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Tag: James Levier

  • THE ‘CORROSIVE CRIMINAL CONSPIRACY’ OF KENNETH MARSH/GRYPHON HOLDINGS: Among 5,000 Fleeced Victims Are Alzheimer’s Patient, Quadriplegic, Widows: A Terrible Tale Of Retirement Savings Gone, Children’s College Tutition Vaporized, Bankruptcies, Crippling Debt, Divorces, Failing Marriages, Embarrassment

    EDITOR’S NOTE: Although this story largely is about Kenneth Marsh and victims of his massive fraud scheme, the PP Blog hopes readers will visit Leagle.com (link below) to read an updated sentencing memo in the Marsh/Gryphon Holdings case. In many ways, the document tells the terrible story of our times . . .

    So, you’re running a fraud scheme and paying commissioned salespeople to pass on your lies — and you want to sanitize your scheme by using fancy phrases such as “holdings company” and making investors believe that say, a billionaire or famous institution, are on board?

    That’s what Kenneth Marsh pulled. It didn’t work in the long term — not for him, not for the pitchmen. In the short-term, though, it worked well enough to destroy lives and alter futures — while Marsh and some of his criminal pitchmen cackled about their brilliance.

    Marsh, now a convicted felon, was the ringleader of the Gryphon Holdings Inc. scam in New York that falsely traded on the names of billionaire investor George Soros and academic institutions such as Harvard and Oxford. He was sentenced in September to eight years in federal prison. Prosecutors say he ran the scam from a strip mall on Staten Island while making investors believe he was a fixture on Wall Street with a top academic pedigree and marquee business connections.

    The government wanted more prison time, and Marsh wanted less. Marsh, 44, ultimately received a middle-range sentence — with U.S. District Judge Jack B. Weinstein explaining that the Marsh sentence was a harsh one that would jail him for nearly a decade, but later would free him under close supervision to get a job so he could address making restitution to victims.

    No Plausible Deniability For Fraud Pitchmen

    Seventeen pitchmen or Marsh associates were charged criminally in the case and sentenced to jail sentences ranging from three months to two years and a month. The defendants also were sentenced to long terms of supervised release. More than 5,000 victims were identified. The life-shattering case is mindful of many of the fraud schemes pitched on Ponzi forums such as TalkGold and MoneyMakerGroup — with the hucksters gleaning commissions while trying to shroud themselves in the cloaks of plausible deniability. (Emphasis added.)

    “Defendants were attracted into the conspiracy by the promise of an easy dollar,” wrote Weinstein. “They had to know almost immediately that they were engaged in criminal fraud. Nonetheless, they continued to participate because of the large sums they were earning.”

    It was a case of garbage in, garbage out., with some of the pitchmen later playing dumb and claiming they only were repeating what they were told by the company — including an assertion the enterprise was “entirely legal” and had been vetted by an “attorney.”

    But is was a sham, the judge ruled. (Emphasis added.)

    “Defendants made gross misrepresentations about almost every aspect of the business,” Weinstein found. “Promotional materials painted the picture of an established, multi-national operation, replete with endorsements from people like George Soros. In reality, the company’s history, international locations, testimonials, purported in-house hedge fund, and research facilities were entirely fabricated.”

    And Weinstein’s memo also destroyed the notion of plausible deniability on the parts of the pitchmen and business associates. (Emphasis added.)

    “Many of the smaller players in the fraud contend that they did not know that what they were doing was wrong,” Weinstein wrote. “If these defendants acted out of ignorance, they willfully rendered themselves blind.”

    And, the judge noted (emphasis added), “Those who cross the line from legal occupation to illegal acts are rarely shielded from criminal liability because they acted in conformance with the instructions of supervisors or the advice of legal counsel. This is particularly so in the high-risk, highly regulated financial industry. Puffery of the sort that may be winked at when utilized by a used car salesperson can constitute a serious crime when made in connection with the sale of securities.”

    Information about the victims and their statements that appears below is taken from an updated sentencing memo issued Monday. The document is a painful read, one that speaks to a disgusting enterprise that targeted vulnerable populations and pilfered retirement and college savings while causing bankruptcies and divorces and destroying family relationships. It also speaks to what Weinstein described as the greed of Marsh’s fellow pitchmen.

    Victims’ Statements (Abridged)

    Here is how several of the victims of the $20 million fraud described how their lives were altered. (Please note that some of the statements are direct quotes from victims; others are summaries of their experiences taken from quoted material in court files.)

    • “[Gryphon] took my retirement money and I have serious doubts now that I will ever be able to retire. I am 59 years old and I don’t have enough time to make this money loss up . . . I fear for my family’s well-being and future.”
    • “Prior to the crime, my financial house was in order and I had saved plenty of money for retirement. Now, I have to ‘start over.’”
    • “I informed [pitchman] Mr. Leveir [sic] that I was going to use my daughters’ college tuition money and asked him to please not be scamming me as a loss of this money was detrimental to me.” (NOTE: The judge found that James Levier, 36, earned $20,000 a month as a fraud pitchman, after previously earning $35,000 a year as an assistant manager at Burger King. Levier created “at least” 250 victims as a Gryphon pitchman. Levier cooperated with prosecutors and has medical problems. The judge sentenced him to three months in prison, three years’ supervised release — and ordered him to forfeit $516,000 and be “jointly and severally liable” for more than $10.5 million in restitution.)
    • “My children were saddled with college loans they should never [have] had to take out because their father was stupid enough to fall for all the misleading advertising they sent out via e-mail. Getting involved with these crooks was the stupidest and most financially devastating thing I have ever done.”
    • “[The fraud] left us in bankruptcy for our credit cards, our savings, were no more. We had to give up [our] dreams, to remodel our home, to give money to our sons so they could get a good start at life. After my husband died it [left us] almost destitute.”
    • “These people completely stole my dignity and my self-worth as I just had to keep going to try and get my money back. I was totally desperate. I have never been treated for depression until this affair with Gryphon happened to me.”
    • Another victim said he “became so depress[ed] that [he] stayed in bed for days at a time. Now [he] do[es] not trust anybody.”
    • Yet another “developed a sleeping disorder and was suffering with stomach issues due to the stress.” Still another “is addicted to sleeping pills now and [has] to take two a night to sleep.” A third “accumulated several thousand dollars of medical bills as a result of the fraud.”
    • One victim stated “that his wife of twenty-eight years left him soon after he admitted that defendants’ scheme had caused him to go $125,000 into debt, $100,000 of which resulted from fees and failed trades. “I’ll never forget her look of disgust with me. For what I have done with Gryphon Financial,” the man said.
    • Another victim put it this way: “I have also lost my marriage of 28 years due to solely the loss of over 33 thousand dollars of my wife’s and my retirement account. She has called me an idiot for good reason and this has been the hardest part. I truly let her down and it now has caused our separation. She still thinks I am a complete moron. I can’t even look her in the eye due to extreme embarrassment.”
    • In some cases, “when victims’ marriages survived the terrible losses, they did so in a weakened state.” One victim “stated that his wife prevented him from having a nervous breakdown when he discovered that they had been defrauded . . . However, she no longer trusts him, especially with regard to financial decisions.”
    • Another victim put it this way: “My wife and I rarely speak. Before this, we ran several businesses as a couple. We now have the business (bar and grill), but work different shifts so we don’t argue. Yes, our marital relations have also suffered. I guess that’s called loss of consortium.”
    • Still another — a wife of a Marsh target whose husband “suffers from progressive dementia and Alzheimer’s” — put it this way: “I was involved in the traumatic events as I tried to recover the funds from Gryphon Financial after discovering that [my husband] paid $25,000 for investment consulting services we did not want or need. When we attempted to cancel the services, even explaining my husband had dementia and was not of the capacity to understand fully what he was purchasing . . . we were told the funds were non-refundable and then we were threatened with legal action from attorneys.”
    • Meanwhile, a different woman put it this way: “I’m 80 years old, a widow, living with . . . part time care workers. My soc. security, and small widow pensions etc. are my current situation. I’m in a wheelchair. They were well informed of my health and age.”
    • Yet another victim was described as “a quadriplegic who was saddled with large medical bills.”
    • Still another victim — a husband, father and grandfather — put it this way: “At the time this unfolded my only daughter was killed in a car accident not of her fault and we were left with two beautiful twin boys aged three. My wife and I are in our mid-sixties. I informed [fictitious pitchman] John Stevens of this happening and that I wanted to be left alone but they continued to press me and I folded. . . . I hoped to help the family but obviously I did not.”

    “Defendants used victims’ vulnerabilities to their own advantage,” according to the Judge Weinstein’s memo.

    “What is particularly striking about the case is [this,]”, the judge wrote: “First, how many people earning decent livings were so easily induced to become members of this corrosive criminal conspiracy, and how cruelly they acted towards the customers they dealt with.

    “Second, how naïve were many of the victims and how easily they were suckered into turning over their fortunes to unknown, bodiless voices and emails.”

    Read the full memo at Leagle.com

  • FIVE ARRESTED: SEC Says Bogus Stock-Tips Website Faked Testimonial From George Soros; Gryphon Holdings Inc., Kenneth E. Marsh, Others Charged With Operating ‘Sham’

    BULLETIN: Five people have been arrested in New York on charges of conspiracy to commit securities fraud and wire fraud.

    Their preliminary court appearances  are occurring now — and the allegations in the case are spectacular.

    Separately, the SEC has gone to federal court in New York to obtain an emergency court order freezing the assets of a company and defendants allegedly involved in the fraud. The company is a Staten Island investment-advisory business that allegedly sold bogus stock tips from “fictional trading experts.”

    Federal prosecutors said the firm has no trading desk, despite professing to have a “legendary” one. Prosecutors added that false academic claims about “Harvard, Oxford, Colombia, and Wharton” were part of the scheme — and that the purported ringleader used multiple names to pull off the fraud.

    U.S. District Judge Jack B. Weinstein of the Eastern District of New York granted the emergency freeze.

    Charged criminally in the case were Kenneth E. Marsh, 43, of Staten Island; Baldwin Anderson, 55, and Robert Anthony Budion, 28, both of Staten Island, Jeanne Lada, 44, of Freehold, N.J., and James Levier, 34, of Beachwood, N.J.

    Each of the criminal defendants also was named a defendant in the SEC’s civil case, which also names Gryphon Holdings Inc., which is operated by Marsh.

    Several relief defendants who benefited from Gryphon’s alleged misconduct also were named in the SEC’s civil complaint.

    “Gryphon and its associates attracted clients through postings on the Internet that falsely exaggerated their investment prowess,” said George S. Canellos, director of the SEC’s New York Regional Office. “They sold a bill of goods by pretending to be legitimate money managers with a long track record of extraordinary returns, distinguished clients, and hundreds of millions of dollars under management.”

    The company  “touted offices on Wall Street and around the world while, in reality, defrauding investors from a strip mall on Staten Island,” said David Rosenfeld, associate director of the SEC’s New York Regional Office.

    “Gryphon was nothing more than a sham designed to separate clients from their money,” Rosenfeld said.

    Like other recent securities cases, the complaint reads almost like a work of fiction. Multiple company names were used, and multiple aliases were used to pull of the scam, authorities said.

    “Gryphon is a New York corporation doing business under various names, including Gryphon Holdings, Gryphon Financial, Gryphon Daily, Gryphon Consulting Group, Gryphon Hedge Fund Partners LLC, Gryphon Management Hedge fund, Gryphon Financial UK Ltd, and Gryphon Australia,” the SEC said in the complaint.

    “Gryphon’s physical offices are located in a strip mall in Staten Island, New York, but the firm’s Internet posts depict an international operation with offices located on Wall Street, in Chicago, California, London, England, and Australia,” the SEC said. “The firm claims to have twenty-five to thirty employees and affiliations with expert, successful securities traders.”

    The defendants also used aliases, the SEC said.

    “In communications with Gryphon’s prospective or existing clients, Defendant K. Marsh has used various aliases, including ‘Kenneth Maseka,’ ‘Michael Warren,’ and ‘Marcus Thorn,’” the SEC said. Federal prosecutors added that “Warren” and “Maseka” are fictional, and the SEC said “Thorn” was, too.

    Other bogus storylines and identities included “Chris Wolfe,” whose average profit since 1995 purportedly ‘exceeded 1000% per trade’; ‘Marc Seigel,’ who purportedly ‘manage[s] in excess of 700 million in daily option trading volume’ and whose ‘talents trading options can be traced back five generations’; ‘John Gage,’ a graduate of Columbia and Wharton, a partner at Gryphon Financial and head of ‘equity Hedge Strategies,’” the SEC said.

    The bogus “Marcus Thorn” was claimed to have “delivered ‘189% gain’ on an ‘Intel play in one day,’” the SEC said.

    Marsh was banned in 2007 by the National Association of Securities Dealers, the predecessor to the Financial Industry Regulatory Authority, “from associating in any capacity with any firm that is a member of the NASD,” the SEC said.

    “Since at least 2007, Gryphon has advertised its services on several websites, which at various times included, among others, www.gryphondaily.com, www.gryphonfmancial.net, www.poisonpilltrader.com, www.cnbceffect.com, www.6ammoneymachine.com,” the SEC said.

    “Gryphon describes itself as the ‘World’s No. 1 Investment Newsletter,’ and provides its investment recommendations through various services bearing names such as ‘6AM Money Machine,’ ‘Raging Bull,’ ‘Wolves of Wall Street,’ ‘Wall Street’s Most Wanted,’ ‘Put Play of the Day,’ ‘Pure Profit,’ ‘WolfOption Trader VIP,’ ‘Elite Option Service,’ ‘Inner Circle,’ ‘Brain Trust,’ and ‘Mafia Trader.’ Once a client pays Gryphon for one or more of these advisory services, Gryphon representatives provide the client with investment recommendations on an individualized basis via telephone, e-mail, and/or through a password-protected section of Gryphon’s website,” the SEC said.

    Meanwhile, the SEC said fake testimonials were part of the scheme.

    “Gryphon’s website and promotional materials were also replete with false testimonials from clients about its performance and affiliations, and a purported endorsement of Gryphon by George Soros, that in fact Gryphon fabricated.

    “Gryphon claimed that Soros stated: ‘Alone the traders of Gryphon Financial are incredible, together the [sic] are unstoppable.’  The client testimonials falsely attested to the success of Gryphon’s recommendations, which purportedly resulted in a ‘huge nest egg,’ the ability to buy expensive cars, and freedom to no longer work,” the SEC charged.

    The scheme gathered more than $17.5 million over the past three years, the SEC said.

    Read the agency’s astonishing complaint.