William J. Wise, International ‘Mastermind’ Of $129.5 Million Ponzi Fraud Involving CDs, Pleads Guilty To 18 Felonies; Top U.S. Attorney Says Federal Prosecutors ‘Around The Country’ Have Identified ‘Unprecedented Rise’ In Investment Fraud Schemes With ‘Staggering Losses’

“The fraudsters prey upon vulnerable victims, do not respect local or even state boundaries, and often loot the victims’ life savings.” — Melinda Haag, U.S. Attorney for the Northern District of California, Sept. 13, 2012

It featured confidence-boosting names: Millennium Bank, United Trust of Switzerland and Sterling Bank and Trust.

But it was a cross-border Ponzi scheme that operated for 10 years. Its international “mastermind” controlled each of the entities and duped investors into purchasing at least $129.5 million in “bogus CDs,” federal prosecutors in two U.S. districts said this week.

William J. Wise, the mastermind, was a resident of Canada. But he also operated in the region of Raleigh, N.C., luring investors with tales of outsize returns made possible by profitable overseas investments, prosecutors said. In 2009, the SEC said Wise was assisted by Kristi M. Hoegel of Napa, Calif.

Hoegel, the SEC said at the time, used as many as five aliases. One proved to be the name under which she was charged criminally in February 2012: Jacquline Hoegel.

On Wednesday, Wise pleaded guilty to 18 felonies, prosecutors said. He potentially faces decades in prison.

Here is a breakdown of the Wise guilty pleas: one count of conspiracy to commit mail and wire fraud; twelve counts of mail fraud; three counts of wire fraud; one count of money laundering; and one count of tax evasion.

“The United States Attorneys around the country have identified an unprecedented rise in investment fraud schemes, involving thousands of victims and staggering losses,” said U.S. Attorney Melinda Haag of the Northern District of California. “The fraudsters prey upon vulnerable victims, do not respect local or even state boundaries, and often loot the victims’ life savings. This case is an example of U.S. Attorneys working together – from the Northern District of California to the Eastern District of North Carolina – to identify the schemes, find the perpetrators and bring them to justice.”

Haag was backed by Thomas G. Walker, the U.S. Attorney for the Eastern District of North Carolina.

“The individuals who commit these crimes have no regard for the well-being of their victims – only the desire to make a quick buck,” Walker said. “United States Attorney’s offices, along with federal, state and local law enforcement officials, work diligently each and every day to see that those who commit these crimes are the ones who pay.”

Prosecutors stressed that “[t]he Sterling Bank and Trust referred to in the indictment and plea agreement is not affiliated with the Sterling Bank & Trust headquartered in Southfield, Michigan, with thirteen branches in the San Francisco Bay Area.”

It is not unusual for scammers to trade on the name of a well-known entity or to cherry-pick parts of a well-known name to sanitize a fraud scheme and create comfort in the minds of investors. The Trevor Cook Ponzi scheme in Minnesota, for example, cherry-picked the name of UBS and also used names that sounded regal.

Ponzi-forum hucksters often do the same thing, dazzling investors with tales of fantastic “offshore” profits and using names that instill comfort and confidence.

Prosecutors noted pointedly this week that Wise “agreed to work with the government and the Receiver appointed by the Texas District Court to obtain control over any remaining investor funds in bank accounts in the United States or in foreign countries. ”

North Carolina was rocked Aug. 17 with SEC allegations that Zeek Rewards, an MLM “program” married to a penny-auction site known as Zeekler and operated by Paul R. Burks of Rex Venture Group LLC, was a $600 million Ponzi- and pyramid scheme that may affect more than 1 million people.

Kenneth D. Bell, the court-appointed receiver in the Zeek case, now says there may be 2 million victims. Zeek used as many as 15 financial vendors, including offshore vendors, the SEC said.

Court records strongly suggest Burks was cooperating with the SEC before the agency’s civil charges became public. The U.S. Secret Service said last month that it also was investigating Zeek.

The SEC said last month that Burks had agreed to cooperate with the receiver.

The Wise case resulted from “a lengthy investigation by the IRS-Criminal Investigations Division,” prosecutors said.