BULLETIN: National Investment-Fraud Sweep Dubbed ‘Operation Broken Trust’ Nets 532 Defendants; AG Holder Says Capers Caused More Than $10 Billion In Losses; ‘Undercover Operations’ Part of Task Force Arsenal

U.S. Attorney General Eric Holder and members of President Obama’s Financial Fraud Enforcement Task Force said this morning that a nationwide sweep known as “Operation Broken Trust” has netted 343 criminal defendants and 189 civil defendants.

Among the targets of the sweep were purveyors of Ponzi schemes, affinity fraud, prime bank/high-yield investment scams, foreign exchange (FOREX) frauds, business-opportunity fraud and other similar schemes, investigators said.

Some of the defendants “filed for bankruptcy in an attempt to avoid claims by victim-investors,” investigators said.

The combined losses in the schemes, which affected 120,000 investors, were estimated at $10.4 billion, Holder said. He was joined in the announcement by FBI Executive Assistant Director Shawn Henry; U.S. Securities and Exchange Commission (SEC) Director of Enforcement Robert Khuzami; U.S. Postal Inspection Service (USPIS) Chief Postal Inspector Guy Cottrell;  Deputy Chief Rick Raven of the Internal Revenue Service Criminal Investigation (IRS-CI); Acting Director of Enforcement Vince McGonagle of the U.S. Commodity Futures Trading Commission (CFTC); and other members of the Financial Fraud Enforcement Task Force.

“With this operation, the Financial Fraud Enforcement Task Force is sending a strong message,” said Holder.  “To the public: be alert for these frauds, take appropriate measures to protect yourself, and report such schemes to proper authorities when they occur. And to anyone operating or attempting to operate an investment scam: cheating investors out of their earnings and savings is no longer a safe business plan — we will use every tool at our disposal to find you, to stop you, and to bring you to justice.”

The calling card of the schemes was greed, Henry said, adding that undercover probes are part of the Task Force’s arsenal.

“This operation highlights the scope of this problem, and its impact on individuals from all walks of life,” said Henry.  “This one sweep alone involves fraud schemes that harmed more than 120,000 victims. The schemes may change, but the underlying greed does not. Working with our partners, we in the FBI will use all the investigative techniques in our arsenal, including undercover operations, to bring those responsible to justice.”

Khuzami, meanwhile, said the law-enforcement community was pursuing multiple forms of fraud.

“Fraud by well-known companies or high-profile executives gets the biggest headlines, but other scams are equally devastating to hard working families and retirees,” said Khuzami. “Victims want justice and don’t much care who the fraudster is or how unique the fraud. Today’s actions underscore that law enforcement agrees and will pursue fraud in whatever form.”

Read Holder’s announcement, made this morning in Washington.

President Obama authorized the Financial Fraud Enforcement Task Force in November 2009. In January 2010, Holder ventured to Florida to speak about the aims of the Task Force and to warn scammers that the government was serious about putting them in jail.

About the Author

9 Responses to “BULLETIN: National Investment-Fraud Sweep Dubbed ‘Operation Broken Trust’ Nets 532 Defendants; AG Holder Says Capers Caused More Than $10 Billion In Losses; ‘Undercover Operations’ Part of Task Force Arsenal”

  1. So is this the summary of actions taken recently or a new “sweep” with new defendants?

    Just wondering…

      (Quote)

  2. So is this the summary of actions taken recently or a new “sweep” with new defendants?

    It’s a summary of actions to date in an ongoing process.

    Patrick

      (Quote)

  3. I wonder if somewhere there is a list of those 343 criminal defendants and 189 civil defendants names. I might be interesting.

      (Quote)

  4. I wonder if somewhere there is a list of those 343 criminal defendants and 189 civil defendants names. I might be interesting.

    Tony,

    A number of U.S. Attorneys across the United States are supplementing Holder’s briefing today with lists of defendants. You’ll be able to get some of the names if you go to Google News and type in “Operation Broken Trust.”

    Patrick

      (Quote)

  5. it is a bout time they got serious about these scammers bulking hard working people out of their money.
    To make the biggest dent of all they need to prosecute more of the pimps and promoters that help these monsters grow.

    Thanks Patrick petty for all the time and effort you put into keeping us informed.

      (Quote)

  6. You’ll be able to get some of the names if you go to Google News and type in “Operation Broken Trust.”

    Good tip, and lots of news stories, with many names. I think my favourite headline is this one:
    http://www.ibtimes.com/articles/89224/20101206/fraud-investor.htm
    Simply “Cheaters go to jail”.

    From another story:

    Mr. Henry said 48 of the FBI’s 56 field offices were involved in the sweep. He said the number of FBI agents assigned to securities-fraud cases has increased nearly 50% during the past three years. Since January 2009, the FBI has opened more than 200 Ponzi scheme cases, he said.

      (Quote)

  7. It would certainly be good to see a complete list of these 343 criminal defendants and 189 civil defendants

    the FBI site gives some case histories but not the complete list

    ttp://www.fbi.gov/news/pressrel/press-releases/brokentrust_120610#case

      (Quote)

  8. Anyone with a website who wishes to link to the Financial Fraud Enforcement Task Force website may do so. They just need to embed the code found at the following link on their pages.

    http://www.stopfraud.gov/about-links.html

      (Quote)

  9. Quick note:

    The Imperia Invest case brought by the SEC got a mention by the Task Force yesterday:

    ____________________________________________________________________________

    Internet-Based Fraud Targeted the Deaf Community

    On Oct. 6, 2010, the SEC obtained a temporary restraining order and emergency order freezing the assets of Imperia Invest IBC. According to the SEC’s complaint, Imperia solicited investors through the internet, claiming it would use the investor funds to purchase Traded Endowment Policies (TEPs), the British term for viatical settlements. Imperia falsely promised to pay investors – the majority of whom are members of the deaf community – a guaranteed return of 1.2% per day. The SEC also alleges that Imperia’s website said that investors could only access their profits by purchasing a Visa debit card from Imperia, but Imperia has no relationship with Visa and was using the Visa name without authorization. Through its website and a series of offshore PayPal style bank accounts, Imperia raised in excess of $7 million from at least 14,000 investors worldwide, including 6,000 investors in the U.S. who have invested in excess of $4 million with Imperia.

    ____________________________________________________________________________

    In Buffalo, meanwhile, U.S. Attorney William Hochul specifically referenced the conviction of Kathleen Fuoco for misprision of a felony for not reporting the Richard Piccoli Ponzi scheme. The Fuoco case was part of the Task Force’s efforts.

    Hochul also referenced other cases.

    http://www.justice.gov/usao/nyw/press/press_releases/Operation%20Broken%20Trust.pdf

    Although a new criminal case emerged in the Buffalo region yesterday, it got only a brief mention in the Operation Broken Trust News release from Hochul’s office.

    This cases involves brothers Michael H. Wilson, 23, formerly of Hamburg, New York, and William W. Wilson, 21, of Cleveland, Ohio.

    Assistant U.S. Attorney Paul J. Campana, who is handling the criminal case, and Richard D. Kaufman, Chief of the U.S. Attorney’s Office’s Asset Forfeiture and Financial Litigation Unit, stated that the Indictment accuses Michael Wilson of attempting to defraud investors out of more than $8,000,000 between June 2008 and July 2009 and another $71,875 in July 2010.

    The Indictment charges that Michael Wilson created several investment companies known collectively as “New Frontier,” including such names as “Phantom Holdings” and others, all purportedly located at 6553 Boston State
    Road in Hamburg, New York, adjacent to his residence. The defendant thereafter induced individuals and companies to invest in financial instruments with complex sounding names – such as “leveraging” agreements – that promised high-yield earnings and returns.

    The Indictment states that rather than investing clients’ money, Michael Wilson spent it on a variety of personal items, including $2.5 million for a down payment for Boston State Road properties, automobiles – including a Hummer, a Corvette, two Land Rovers, and a Mercedes ML 500, artwork and other items. The Indictment also discloses that in January 2009, Wilson paid $1,800 to hire an actor from a talent agency to portray a
    person using the name of an alias (“George Possiodis”) – which name and persona the defendant used during his scheme.

    The Indictment seeks the forfeiture of more than $3,000,000 that Michael Wilson allegedly stole from investors and spent. The Indictment also alleges that in July 2010, Michael Wilson and his brother, William Wilson, conspired to receive two wire transfers totaling $71,875, which a client
    believed would be invested by “Zodiak Capital,” another one of Michael Wilson’s companies. $70,325 of the $71,875 never reached Michael or William Wilson because the government successfully froze and seized the money before it could be withdrawn from two accounts it had been wired into.

    Earlier this year, the government completed the successful civil forfeiture of five automobiles, as well as three recreational vehicles, artwork and electronic items that had been seized by the FBI on July 1, 2009 during the execution of search and seizure warrants at Michael Wilson’s residential and office properties.

    ____________________________________________________________________________

    Patrick

      (Quote)

Leave a Reply