A closer look at the Millennium Bank Ponzi Scheme: Boston trial lawyer, the attorney, 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.
William 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.
At 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.
The product was not a problem. The rates were incomparable. The real work was to overcome investor fear of depositing money in an island bank, where no FDIC insurance was available. Unstated, but understood was the possibility that the IRS could not track income being generated on the deposits, and this apparently interested a number of customers.
Apparently, the risk did not prevent hundreds of investors from mailing checks or wiring funds to the bank’s subsidiaries, UT of S, LLC or Sterling Investments, LLC, neither of which apparently had any legal connection to the SVG bank. Later, an IRA product was added and a U.S. custodian, Millennium Trust (apparently no relation) was enlisted to receive rolled over retirement funds.
It now appears that, on Wise’s instructions, most customer deposits, including IRA deposits, not needed to pay the expenses of running the SVG and Napa offices, were forwarded by wire to accounts he controlled at Credit Suisse in Geneva, Switzerland and via New York to a depository known as ‘Caribbean Money Market Brokers’, which was located in the Caribbean island of Trinidad.
What Wise then did with the money remains a mystery. It is known that he lived a lavish lifestyle, traveling the world with his friends and business acquaintances in a private jet. Upon arrival for weekend stays in Geneva, the first stop would be the offices of Credit Suisse, where he would withdraw large sums in cash, and would proceed to luxuriate in the best hotels and restaurants with acquaintances and expensive companions, apparently all at the expense of Millennium Bank customers.
It now looks like there were no real investments, and the question remains where all the money is presently parked. It is improbable that so much money could have been completely consumed by Mr. Wise’s extravagant lifestyle. So the objective of the SEC and the Court appointed Receiver is to trace the money, with or without Mr. Wise assistance. Both claim to be actively pursuing this goal and have stated to several Millennium Bank investors that they are making progress.
For investors, there remains the question whether other third parties can be found liable for their acts and omissions, which permitted this grand theft to continue so easily and for so long. What about Google and Yahoo, whose ‘pay per click’ sponsored ads made them hundreds of thousands in advertising revenues. Did they know or should they have known that they were helping promote a criminal enterprise?
Did Washington Mutual Bank (WAMU) recognize that millions of dollars in ‘suspicious transactions’ were moving through their branches in California and Nevada to banks or depositories in foreign locations, and does it matter, since WAMU filed for bankruptcy in September, 2008?
Did the IRA custodian, Millennium Trust, have some specific information in the end of 2008, when it announced to customers that it would not be taking on any new Millennium Bank deposits, and if so, why weren’t its customers provided this information, which may have stopped the flow of money into the bank. These are all areas of focus for Attorney the attorney, who is investigating leads and contemplating legal action on behalf of a growing list of clients. All are victims of this blatant theft by the brash and elusive William J. Wise.