Secret Service Busts Another Alleged Ponzi In Florida; Michael Greenberg Accused Of Using 9 Company Names To Bilk Investors, Banks, Law Firm, Small Business Administration

A Florida man who spent time in prison for wire fraud and money-laundering in a previous Ponzi scheme embarked on a new scheme after his release, federal prosecutors said.

Within two years of being released from custody in 1996 — and while still on supervised probation — Michael Greenberg, 50, started a new Ponzi and fraud scheme.

The new scheme operated for more than a decade, gathered more than $53 million, fleeced investors and creditors out of more than $24 million and used the names of at least nine different companies, prosecutors said.

Just days ago FBI Director Robert Mueller III warned Congress that white-collar criminals in the United States increasingly were relying on shell corporations to commit crimes and avoid detection.

The U.S. Secret Service led the investigation, which is centered in Pinellas County, Fla. Greenberg has been charged with wire fraud.

One of his companies existed for “no other purpose than to defraud banks and the U.S. Small Business Administration,” the Secret Service said. The agency described several of the companies as operating “on paper.”

In 1992, Greenberg was sentenced to 46 months in federal prison after being convicted of operating a Ponzi scheme that fleeced his own father out of more than $1 million. Other investors also lost money in the scheme, according to records.

After being released from prison, Greenberg started a company named Pure Class Inc., according to the Secret Service complaint. The business involved the need for an automobile-dealer’s license, something that might be a tall order for a convicted felon to obtain.

Greenberg “hid behind a proxy in both forming the corporation and in obtaining the license,” the Secret Service said.

‘[A]ll business done with Pure Class from its inception was based on a fraud at its inception,” the Secret Service said.

Because of the corporate deception and the proxy, the Secret Service said, persons conducting due diligence on the company would have been shielded from discovering Greenberg’s felony conviction and facts to help them make informed investment and business decisions.

The agency painted a picture of an elaborate deception, alleging that Greenberg assumed the identity of a third person to trick at least one victim and created a bogus email account to correspond with the victim, as though Greenberg were a third party who could verify details about the business.

Greenberg also assumed the identities of his parents to get a loan and created “sham” corporations to keep investors from learning the truth about his business operations, the Secret Service said.

He is accused of creating false tax returns in his parents’ names, forging their signatures on a loan deal, stealing a notary stamp, affixing the stamp to the forged documents, and then forging the name of the notary.

Greenberg formed at least nine different corporations or business names to pull off the scheme, according to the Secret Service. He is accused of fleecing at least 30 investors and banks, and also is accused of swindling the U.S. Small Business Administration.

Among the victims were a real-estate developer and a law firm whose office manager invested the company’s line of credit of $119,000 in the scheme, according to the complaint.

Based on Greenberg’s fraud — and elaborate measures to cover it — he duped the Small Business Administration into backing $1.5 million in loans — loans that were acquired at least in part because Greenberg forged his wife’s signature on documents, according to the complaint.