Spectacular Ponzi Scheme Alleged In Utah By SEC; Attorney Who Didn’t Do Homework Helped Fraudster Grease Money Wheel By Calling Investment ‘One Of The Best He Had Ever Seen,’ Agency Says

EDITOR’S NOTE: If you’re an autosurf or HYIP promoter — or a person who is accepting fees for driving business to an investment opportunity based on assertions you cannot independently verify to be truthful — the story below should be instructive. It perhaps will be particularly instructive if part of your fraud game plan is to improve upon the lies told by the fraudster-in-chief.

In the first major Ponzi case brought in 2011, the SEC has charged a Utah man with presiding over a spectacular promissory-notes fraud involving at least $60 million and several co-defendants, including an attorney.

When the scheme started to collapse, delayed payments were blamed on “Homeland Security” and banking red tape caused by the Madoff Ponzi, the SEC charged, alleging that investors were discouraged from contacting authorities and told lies to keep hope alive that their money was safe.

Raymond P. Morris, 42, of Draper, conducted an unregistered offering and operated the Ponzi scheme “at least” between March 2007 and January 2009. The scheme defrauded “at least 90 investors” and was a Ponzi out of the gate, the agency said.

Three other Utah men, including attorney Luc D. Nguyen, 40, of Draper, helped the fraud spread by conducting no due diligence, recklessly repeating assertions made by Morris as though they were truthful and coming up with their own lies to drive money to the scheme, the agency alleged.

Also charged were James L. Haley, 49, of Draper, and Jay J. Linford, 49, of Orem. At the same time, several companies also were charged: E & R Holdings LLC, Wise Financial Holdings LLC, Momentum Leasing LLC, Cornerstone Capital Fund LLC, Vantage Point Capital LLC and Freedom Group LLC.

Ponzi Scheme Collapses

The Morris Ponzi scheme began to unravel in April 2008, when he stopped making regular payments to investors, the SEC charged.

“Morris gave many explanations to investors, including that Homeland Security had frozen the accounts, that the Madoff case had caused banks to hold funds and that typographical errors in wire request forms had caused delays,” the SEC charged.

“Morris told Haley, Nguyen and Linford to pass these explanations on to investors, and they did so without questioning Morris or conducting due diligence on Morris or the Fund,” the agency charged. “As investors complained and threatened to go to the Commission and other government agencies, Morris began disseminating phony bank statements falsely showing that he had over $200 million deposited with Wachovia Bank.

“In late October 2008, Morris gave Nguyen a purported ‘Bank Confirmation Letter’ from Wachovia,” the SEC continued. “This fraudulent letter states that Wachovia ‘currently holds funds in the amount of . . . $201,782,567.89 . . . [and] Mr. Raymond Paul Morris is the signatory on this account.” The letter also says ‘the funds are good, clean and of non-criminal origin, are unencumbered and freely disposable.'”

Meanwhile, the agency charged, Morris gave Nguyen a phony ‘Verification of Depository,’ also purporting to be from Wachovia Bank, showing that $201,827,067.89 was in Morris’s account.

“After Nguyen received the bogus ‘Bank Confirmation Letter’ and ‘Verification of Depository,’ he agreed to draft a letter to Morris’s investors, assuring them their funds were safe.

“Nguyen’s October 30, 2008 letter states that ‘Mr. Morris is in possession of funds that will allow for the return of the principal amount of your investment along with any back interest in the anticipated redemption of your Promissory Notes(s),'” the SEC continued.

“This letter further confirmed that Nguyen was ‘in possession of a copy of an official bank letter confirming that the funds are in a specified account under Mr. Morris [sic] signatory control at such bank,'” the SEC said. “Nguyen did not conduct reasonable due diligence prior to sending this October 30, 2008 letter. The letter caused investors to delay their attempts to contact government authorities regarding Morris, Haley, Linford and Nguyen and their investment activities.

“By the time the Ponzi scheme unraveled, Morris, Haley, Linford and Nguyen, and their respective entities, had defrauded at least 90 investors out of $60 million or more by offering and selling unregistered and non-exempt promissory notes based on material misrepresentations and omissions,” the SEC charged.

Other Misrepresentations

Lies fueled the scheme, the SEC charged.

“Morris told investors that their principal would only be used for ‘verification of deposit’ purposes by certain private traders,” the SEC charged. “Morris further told investors these private traders would obtain large lines of credit and invest the proceeds in ways that would generate a guaranteed 20% per month interest rate.

“In reality, Morris used investor money for personal expenses, including a luxurious home and several sports cars, and for making Ponzi payments to create an illusion of a successful investment,” the SEC said.

Haley took the base story and improved upon it, the SEC said.

“From about August 2007 through June 2008, Haley, through his entities Cornerstone Capital and Vantage Point, raised at least $20 million for Morris’s Fund. In soliciting investments, Haley repeated Morris’s misrepresentations to investors and made additional misrepresentations, including that he was the sole owner of the Fund,” the SEC charged.

“Out of the approximate $20 million Haley raised, Haley used at least $700,000 for personal expenses, including payments on a new home and $25,000 per month rental payments while building this new home,” the SEC charged.

Linford, accused of collecting about $1 million for the scheme, added to the lies, as well, the SEC charged.

“Linford also knowingly misrepresented to some investors that he controlled the secure account where their funds would be held,” the SEC charged. “Contrary to what Linford told investors about their funds being secure, the wiring instructions he gave investors were instructions to deposit funds into an account Morris controlled. Linford had no authority to verify what was being done with investor funds once they were deposited into Morris’s account.”

Nguyen held himself out as an “SEC attorney” and told investors the fund was “one of the best he had ever seen,” the SEC charged.

“Nguyen told investors he had personally met with the attorneys representing the supposed trading companies involved in the Fund and that he had received copies of all operating agreements between the leasing companies and the trading companies,” the SEC charged. “In fact, Nguyen performed no due diligence on Morris or the Fund, never met with anyone affiliated with the Fund or a leasing company or trading company involved with the Fund and never received any documents associated with the Fund.”

Read the complaint.

About the Author

14 Responses to “Spectacular Ponzi Scheme Alleged In Utah By SEC; Attorney Who Didn’t Do Homework Helped Fraudster Grease Money Wheel By Calling Investment ‘One Of The Best He Had Ever Seen,’ Agency Says”

  1. I bet that Robert Garner is crapping in his pants about now with this news. Makes you wonder how long before he gets to do the perp walk?

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  2. Now that I think about it, I think Gerald Nehra is shaking in his boots too since he testified at the Evidentiary Hearing how ASD was not a Ponzi. Man this is going to be fun to watch.

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  3. super eerie—divide $60,000,000 by 90, and you get $666,666.666

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  4. oops,added extra 6 after the decimal point.

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  5. ~ATTENTION~
    THERE HAS NEVER BEEN A FORMAL CHARGE MADE AGAINST ANY OF THESE MEN.

    THIS IS A BLATANT LIE AND SLANDER IS A CRIME. you have got your facts completely wrong and are committing slander against all of these men with the exception of RAY MORRIS. Ray Morris is the only one named here that is still under investigation by the SEC, NONE of the other men have been CHARGED WITH ANY WRONG DOING, and ARE NOT UNDER INVESTIGATION BY ANY GOVERNMENT AGENCY…DO YOUR HOMEWORK AND GET YOUR FACTS RIGHT BEFORE YOU FALSELY ACCUSE.. These men were victims of Ray Morris he is the only criminal here and you are defaming and destroying these men’s good names..

    You are no better than Ray Morris. It is a matter of public record. Do your homework before you make FALSE ACCUSATIONS. ALL CIVIL ACTION HAS BEEN DISMISSED AGAINST ALL OF THESE INNOCENT MEN WITH THE EXCEPTION OF RAY MORRIS. This is a matter of public record. You should be ashamed of yourself for spreading lies on a public forum, and will be held accountable for doing so. I would recommend taking this post down and doing the research that will back up my claims and debunk your slanderous lies. SLANDER IS A CRIME!

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  6. Phoebe Dell: I would recommend taking this post down

    No, Phoebe. I am not taking down this post.

    Patrick

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  7. The S.E.C. site still carries the litigation release:

    http://www.sec.gov/litigation/litreleases/2011/lr21801.htm

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  8. Phoebe Dell: ~ATTENTION~
    THERE HAS NEVER BEEN A FORMAL CHARGE MADE AGAINST ANY OF THESE MEN.THIS IS A BLATANT LIE AND SLANDER IS A CRIME. you have got your facts completely wrong and are committing slander against all of these men with the exception of RAY MORRIS. Ray Morris is the only one named here that is still under investigation by the SEC, NONE of the other men have been CHARGED WITH ANY WRONG DOING, and ARE NOT UNDER INVESTIGATION BY ANY GOVERNMENT AGENCY…DO YOUR HOMEWORK AND GET YOUR FACTS RIGHT BEFORE YOU FALSELY ACCUSE.. These men were victims of Ray Morris he is the only criminal here and you are defaming and destroying these men’s good names..
    You are no better than Ray Morris. It is a matter of public record.Do your homework before you make FALSE ACCUSATIONS. ALL CIVIL ACTION HAS BEEN DISMISSED AGAINST ALL OF THESE INNOCENT MEN WITH THE EXCEPTION OF RAY MORRIS. This is a matter of public record. You should be ashamed of yourself for spreading lies on a public forum, and will be held accountable for doing so. I would recommend taking this post down and doing the research that will back up my claims and debunk your slanderous lies. SLANDER IS A CRIME!

    You may want to go after the actual source: the SEC as Littleroundman points out. Good luck with that. And as always, it’s not slander. lol.

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  9. Go check the current SEC records, you will find that I am stating truth. You should be ashamed of yourself, for printing slanderous lies. The SEC never had the correct facts in the beginning and is no longer pursuing any of these men with the exception of Ray Morris. All of these men were victims and did nothing wrong. I was also a victim in this and know all of these men very well. None of them did anything wrong.It’s guys like you Patrick that should be investigated for printing lies and passing them off as truth and facts.

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  10. Because the SEC still carries the LITIGATION RELEASE IT must be right? The litigation is still ongoing for Ray Morris but NOT for any of the other men you are defaming.YOU ARE WRONG! YOU DESTROY LIVES BY PRINTING LIES!!!! The SEC has stopped the investigation against all of these men with the exception of RAY MORRIS. Ray Morris is the criminal here, and I am confidant that he will go to prison, but for you to continue your journey to destroy the lives of these other men on a release you got from the SEC over a year ago is WRONG! You need to contact the SEC, so you can up-date your information. continuing to defame these men is WRONG! Especially when you DON’T have the facts. Many new facts have come to light and the truth about the involvement of these men has also been brought forth. The SEC went after these men with inaccurate details and lies told to them by others.PLEASE get your facts straight and revise your site. It is not noble to pass on FALSE information. THIS DESTROYS LIVES… I KNOW THE FACTS, I have been in constant contact with the SEC because I am one of the Ray Morris victims as well as these men.

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  11. It’s still not ‘slander’ dumbass. lol. Especially if true. You have no ‘facts’ or you would prove them. I hope he leaves it as is as it annoys you greatly.

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  12. Phoebe Dell: Go check the current SEC records,

    You mean like this one — i.e, the June 14, 2012, SEC Administrative Order brought against Nguyen by consent after the court permanently enjoined him from violating securities laws and in which the SEC, among other things, barred him from practicing law before the Commission?

    “On June 1, 2012, the court entered an order permanently enjoining Nguyen, by consent, from future violations of Sections 17(a), 5(a) and 5(c) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.”

    http://www.sec.gov/litigation/admin/2012/34-67200.pdf

    Or do you mean like this one — i.e., the Jan 4, 2012, SEC Administrative Order brought against Haley after the court permanently enjoined him from violating securities laws and in which the SEC, among other things, barred him “from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, and barred from participating in any offering of a penny stock . . .”

    “On December 22, 2011, a final judgment was entered by consent against Haley, permanently enjoining him from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act, Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder, in the civil action entitled Securities and Exchange Commission v. Raymond P. Morris, et al., Civil Action Number 2:11-cv-00021, in the United States District Court for the District of Utah, Central Division.

    http://www.sec.gov/litigation/admin/2012/34-66101.pdf

    Patrick

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  13. Will the real Jay Linford please stand up

    http://exmormon.org/phorum/read.php?2,529447,530242,quote=1

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  14. Phoebe Dell: ~ATTENTION~
    THERE HAS NEVER BEEN A FORMAL CHARGE MADE AGAINST ANY OF THESE MEN.THIS IS A BLATANT LIE AND SLANDER IS A CRIME.

    Let me second Whip’s remark to you, Ms. Dell. “Slander” is not the correct word for what you are trying to say, as slander is oral or spoken defamation. Not written defamation.

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