Massachusetts Man, 76, Becomes Latest Senior Citizen Implicated In Ponzi Scheme; Richard Elkinson Accused Of $29 Million Fraud; Investigators Find Millions Of Dollars In Las Vegas Casino Transactions

A Massachusetts man has been arrested in Mississippi and charged with orchestrating a $29 million Ponzi scheme by tricking people into believing they were investing in a company that provided uniforms for the Winter Olympics, the Pan American games and the government.

Ironically, Richard Elkinson told investors he provided prison uniforms — and also uniforms for police officers, federal prosecutors said.

It was not immediately clear how much of Elkinson’s purported uniform business was legitimate. Investigators say the Ponzi scheme might have been operating for 20 years before flaming out in December.

The FBI was working the case on Christmas Eve, according to the criminal complaint. After securing purchase orders claiming the states of Connecticut and Georgia were among Elkinson’s customers, an agent called the phone numbers on the purported purchase orders.

“In each instance, I encountered ‘disconnected’ messages,” the agent said.

The investigation also revealed that Elkinson had an affinity for Las Vegas and claimed to have credit lines of $25,000 each at the Venetian, MGM Grand and Caesars Palace casinos.

Elkinson, 76, of Framingham, was charged with mail fraud. The SEC and the Securities Division of the Massachusetts Secretary of State are assisting in the probe.

Records in Las Vegas casinos show that Elkinson had “conducted a total of more than $3.7 million in currency transactions over $10,000” since 1998, prosecutors said. The Ponzi scheme began to collapse last year, and Elkinson missed a meeting with investors in December, and stopped answering his phone.

Records suggest he was at the Wynn casino in Las Vegas Dec. 22, and canceled a reservation at the Venitian Dec. 23.

The Alleged Scheme

One of the elements, according to the complaint, was that the purported Japanese garment manufacturer, which purportedly had an office in Chatsworth, Calif., would do business with only Elkinson “personally,” a possible signal that agents believe Elkinson was attempting to keep investors from asking too many questions or performing thorough due diligence.

In 2003 or 2004, according to the FBI, Elkinson showed investors a 1998 letter purportedly written by “Alan Shimuka” on the California office’s letterhead that said, “My Honorable Father, once again, requires me to state that we do business with Mr. Richard Elkinson of Northeast Sales.”

“Elkinson allegedly represented that his business involved entering into contracts directly with large purchasers (such as government entities), in which Elkinson had to pay 50 percent of the contract amount as a down payment to the manufacturer in order to initiate the manufacturing process,” prosecutors said.

“[U]pon completion and delivery of the uniforms, Elkinson reported that he would receive payment from the purchasing entity,” prosecutors continued. “[He] claimed that banks were unwilling to lend funds to his business based upon unexecuted contracts, so he needed to borrow a portion of the funds required to pay the 50 percent down payments.”

As has been common in recent Ponzi schemes, Elkinson lulled investors with promissory notes, prosecutors said. In his specific case, Elkinson’s notes “generally required repayment within a term of 330-360 days, and with interest rates that ranged from 9 percent to 13 percent.

“Upon maturity of the notes, investor/lenders were given an option to take a return of their principal and interest, to take interest only, or to roll the principal and interest over into a new note,” prosecutors said.

In April or May of 2009, Elkinson began to default on the notes, providing investors “a variety of excuses,” prosecutors said.

Among the excuses was that Elkinson’s wife was ill and he had to accompany her to Houston for treatment. Elkinson also told investors that government budgetary problems at the state level were delaying payments.

The wheels fell off in December, when Elkinson missed a meeting with two investors and stopped answering his cell phone.

In the early stages of the probe, investigators have identified about 130 investors and calculated that Elkinson owes them $29 million.

U.S. Attorney Carmen M. Ortiz said that prosecutors will post information on a website to update victims. Here is the website:

http://www.usdoj.gov/usao/ma

Victims may also call the U.S. Attorney’s Office’s victim assistance toll-free number at 888-221-6023 to obtain status information.

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4 Responses to “Massachusetts Man, 76, Becomes Latest Senior Citizen Implicated In Ponzi Scheme; Richard Elkinson Accused Of $29 Million Fraud; Investigators Find Millions Of Dollars In Las Vegas Casino Transactions”

  1. Apprehended in Mississippi..given his affinity for gambling, my guess is Richard Elkinson was happily spending his investors money at the “boats” or casino’s that stretch along the Mississippi Gulf Coast when arrested.

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  2. Maybe he and Andy can share a jail cell.

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  3. Ki Kathy,

    Kathy: Apprehended in Mississippi..given his affinity for gambling, my guess is Richard Elkinson was happily spending his investors money at the “boats” or casino’s that stretch along the Mississippi Gulf Coast when arrested.

    You are right about this: He was found in a Biloxi casino with a large sum of money in his possession. The FBI seized the money.

    http://www.boston.com/business/articles/2010/01/07/ponzi_suspect_had_prior_woes/

    Patrick

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