EDITORIAL: Recruiting Seniors Into Your Downline? Why Ponzi-Forum Purveyors And Pimps Should Pay Attention To Dennis Bolze’s Failed Bid To Have His 27-Year-Prison Sentence Reduced

EDITOR’S NOTE: The U.S. Court of Appeals for the Sixth Circuit yesterday rejected the bid of convicted Tennessee fraudster and Ponzi schemer Dennis Bolze to have his 27-year prison sentence reduced. Although Bolze did not operate the sort of HYIP typically promoted on Ponzi boards such as TalkGold and MoneyMakerGroup, he advanced some of the arguments/rationalizations that often appear on the forums.

A three-judge appeals panel from the 6th Circuit yesterday reduced those arguments to ruin . . .

Dennis Bolze’s Ponzi scheme operated for more than six years, gathered $21 million, created more than 100 victims in the United States and Europe and caused millions of dollars in losses.

Bolze, 63, was sentenced in 2010 to 327 months in federal prison — in other words, more than 27 years. If he survives the lengthy term, he’ll be nearly 90 years old when released.

U.S. District Judge Thomas A. Varlan of the Eastern District of Tennessee sentenced Bolze, applying a “a two-level vulnerable victim enhancement.”

Here is why Ponzi purveyors and their forum pimps need to pay attention: They may be recruiting senior citizens and other vulnerable populations into their schemes. In doing so, they risk significant sentencing enhancements if indicted and convicted. This may be particularly true in cases of Internet fraud in which purveyors and their pimps cast exceptionally wide nets.

Following the advisory guidelines, Varlan could have sentenced Bolze under the facts of the case to as little as 252 months, according to the 6th Circuit. But the judge chose the upper term of 327 months — in effect, six-plus more years — because vulnerable victims were ensnared in the scheme.

Bolze claimed his enhanced sentence was “substantively unreasonable.” The appeals court disagreed, siding with Varlan.

“We conclude that the vulnerable victim enhancement was properly applied and that the sentence at the top of the advisory guideline range was substantively reasonable,” the 6th Circuit ruled.

And the three-judge panel pointed out that “a person who is a victim of the offense of conviction qualifies as a ‘vulnerable victim’ if that person ‘is unusually vulnerable due to age, physical or mental condition, or . . . is otherwise particularly susceptible to the criminal conduct.'”

It often is the case on the Ponzi boards that purveyors and pimps of fraud schemes argue that disclaimers such as “do not invest more than you can afford to lose” insulate them from prosecution.

Bolze used a similar argument for a sentencing reduction, asserting that his victims invested only “discretionary money.”

He further argued that age alone was  not sufficient to justify the enhancement “and that the present poor financial condition of his victims is not relevant to whether they were unusually vulnerable at the time they invested their money with him,” according to the 6th Circuit.

Meanwhile, Bolze “denied that he forced anyone to invest” and claimed “that he did not know” certain investors “because his associate dealt with them.”

The panel rejected each of those arguments. It also rejected a contention by Bolze that only victims who appeared in court at his sentencing proceeding and offered testimony under oath could be counted against him for the purposes of sentencing.

Varlan was within his discretion when he considered victim-impact statements to fashion a sentence for Bolze, the panel ruled. (Emphasis added).

“A sentencing court is not limited to consideration of sworn testimony,” the panel ruled, adding that “The Crime Victims’ Rights Act gave the district court express authority to consider victim impact statements.”

If Ponzi purveyors and their forum pimps still find themselves committed to robbing people on the Internet, other parts of the appeals-panel ruling could give them pause.

“Additionally” the panel ruled, “we will not disturb the district court’s choice to believe the victims’ statements over Bolze’s testimony.

“Many victims reported that Bolze convinced them to invest by assuring them that their money would be safe, contrary to Bolze’s assertion that his investors were ‘simply willing to take on more risky investments,” the panel continued. “And many victims did not invest ‘discretionary money’ as Bolze claimed, but funds ‘they intended to use for their basic needs and to provide them with an income on which to live in their retirement.”

But the news gets even worse for the committed felons on the Ponzi boards, perhaps particularly the hucksters-in-chief who are deliberately targeting seniors and retirees and may have individuals in their organizations doing the same thing. A Bolze claim that he “didn’t know” vulnerable populations were being targeted was summarily rejected by the panel. (Emphasis added.)

“Furthermore,” the panel ruled, “the preponderance of the evidence supports the district court’s determination that Bolze knew or should have known that victims of his offense were unusually vulnerable to his fraudulent scheme. The district court found that Bolze knew ‘several of the victims were in or about to enter retirement,’ that Bolze ‘had personal dealings with the victims, going so far as to bring them to his home,’ and that Bolze expressly told investors that ‘the investment strategies he was advocating were ideal for people of their situation[.]'”

If you’re a Ponzi board huckster — and if you’re recruiting downlines through presentations in your home, other homes or through webinars and conference calls — the ruling by the 6th Circuit provides compelling reasons why you should stop.

Now.

This is perhaps particularly true if you’re involved in a scheme that has gained a head of steam and you’re telling recruits that all is OK because the authorities would have moved by now if anything was amiss. Such tortured constructions frequently appear on the Ponzi forums.

Importantly, Bolze’s scheme lasted for more than six years. The longer a scheme lasts, the higher the odds that that senior citizens and other vulnerable populations will become investors — a situation that sets the stage for a sentencing enhancement.

In rejecting Bolze’s arguments, the 6th Circuit pointed to the experience of “H.H.,” a 76-year old widow living in the Mediterranean region of Europe who’d met with Bolze personally and was the subject of an invitation to his home.

“When the Ponzi scheme collapsed, H.H. lost her investment,” the appeals panel recounted. “Among other adverse impacts, she could no longer afford private health insurance . . . She is now forced ‘to live on a very small state pension of approximately $175 per week’ and spend the equity in her home on basic necessities.”

If none of this so far has given pause to the Ponzi purveyors and their forum pimps, perhaps a line buried in the appeals-panel ruling will emerge as a difference-maker for some. (Emphasis added.)

“The [sentencing] enhancement applies if the Government proves that one victim of the Ponzi scheme was unusually vulnerable.”

That’s a low bar indeed, considering that the Ponzi purveyors and their forum pimps reach into all corners of the world on the Internet. Their reach alone, coupled with their practiced, serialized disingenuousness, puts them at great risk of recruiting a person such as “H.H.” into their fraud scheme — and persons such as “H.H.” have great sway with judges.

Still planning that personal pitch or webinar or mass email? Still telling folks not to invest more than they can afford to lose and claiming you never forced anyone to invest? Still turning a blind eye to what you knew or should have known.

If so, the 6th Circuit just told you it isn’t going to work and that a sentencing enhancement might be in your future, as it was for Dennis Bolze, a purported day-trader who briefly went on the lam after the Bernard Madoff Ponzi scheme was exposed.