the SEC, from 2003 to 2008, Bowen and his staff sold membership interests in Eagle Storage telling investors that they would receive 8% annual returns and that their money would be used to construct storage facilities. None of these investors were ever paid back and the SEC claims that Bowen did use a portion of investor funds, along with a $6.6 million loan, to purchase a storage facility. However, Eagle Storage subsequently defaulted on the mortgage. The SEC alleges that Bowen did not disclose to investors that Eagle Storage had been issued a cease and desist order in Alabama.

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December 9, 2009 – Rockford Funding Group LLC, a New York financial firm controlled by Genadi Yagodayev, was an investment scam, according to the Securities Exchange Commission. Rockford lured customers who believed that they were investing in “Fixed Dividend Contracts,” which purportedly generated 15 percent per year or more from structured settlements of private lawsuits, according the Complaint filed by the SEC this week. From March to November 2009, Rockford raised at least $11 million from over 200 investors.

logo.gifYagodayev, and twelve other foreign companies who allegedly received payments from Rockford, were named as relief defendants, including the following: Bookmann Agency, LLP, Houseberg Impex, Inc., Infinita Plus Trading Ltd., Intercity Transit Ltd., Madisa Ltd., Milton Benefits LLP, Pacific Gain Technologies Ltd., Partner Asia Distribution Ltd., Rockford Industry Ltd., Star Trading Inc., Sunrise Import & Export Inc., and Traseks Ltd.

According to the SEC, Rockford marketed itself through its web site and by making cold calls to potential customers, promising an annual return of 15%, and claiming that client funds would be invested in structured settlements from private lawsuits. The SEC maintains that in reality Rockford did not hold interests in any structured settlements, but rather used investor funds to make payments to older investors using new victims’ money.

The SEC Complaint alleges that during the nine months it operated, Rockford sent over $10.4 million to bank accounts outside the U.S. in the name of entities controlled by Yagodayev. Most were located in Latvia and Honk Kong. The transfers were ostensibly made to cover construction costs and other expenses unrelated to the Rockford investments.

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December 7, 2009 – Striker Petroleum, LLC, a Dallas based oil and gas company controlled by Mark S. Roberts, 58, and Christopher E. Pippin, 35, was a massive Ponzi scheme, according to the complaint filed by the SEC last week. According to the SEC complaint, Striker
oil-rig.jpgraised approximately $57 million from about 540 investors throughout the U.S. by offering debentures backed by false disclosures about Striker’s financial health. Striker further maintained that collateral backing the debentures was held by an independent third party trustee, which was also false.

Between September 2006 and September 2009, Striker offered debentures to investors in an effort to raise additional capital. Debentures function as an unsecured bond backed by the reliability of the borrower. Each series of debentures issued by Striker was accompanied by a Private Placement Memorandum (“PPM”), which contained vital financial statistics about Striker and further claimed that the money would be used to acquire, develop and maintain existing oil and gas properties, to purchase additional collateral, and for general working capital.

According to the SEC, Striker did not use the funds as advertised, but for other puposes, including paying out fixed returns to prior investors who had acquired working interests, known as “Legacy Offerings”. Striker also sent funds to a related operating company, Reichman Petroleum, which shortly after filed for bankruptcy.

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November 26, 2009 – Trevor G. Cook and Patrick J. Kiley, both Minnesota residents, allegedly operated a foreign currency investment scam through their four main entities: UBS Diversified Growth LLC, Universal Brokerage FX Management LLC, Oxford Global Advisors LLC, and Oxford Global Partners LLC. According to the complaint filed by the SEC this week, Cook and Kiley ran a Ponzi scheme, which took in over $190 million and had at least 1,000 investors.

The SEC alleges that from July 2006 through July 2009, Cook and Kiley enticed over 1,000 investors by promising annual returns of 10-12%. Cook and Kiley promised their clients that their money would be kept in separate accounts for each individual and invested in foreign currency trading. In reality, the SEC claims investor money was pooled together and deposited into the accounts of various entities controlled by Cook and Kiley.

According to the complaint, Cook and Kiley moved $108 million through their various entities and did use a portion of that money for foreign currency trading, but this resulted in losses of $48 million. The SEC claims that Cook and Kiley pocketed $42.8 million for personal use, including $18 million used to purchase ownership interests in two trading companies, $12.8 million, which was moved to Panama, ostensibly for the construction of a casino, $2.8 million to purchase the Van Dusen Mansion, and $4.8 million, which Cook lost gambling. Also, it is alleged that nearly $51 million was used to make payments to prior investors in a Ponzi-like fashion.

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November 24, 2009 – The SEC alleges that Derek A. Nelson ran a Ponzi Scheme using fictitious companies: Capital Mountain Holding Corporation (“CMHC”), Systems XXI, Act I, LLC, and Systems XXI, Act II, LLC. In a Complaint filed last week in federal court for the Northern District of Texas, the SEC brought civil claims against Nelson, CMHC, Act I, and Act II. The SEC also named two other Nelson entities, Plouteo, Inc. and Homaide Real Estate Services, Inc., as relief defendants. According to the complaint, Nelson’s scam enticed hundreds of investors and raised over $25 million from June 2008 through September 2009.

In June 2008, CMHC, based in Dallas, Texas, began offering promissory notes purportedly to raise capital for investment in distressed homes. Nelson, 42 from Fairview, Texas, told David Nelson World Finance Cover.jpginvestors that he would use the money to purchase these properties at a discount and then renovate or rent them and eventually sell them at a profit. Nelson gathered investors through vigorous internet marketing and a Canadian-based marketing firm. The CMHC notes promised returns of 10% per month for three months. CMHC allegedly raised $15 million from these sales.

In October 2008, Nelson began offering similar notes from Act I and Act II. The Act I notes offered 18% yearly returns for two year investments and the Act II notes 21% yearly returns for five years. These notes also declared that 90% of investor funds would be used to purchase and rehab properties. According to the SEC, Nelson raised at least $10 million from sales of Act I and Act II notes.

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November 18, 2009 – Mantria Corporation and Speed of Wealth, LLC operated a ponzi scheme, claims the Securities and Exchange Commission (“SEC”) in a complaint just filed in federal Court in Colorado. The SEC has filed a civil action against Mantria Corporation, Troy B. Wragg, Amanda E. Knorr, Speed of Wealth, LLC, Wayde M. McKelvy, and Donna M. McKelvy in the United States District Court for the District of Colorado, alleging that they operated a $30 million investment scam. According the SEC’s complaint, over 300 individuals, mostly elderly, unknowingly participated in the scheme, which sought investors to support Mantria’s environmentally conscious investments.

Mantria Corp Logo.jpgMantria, based in Bala Cynwyd, Pennsylvania, was run by Wragg and Knorr and offered potential investors unregistered securities with yearly rates of return between 17% and “hundreds of percent.” Investors thought they were financing Mantria’s “green” initiatives including a “carbon negative” housing development in Tennessee, and a “biochar” charcoal alternative made from organic waste. The SEC alleges that Mantria’s supposed projects did not produce significant returns and a majority of payments made to investors were from funds accumulated from earlier investors.

 

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Speed of Wealth, LLC, headquartered in Centennial, Colorado is operated by Wayne and Donna McKelvy and apparently worked in conjunction with Wragg, and Knorr to market and promote investments in Mantria. Speed of Wealth was a “wealth education” program founded by the McKelvys that offered investment seminars, online webinars, telephone conference calls, and hosted online radio programs.

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Thumbnail image for Thumbnail image for millennium-bank_1.jpgNovember 14, 2009 – The Boston Law Offices of the attorney and Washington D.C. based, Steven Berk (Berk Law), in conjunction with Cotchett, Pitre & McCarthy, has filed a class action against JPMorganChase as the successor in interest to Washington Mutual (“WAMU”) in the US District Court for the Northern District of California. The complaint alleges that WAMU’s banking services played an integral role in facilitating the $150 Million Ponzi scheme perpetrated by William Wise and Millennium Bank.

 

 

Thumbnail image for tv photo.jpgAccording to the complaint, Wise and Millennium Bank raised over $150 million from over 250 investors by promising returns as high as 9% on premium certificates of deposit, when the market was offering much lower rates. Millennium Bank was primarily operated out of Napa, California and claimed to be a subsidiary of United Trust of Switzerland, another Wise entity.  Millennium Bank’s sophisticated internet marketing allowed them to dupe hundreds of investors worldwide.

 

As described in the Complaint, Millennium Bank’s staff in Napa instructed purchasers of the high-yield CDs to wire funds to its WAMU accounts opened in Las Vegas, Nevada under fictitious names, or to send checks to Napa, which were subsequently deposited into these accounts. The money then moved offshore or was used to pay for Wise’s lavish lifestyle. There is no evidence that he made any investments with victims’ money. A copy of the Complaint appears below:

 

 

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October 23, 2009 – Milton Retana, 43 from Norwalk, California, was arrested in December 2008 for allegedly running a $62 million Ponzi scheme that involved over 2000 investors.Diamond.jpg Retana perpetrated the alleged scam through his company Best Diamond Funding, a real estate brokerage and mortgage lending firm.

According to the indictment, Retana was able to raise the money by telling potential customers that their money would be invested in real estate purchases and sales. Allegedly, Retana claimed that Best Diamond Funding successfully bought, renovated, and sold homes in the Los Angeles area and employed as many as 60 real estate agents and bought 50 to 60 properties at a time. Retana offered returns of up to 7% a month and guaranteed an 84% yearly return on investment.

Retana, who is of El Salvadoran descent, targeted the Latino community by advertising his company in Spanish-language magazines, internet ads, and held weekly investment seminars throughout Los Angeles. It is alleged that Retana suggested that potential investors use the equity in their homes to secure loans in order to
obtain capital to invest with Best Diamond Funding.

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October 23, 2009 – The SEC and CFTC have filed civil actions against David F. Merrick and his Trader’s International Return Network ( TIRN ), and Merrick’s other corporate shells, most of them registered in Florida. The government alleges that Merrick and TIRN operated a $22 million Ponzi scheme, raising money from thousands of unsuspecting investors. 


TIRN.jpgIt is alleged that Merrick, 61, organized a group of “finders” who earned commissions by soliciting  potential new investors touting TIRN”s double-digit monthly returns on investment in foreign currencies, real estate and precious metals. It appears that little or no money was ever invested at all. Rather, Merrick diverted the money to his own use or to paying redemptions to other investors.

Merrick also conducted investment seminars seeking to lure new customers in the U.S. and elsewhere, including Panama, Antigua and Punta Cana (See Youtube video below). It has been reported that Anres representatives were present at some of these seminars. Merrick had plans to export his investment club to many foreign countries, and some Spanish and Portuguese language websites are still active.

 

 

One unique feature of this scam was Merrick’s use of debit cards as a vehicle for investors obtaining interest or principal from the investments. Merrick teamed up with a private Nevada corporation, Anres Technologies Corporation, base in Plano, Texas, to supply the debit cards. Investors used the Anres website to transfer funds to their cards, and were charged fees for the transactions, including link up charges for use of the site.

images[6].jpgIt is alleged that Merrick transferred at least $8.8 million to Anres in order to fund the cards, which appears to have been affiliated with the Palm Desert National Bank, a California bank with branches in Palm Desert and several other California locations. Although some investors successfully used the debit card to make withdrawals, it is unclear how much was distributed using the cards.

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