DURANGO HERALD: Attorney Says His Client Was Ponzi Player Who Tried To ‘Scam The Scammers’; E-Bullion’s Name Surfaces In Illustrative Case Of Frederick H.K. Baker, Who Is Sentenced To Federal Prison

In July 2010, FINRA memorably described the HYIP sphere as a “bizarre substratum of the Internet.” The regulator warned about “online payment systems” that are used for criminal activity, noting that some fraud purveyors discuss subjects such as how to “build a winning HYIP portfolio” and how “to ‘ride the Ponzi’ and get in and out before a scheme collapses.”

A case brought by federal prosecutors in Colorado against a Utah man could be an eye-opener for fraudsters and their apologists and shills who engage in bizarre and reckless behavior such as that outlined by FINRA and help fraud schemes proliferate to consume millions of dollars.

Indeed, the Durango (Colorado) Herald is reporting that Frederick H.K. Baker will be going to federal prison for 41 months (see link at bottom of post). Although FINRA’s 2010 Public Awareness Campaign is not referenced in the story, Baker’s case speaks to a number of the issues FINRA raised more than a year ago.

Compellingly, even Baker’s attorney conceded that his client thought he could “scam the scammers” by knowingly becoming a Ponzi player and adopting a strategy by which he’d get in early, collect his profits — and then get out, according to the Herald.

“Baker thought he could make money if he got in early,” the Herald reported. “In effect, he was running a Ponzi scheme to invest in other Ponzi schemes . . .”

The Herald’s story quotes a federal prosecutor who told a federal judge that Baker’s scheme destroyed families and caused financial and emotional heartache for the victims.

And it also notes that E-Bullion, the shuttered California payment processor whose operator, James Fayed, was convicted in May of arranging the July 2008 gruesome murder of his wife, was used in the Baker scheme.

E-Bullion also has been referenced in the AdSurfDaily Ponzi case, the Legisi Ponzi case, the Gold Quest International Ponzi case, the FEDI case and other cases. The most recent reference to E-Bullion in the Legisi case, according to research by the PP Blog, occurred on Sept. 22, 2011 — less than three weeks ago.

An attorney for two individuals claimed in court filings that his clients had used E-Bullion when investing with Legisi and were out $92,094.11. The attorney noted that their claims to a share of proceeds from the receivership estate have been rejected. Other filings list the reason for the rejection as inadequate documentation of the investment. The operators of fraud schemes such as Legisi are infamous for keeping poor records and not entering information in books, a sad reality that can lead to a result of victims of fraud schemes not receiving compensation from restitution pools.

Read the Baker story in the Durango Herald. The story is compelling because it points out that Ponzi players have more to lose than just money. Baker, according to the story, is now facing some harsh realities and coming to grips with what his descent into the Ponzi darkness truly has cost him and his family.