Now, A Fast-Food Ponzi Scheme: Feds Say Ohio Man Swindled Millions By Telling Investors He Built Chicken And Burger Restaurants

EDITOR’S NOTE: Here’s one for your Bubba Blue notebook on the various ways to have a Ponzi scheme, as opposed to shrimp — and this one actually wafts with the myth of food — in this case, chicken and burgers.

More than 200 investors have been fleeced in a bizarre scheme in which an Ohio man persuaded them to turn over $7 million to build franchise restaurants for Pioneer Chicken and McDonald’s, the FBI said.

The trouble with David J. Harriett’s scheme, the FBI said, was that he “knew that neither he nor his company had any contracts with McDonald’s or Pioneer Chicken, let alone franchise construction contracts.”

Harriett, 60, of Warren, Ohio, now has been charged with mail fraud. Prosecutors said the scheme operated for at least 14 years through Harriett’s company, DJ Harriett Inc.

“Fraud in the market place is a significant problem that negatively affects consumer confidence and, ultimately, economic recovery,” said U.S. Attorney Steven M. Dettelbach of the Northern District of Ohio. “For these reasons, we will continue to vigorously prosecute Ponzi schemes.”

The case was investigated by the interagency Financial Fraud Enforcement Task Force established by President Obama in November 2009.

Harriett told investors he was a “project manager” for Pioneer and McDonald’s and built restaurants in Northeast Ohio, New York, Indiana, Pennsylvania and Florida, the FBI said.

Investors were given promissory notes that purportedly “guaranteed the return of their investment, plus significant interest,’ the FBI said.

It was all a fantasy, the agency said.

“Harriet sent numerous letters through the mail to investors which falsely represented the success and growth of the company as well as the existence and success of franchise construction contracts,” the FBI said.

Ponzi payments were made using money from some investors to pay other investors in a shell game, the FBI said.

Harriett “knew the investor money was not being put to any legitimate use, but rather was being used to make Ponzi payments to other investors, to operate DJ Harriett and for his own purposes and personal use,” the agency said.

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8 Responses to “Now, A Fast-Food Ponzi Scheme: Feds Say Ohio Man Swindled Millions By Telling Investors He Built Chicken And Burger Restaurants”

  1. Well it is only fitting that we got around to chicken and burgers, since we first had a pigeon (PKI) Ponzi. Wonder which food group is next?

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  2. Lynn wrote: “Well it is only fitting that we got around to chicken and burgers, since we first had a pigeon (PKI) Ponzi. Wonder which food group is next?”

    Not sure of the next food group, Lynn. One thing that is clear is that DJ Harriett had problems with the BBB, which revoked its accreditation and says Harriett continued to use the BBB logo after the revocation.

    http://www.bbb.org/youngstown/business-reviews/financial-services/d-j-harriett-inc-in-canfield-oh-20000694/

    And there are other problems, including lawsuits from investors, according to a case filing I saw today. One investor claims a loss in excess of $354,000. Looks as though this Ponzi started to unravel last year — but not until after a Caribbean cruise in December 2008.

    According to a lawsuit, Harriett received a loan for $155,000 from an investor on Dec. 15, 2008. Not sure of the dates of the Caribbean cruise.

    Patrick

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  3. we first had a pigeon (PKI) Ponzi.

    I hadn’t heard of that one so I took a look. It’s the usual tale with a “naysayer” that gets blamed for bringing down the best business venture since Madoff. Then there’s the religious affinity fraud and unwanted animals that need to be disposed of humanely.

    However this is a good example of what happens when the [evil] government does nothing to stop these frauds. The ASD and other ponzi supporters claim that the [evil] government “steal” the money and/or pay over-priced bankruptcy auditors over charging to get all the money.

    In this case the [not evil] Canadian government did nothing.
    http://www.pyramidschemealert.org/psamain/news/PigeonPonziUpdateJune08.html

    An official from the Competition Bureau, Canada’s equivalent to the U.S. Federal Trade Commission (FTC), wrote, ” the business practices of Pigeon King International do not appear to meet the definition of a “scheme of pyramid selling” which must first and foremost meet the definition of a “multi-level marketing plan” as stated in section 55. (1) of the Act. I have taken the liberty to forward your concerns to the Ontario Provincial Police Anti Rackets Section.”

    In other words, Canada’s Competition Bureau claimed it only recognizes a Ponzi scheme as a fraud if it meets the technical definition of a multi-level marketing scam. Other types of Ponzi frauds are ignored! The Competition Bureau passed the “hot potato” to the Ontario Provincial Police, which did nothing. Some police officials told consumer advocates they were “too busy investigating murders and home invasions.” Others explained that such investigations were expensive, time consuming and complex and were beyond their capabilities. This same argument is frequently used by do-nothing regulators in the USA.

    There is no money left for the punters. Some have many pigeons that they have to feed or dispose of. At least the ASD punters should get something back. They could have been just left with whatever worthless “adpacks” they had bought.

    It would be nice to think that since 2008 the attitude of the Canadian authorities have changed.

    [off topic] For those who are interested, I notice that there is an update on the CEP receivers web site.

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  4. Wow, I took a look at the receiver’s website, and it’s got a good bit of material to read.
    http://www.wfperkinsforcep.com/ (perhaps off topic)

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  5. Interesting to see the names of some of the ASD promoters on the CEP list of claims. Looks like ASD wasnt their first rodeo.

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  6. Tony H: It would be nice to think that since 2008 the attitude of the Canadian authorities have changed.

    It “WOULD” be extremely nice.

    Unfortunately, though, nothing of substance HAS changed.

    The notorious supporter-enabler of HYIP ponzis “Alertpay” operates with apparent impunity from Canada.

    In fact, Canada is rapidly gaining notoriety as the “go to” place when it comes to the HYIP / ponzi “business”

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  7. A massive Ponzi scheme, over 40 million dollars, from Canada using live pigeons ripped through Canada then 13 U.S. states. North American farm family lost from $20,000 to 1.5 million, some losing their farms, at least two farmers on suicide watch. Taxpayers paid over $90,000 to exterminate by lethal gas about 1 million useless pigeons.

    Nothing has been done to even arrest this crook in Canada. WE shut his fraud down in June of 2008 while Canadian Police were on the major Canadian National news, CTV telling the world this obvious fraud was NOT ILLEGAL. The other National Media, CBC’s new’s anchor gratuitously stated “This is CLEARLY LEGAL in Canada.”

    That is a lie! Now the fraud has collapsed authorities admit it was a Ponzi scheme but allowed this crook to retire anyway on his “Sacred Dove Ranch” in Cochrane Ontario, Canada paid for with his victims money. Over 5000 North American farm children suffered in this massive fraud.

    I wish someone would do a “real story” on the harm this Canadian fraudster caused and the corruption in the Canadian Government that allowed the scam to be perpetrated in the open refusing to do anything meaningful about it.

    http://crimebustersnow.org/html/pigeon_king.html

    Last month this appeared in the Canadian Press (CP)….. “Internal reports show an average of 85 [CRA Tax Dept.] employees a year are disciplined for wasting their work days surfing the web, setting up sports pools, sending chain letters, promoting “illegal substances,” sharing offensive cartoons and RUNNING PYRAMID SCHEMES.”

    This is what’s going on in Canada. These scammers make millions in Canada untouched by Canadian authorities then charge into the U.S and take U.S. citizens for billionS. Hundreds of pyramid/Ponzi schemes are from Canada. That’s the truth…. That’s reality!!!

    dave -CBNow
    http://www.crimebustersnow.com
    International fraud Investigation
    Exposing Government & Police Corruption
    One Fraud at a Time

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