PatrickPretty.com

Day: December 17, 2009

  • NY ATTORNEY GENERAL: Unlimited Wealth Associates Pulled Off ‘Seemingly Limitless Fraud And Deceit’ In Ponzi And Pyramid Scheme That Operated Nationwide

    New York Attorney General Andrew Cuomo
    New York Attorney General Andrew Cuomo

    A company known as Unlimited Wealth Associates operated Ponzi and pyramid schemes that obtained at least $7 million, New York’s top prosecutor said today.

    “While this company promised unlimited wealth, our investigation found seemingly limitless fraud and deceit as they went after investors’ savings,” said Attorney General Andrew M. Cuomo.

    Prosecutors “will continue to have zero tolerance for financial schemers trying to set up shop in New York,” Cuomo said.

    Unlimited Wealth Associates is controlled by Robert Donald and Annette Stuart Donald, Robert Donald’s wife. Investigators obtained an asset freeze amid allegations that the Donalds were running a “series of get-rich-quick schemes” from their home in Brooklyn.

    Company names under which the schemes operated  included Unlimited Wealth Associates, United Wealth Associates, Unlimited Enterprises and Wealth Associates Group, prosecutors said.

    Among the allegations were that the Donald-connected companies had been operating Ponzi and pyramid schemes since at least 2004 and violating a state securities law known as the “Martin Act.”

    More than 1,000 investors across the United States were affected, prosecutors said.

    When the schemes began to collapse, Robert Donald lied to keep investors at bay, prosecutors said.

    Investigators determined that “Donald was covering up the fraudulent operation by informing investors that their investments have been lost or stolen by those with whom Donald purportedly invested the victims’ funds,” prosecutors said. “Donald told victims that he was raising new funds that would be invested so that both new and old investors would recover their principal and receive handsome profits.”

    As part of the probe, prosecutors said, investigators obtained “emails, newsletters and Web site pages” showing the companies “routinely made false and misleading representations that investors could earn enormous profits on modest investments, with little or no risk involved.”

    The website for Unlimited Wealth Associates now appears to be throwing a server error.

    Prosecutors said the scheme included over-the-top hype. Investors in one program were told that $5,000 could turn into $1.2 million in 18 months.

    Here is how investigators described the false claims:

    • Investors in a so-called “Wealth Units” program were falsely informed that they would “earn 2% per business day, payable every 60 business days, for a total of 180 business days.”
    • Investors in an “Infinite Cycle of Wealth” program were falsely informed that the program “provides you with UNLIMITED INCOME FOR LIFE! You can receive thousands of dollars over and over again – to INFINITY!” and “With a ONE TIME INVESTMENT contribution of $5,000 you can earn over $1.2 million, once you complete 7 phases which takes approximately eighteen months.”
    • Investors in a “Capital Growth Program” were falsely informed that they could “receive up to 100% return every month” and would “have the opportunity to MAKE WELL OVER $500,000 for each $1000 that you deposit, within 15 months from the day the funds enter into trade.”
    • Investors in a “40 Week Proposal” were falsely informed that their expected return would be “40 payments of UP TO 50% for each $1000 contribution. That’s a total of $20,000 per $1000.”
    • Many of the representations falsely claimed that there was no risk involved in the investments. One such false statement promised “The Unlimited Wealth Units is an ingenious RISK FREE way to LET YOUR MONEY WORK FOR YOU!” (emphasis in original).

    The SEC and U.S. Postal Inspection Service assisted in the probe.

  • Judge Enters Injunction Against Mantria/Speed Of Wealth Figure Donna McKelvy In ‘Green’ Ponzi Scheme Case; Speed Of Wealth Website Goes Missing

    breakingnewsA federal judge has issued an order that enjoins Speed of Wealth principal Donna McKelvy from breaking securities laws and disgorges her ill-gotten gains from the alleged Mantria Corp./Speed of Wealth Ponzi scheme.

    McKelvy, 43, of Parker, Colo., consented to the order without admitting or denying the allegations in a complaint filed by the SEC Nov. 16. The Speed of Wealth website, which once prominently featured a video containing images of President Obama, former President Clinton and Secretary of State Hillary Clinton, now is returning a server error and will not load.

    U.S. District Judge Christine M. Arguello entered the order against McKelvy yesterday.

    “Donna M. McKelvy is prohibited, directly or indirectly, from accepting funds from investors for investment in any investment program,” Arguello wrote in the order.

    She further ordered McKelvy to “pay disgorgement of ill-gotten gains, prejudgment interest thereon, and a civil penalty.” The amounts will be determined later, and Arguello said McKelvy “will be precluded from arguing that she did not violate the federal securities laws as alleged in the Complaint” and “may not challenge the validity of the Consent or this Order of Permanent Injunction.”

    The SEC said McKevly was a principal in Speed of Wealth and used “the titles of president of Speed of Wealth in charge of investor relations and vice president of Speed of Wealth in charge of investor relations.

    “She is a 25 percent owner of Mantria Industries LLC, one of the Mantria subsidiaries that has actively raised funds from investors, as well as three other Mantria subsidiaries. She does not hold any securities licenses, and she has never been associated with a registered broker-dealer,” the SEC said.

    Also charged in the SEC complaint last month were McKelvy’s ex-husband, Wayde McKelvy, 46, of Sunny Isle Beach, Fla.; Mantria CEO Troy Wragg, 28, of Philadelphia, and Amanda Knorr, 26, also of Philadelphia. Knorr is Mantria’s COO.

    Wayde and Donna McKelvy “particularly targeted elderly investors or those approaching retirement age to finance” Mantria’s “green initiatives,” the SEC said.

    The SEC alleged that Mantria operated a $30 million Ponzi scheme pushed by Speed of Wealth.

    Mantria’s biochar, a carbon-negative charcoal, was used to appeal to environmentally conscious investors, the SEC said.

    “Despite claims that Mantria was the world’s leading manufacturer and distributor of biochar and had multiple facilities producing it at a rate of 25 tons per day,” the SEC said, “Mantria has never sold any biochar and has just one facility engaged in testing biochar for possible future commercial production.”

    Both Mantria and Speed of Wealth showcased a video assembled in part from materials published by the Clinton Global Initiative (CGI), one of President Clinton’s signature undertakings since leaving office in 2001.

    Wragg appeared alongside President Clinton and Secretary of State Clinton at the CGI annual meeting in New York in September, and images of prominent attendees were placed in the video, including an image of President Obama.

    Less than two months later the SEC alleged that Mantria was a Ponzi scheme.

    Mantria and Wayde McKelvy have denied wrongdoing.

  • Raymond Frank Joseph Convicted On All 36 Counts In Michigan Ponzi Scheme; Federal Judge Revokes Bond

    ponziblotterFederal prosecutors have scored another dramatic win in a Ponzi scheme case.

    Raymond Frank Joseph, 55, of Bloomfield Hills, Mich., was convicted of three counts of wire fraud, nine counts of interstate transportation of stolen money or property and 24 counts of conducting monetary transactions in criminally derived property.

    Judge Gerald E. Rosen immediately revoked Joseph’s bond after a federal jury returned guilty verdicts on all 36 counts. Joseph was ordered detained, pending sentencing next year.

    “Investors or lenders should be wary of unreasonably high promises of massive profits,” said U.S. Attorney Terrence Berg of the Eastern District of Michigan. “Ponzi schemes prey on the expectations of big returns, and use the next person’s money to pay previous investors. In this case, the jury saw through the defendant’s fraudulent scheme.”

    Prosecutors said Joseph fleeced $5 million in the scheme.

    “Joseph solicited loans of money from several individuals to invest in a number of business ventures,” prosecutors said. “To induce the lenders to give him their money, Joseph fraudulently promised the victims a specific date of repayment with interest resulting from his claimed business investment of the money.”

    But Joseph did not invest the the money, prosecutors said. Instead, he used it to make payments to earlier investors and to pay his personal expenses such as credit card bills, household expenditures and vehicle costs.

    A veteran IRS criminal investigator said investors have a duty to be cautious.

    “Although the economics of Ponzi schemes are simple, today’s swindlers artfully conceal their greed with sophisticated marketing and numerous misrepresentations,” said Maurice Aouate, special-agent-in-charge of the Internal Revenue Service Criminal Investigation Division.

    “Beware, for if is sounds too good to be true, it probably is,” Aouate said.

    The FBI also had a leading role in the Joseph probe.

    “Investors generally understand that there’s a correlation between risk and reward, and Ponzi scheme cases like this one reinforce the fact that investing money is inherently risky,” said Andrew Arena, FBI special-agent-in-charge.

    “Before handing hard-earned money to investors, individuals should know who they are dealing with and how their money will be invested,” Arena said. “In light of recent large scale Ponzi schemes, public awareness is at the forefront. The FBI and its partners will aggressively investigate people who swindle money from others, whether it involves hundreds of thousands or millions of dollars.”

    Joseph potentially faces decades in prison. Sentencing is scheduled for March.

  • PP Blog Marks Milestone In A Year Filled With Ponzi Schemes And Nonfiction That Reads Like Fiction

    EDITOR’S NOTE: We were going to publish this post to commemorate our 500th post since December 2008, but breaking news intervened. So, this is now Post No. 501.

    milestoneThis is the PP Blog’s 500th post (actually it’s now No. 501) since December 2008, the month we switched to WordPress.

    It has been a year filled with nonfiction that reads like fiction. Some of the Ponzi tales and allegations are so incredible they require readers to suspend their disbelief — and occasionally even to suspend their disbelief at multiple levels.

    A year ago, most members of the reading public knew very little about Ponzi schemes. News junkies and television viewers alive during the 1980s perhaps had a fleeting memory of the “Billionaire Boy’s Club” (BBC) Ponzi scheme from that decade. Joseph Gamsky’s operation led to murders and a TV miniseries.

    Ponzi schemes, though, generally were localized stories, and it was easy to miss news about them. Bernard Madoff changed that a year ago. Although authorities were well-acquainted with Ponzi schemes, the public at large was not. Since Madoff’s arrest, the seamy underbelly of one of the world’s hidden cultures of criminality has been exposed. Ponzi schemes now regulary lead to national and international headlines.

    Just last week the FBI announced it was investigating at least 1,500 cases of securities fraud, including 314 HYIP schemes in which a Ponzi scheme appears to be an element. Prosecutors now are using racketeering laws to address some of the schemes, while continuing to use mail-fraud, wire-fraud, money-laundering and securities laws to combat the plague.

    Some of the cases are just plain bizarre. Many mysteries and questions remain. Here are some of them.

    Did Florida Ponzi suspect Scott Rothstein really attract investors by saying he employed former FBI and CIA operatives to dig up dirt on the sexual infidelities or workplace sexual misconduct of wealthy people so he could target them in lawsuits?

    Did investors really throw hundreds of millions of dollars at such a business, viewing it as just another way to make money and not even questioning the moral, ethical or legal ramifications of such a bizarre marketplace approach — the packaging of sexual indiscretions as a security?

    Did Minnesota Ponzi suspect Trevor Cook really buy a private island and a submarine to access it with part of his loot?

    Did Mantria Corp. and Speed of Wealth LLC, now accused by the SEC of promoting a “green” Ponzi scheme, really believe that it was prudent to beam videos and trade off the reputations of a current President of the United States, a former President of the United States, a current U.S. Secretary of State and a former Secretary General of the United Nations?

    And did a Ponzi defendant in the Mantria/Speed of Wealth case really try to recruit a reporter into an MLM by calling her a “fellow Wealthalete” and USING ALL CAPS in the sales pitch — after the SEC brought the charges in the Mantria/Speed of Wealth case?

    Did members of the alleged AdSurfDaily Ponzi scheme in Florida really write to the Senate Judiciary Committee in the post-Madoff Ponzi era to elicit support for the Ponzi scheme business model — while fortunes were being destroyed by Ponzi schemes and people in their 80s and 90s were being dispossessed as a result of investing in Ponzi schemes?

    Did ASD members really believe that one of the best ways to stay under the Feds’ radar when pitching a Ponzi scheme was to claim the President of the United States personally endorsed the business acumen of the man running the Ponzi scheme? (And did Mantria/Speed of Wealth not have any knowledge of the ASD case and how quickly the government reacted when it learned that institutions such as the Presidency were being used in advertising pitches?)

    Did the Pro-ASD Surf’s Up forum and a forum some of its Mods established to promote the AdViewGlobal (AVG) autosurf really label Curtis Richmond a “hero” for his pro se legal efforts to derail the forfeiture aspect of the ASD Ponzi prosecution?

    Did some ASD members really send President Andy Bowdoin brownies and delicious baked goods after federal prosecutors and the U.S. Secret Service said he was at the helm of an international wire-fraud and money-laundering scheme whose key component was a $100 million Ponzi scheme?

    Think that’s weird? See this story on attempts by AVG to explain it had no ties to ASD.

    Did the Noobing autosurf really think it prudent to pitch an autosurf to deaf people after the government seized tens of millions of dollars in the ASD case?

    Is it really possible that thousands of people believe the answer to Ponzi schemes and the wealth they destroy is even more Ponzi schemes, including ones launched while Bowdoin was under investigation for serious crimes and already had been sued for racketeering?

    Indeed, it has been an amazing year in the world of the Ponzi scheme.

    You’ve heard about the convicted Ponzi schemer who declared himself a “sovereign” being, right?