BULLETIN: Federal prosecutors in the Northern District of Illinois have charged Steven W. Salutric with wire fraud, the office of U.S. Attorney Patrick J. Fitzgerald said.
Salutric, 53, of Carol Stream, initially was charged civilly by the SEC in January 2010, amid shocking allegations that, to keep his Ponzi and fraud scheme afloat, he stole $400,000 from a 96-year-old woman with dementia who resided in a nursing home.
The U.S. Department of Labor later sued Salutric, alleging that he illegally withdrew “more than $1 million from five pension plan client accounts from 2005 through 2009” and “jeopardized the retirement security of many workers.”
Fitzgerald’s office now says Salutric, who co-founded an investment-advisory firm known as Results One Financial LLC, “caused about 10 clients to lose more than $4.26 million.”
Salutric’s scheme, which in part involved dipping into client’ custodial funds at Charles Schwab & Co Inc., operated between December 2002 and January 2010, prosecutors said.
“Salutric allegedly fraudulently obtained more than $3 million from clients by preparing, forging clients’ signatures on, and faxing documents that falsely represented to Schwab that the clients wished to transfer funds from their Schwab accounts to bank accounts held by Salutric’s personal business associates and entities in which he had a financial interest,” prosecutors said. “Salutric allegedly used at least a portion of the clients’ funds to make Ponzi-type deposits to other clients’ accounts to conceal and prolong the scheme.”
UPDATE: Jeffery (also cited as “Jeffrey”) L. Groendyke, the Michigan man ordered by a federal judge earlier this month to pay nearly $1.4 million in restitution and penalties in a Forex Ponzi case brought civilly by the CFTC, now has pleaded guilty to a criminal charge of wire fraud, federal prosecutors in the Western District of Michigan said yesterday.
Groendyke, 41, admitted he fraudulently obtained about $1 million from investors in his JG Forex Fund and misappropriated money, the office of U.S. Attorney Donald A. Davis said.
The guilty plea followed an investigation by the FBI, prosecutors said.
Groendyke was charged civilly in May. In November, court filings by the CFTC alleged that funds from Groendyke’s fraud scheme made their way to Nicholas Trimble, who was running a fraud scheme through Capstone FX Quantitative Analysis Inc. that involved a purported “automated forex robot trading system” known as the “Gladiator system.”
As part of Trimble’s fraud, Trimble fabricated a Utah office and told an investor that miracle programmers worked at the Utah office. When the investor wanted to see the office, Trimble arranged a “webinar” instead, the CFTC charged.
Trimble, 29, of Denver, was spending investors’ money at Las Vegas casinos, making large cash withdrawals and giving money to his wife and a lawyer, the CFTC charged.
A federal judge in Colorado froze Trimble’s assets.
Claims about miraculous trading platforms and software frequently accompany Forex fraud schemes, which often are targeted at people of faith and sometimes include webinars.
Groendyke is free on bond. Sentencing is anticipated in March.
UPDATED 6:59 A.M. ET (DEC.29, U.S.A.):The OneX site now is resolving to a server, although the site still appears to be down. (UPDATE 6:25 P.M. ET DEC. 29: The OneX site now appears to be back online after an absence of days. Whether is is fully functional is unclear.) Web data now suggest OneX is using a server in the United States. It previously used a server in Europe. Here, below, our post that reflected earlier events . . .
At the time of this post, the website for “OneX” — a “program” pushed by AdSurfDaily President Andy Bowdoin — will not resolve to a server.
Nor will the site return a ping. The ping returns “Timed out” error messages. Because the site will not resolve to a server, a message that the site “will be available in the next 24 hours” no longer appears at the URL for OneX.
The development means that some or all OneX members and prospects are in an even greater information vacuum. The site has been inaccessible for days, although the PP Blog has learned OneX conducted a conference call yesterday and assured listeners the site would return after server problems caused by “inexperience” were solved.
The call featured various cheerleaders, including a man identified as “J.C.,” apparently a company official.
“J.C.,” explaining that he did not enjoy hype, assured listeners that “God” was on the side of OneX and that he anticipated 2.5 million riders on the OneX train by March.
It was revealed during the call the OneX is using Canada-based Solid Trust Pay (STP).
STP was one of the payment processors used by ASD and has a reputation for fueling Ponzi and fraud schemes. STP was among the processors used by alleged international swindler Nicholas Smirnow of Pathway To Prosperity, which the U.S. Postal Inspection Service said last year had defrauded tens of thousands of people from 120 countries.
During the OneX conference call, J.C. explained that many members were showing “unbelievable tolerance” for the website problems.
“Those who are not being patient do not understand what’s there,” J.C. asserted.
Among other things, J.C. appealed to callers not to send in support tickets.
“We’re having some — it’s load problems,” J.C. asserted, calling the development “teething problems.”
J.C. also assured listeners that the company was “a thousand times” more frustrated than OneX members who cannot access the site.
The OneX IT team was inexperienced in the area of “load testing” and wished to apologize for its lack of experience, J.C. said.
“. . . We don’t know how to do heavy load-testing,” J.C. asserted.
That the OneX website was being “slammed” by traffic was a “good thing,” J.C. asserted.
“Hey,” he insisted, “these are pioneering days.”
“We’re on a mission from God,” J.C. asserted.
Bowdoin, who is facing trial on criminal charges of operating a Ponzi scheme through ASD that gathered at least $110 million, told conference-call listeners in October that God created OneX to help him win his criminal case.
Although J.C. apparently agrees with Bowdoin that God is steering the OneX ship, J.C. told listeners that they should expect no support from their sponsors.
Bowdoin has claimed that he is providing “leads” to his OneX recruits and that enrollees could make nearly $100,000 by paying $5.
A woman on yesterday’s OneX call, which apparently was organized by a downline group with access to OneX management, claimed there were plenty of reasons to be excited about OneX.
“In three months, we can look back . . . and laugh,” the woman claimed, later asserting the company started out “on horseback.”
“You’re pioneers,” J.C. asserted. “This is huge.”
OneX “leadership” will “roll up their sleeves” to solve problems, another woman asserted.
J.C. said the firm would provide a “paved road” for members one day.
Some affiliates have claimed Text Cash Network (TCN) is part of a company known as “The Johnson Group.” Others have added an ampersand and mimicked the name of an internationally famous company, saying TCN is part of the “Johnson & Johnson Group.”
Now, yet another TCN flap involving a company name is emerging. The name appeared on TCN’s purchase-agreement page in recent days.
“I understand that this agreement may not be transferred or assigned without prior written consent of REX Venture Group, LLC a/k/a/ T.C.N..com (sic), which consent shall not be unreasonably denied,” the TCN purchase-agreement page read in part on Dec. 22, according to Google cache. The language appeared below a clause labeled “ASSIGNMENT.”
Largely the same language appears on a page for a program known as Zeek Rewards, which leads to questions about whether TCN had copied the language and swapped in the name of its own company without consent.
But the name of REX Venture Group no longer appears on the purchase-agreement page of TCN’s website, and the “ASSIGNMENT” clause has been reworded to read, “I understand that this agreement may not be transferred or assigned without prior written consent of Text Cash Network, inc. a/k/a T.C.N., which consent shall not be unreasonably denied.”
It is unclear when the changes were made.
TCN has claimed to employ an “attorney,” but does not name the attorney. It also has claimed to use a “host of traditional domestic and international legal representatives.”
Whether TCN consulted the purported attorney and the purported “host of traditional domestic and international legal representatives” before posting the assignment clause — and later editing it — is unclear. Also unclear is whether TCN ever consulted with the Rex Venture Group, the firm whose name now has been deleted from TCN’s purported assignment clause.
Why TCN claimed it also was known as the Rex Venture Group also is unclear.
TCN has promotional links to Ponzi scheme boards and to MLM huckster Phil Piccolo and Piccolo-associated firms such as Data Network Affiliates (DNA) and OWOW, which stands for “One World One Website.”
Significant incongruities and vagueness over TCN’s ownership structure have marked promotions for TCN. Similar incongruities marked promos for DNA and OWOW.
1.
Google took a cache shot of TCN's purchase-agreement page on Dec. 22. Here is a screen shot of part of the page, which shows the name of REX Venture Group LLC. The name no longer appears on the page, leading to questions about whether TCN had simply copied-and-pasted terms from another MLM opportunity.
2.
Section from TCN's purchase-agreement page as it appeared on Dec. 27. The section has been reworded, and the name of REX Venture Group LLC has been removed.
UPDATE: “OneX,” the mysterious “program” AdSurfDaily President Andy Bowdoin claimed in October would pay for his criminal defense and help former ASD members “earn $99,000 very quickly,” has been offline for days.
The reason for the extended outage, which coincided with the run-up to the holidays and now has extended beyond Christmas, is unclear. Messages viewed by visitors to the OneX site have varied. The most recent message claims the site “will be available in the next 24 hours.”
But the site has beamed that message for days. The message is signed, “OneX/Qlxchange Administration” — without naming the operators of OneX.
Bowdoin, 77, claimed in October that God had led him to his strategy of using OneX to pay for his criminal defense.
“I believe that God has brought us OneX to provide the necessary funds to win this case,” Bowdoin said in a conference call. Bowdoin was charged with wire fraud, securities fraud and selling unregistered securities in December 2010. His trial is scheduled for September 2012.
OneX, which uses a domain extension assigned to the European country of Montenegro and a webserver apparently positioned in the Irish Sea nation of Isle of Man, is described in MLM-style web promos as a 4X4 matrix feeder program for a Panamanian investment firm and commodities enterprise known as QLxchange.
Bowdoin has participated in multiple OneX pitchfests, using a presentation that appears to have been scripted heavily.
“Tonight we’ll be talking about a financial bailout program for the average person,” Bowdoin said during an October pitchfest.
ASD’s own site was chronically offline before the U.S. Secret Service brought Ponzi scheme allegations in 2008. When Bowdoin’s 10 personal bank accounts were seized on Aug. 1, 2008, the message on the ASD site was signed, “ASD Management.”
During the extended outage, the OneX site has been using this strange headline: “Under A Little Maintenance.”
A tagline below the logo for QLXchange on the site reads, “Investing To Achieve Your Dreams.”
Screen shot: The logo for Qlxchange is appearing in a maintenance message on the OneX site. The site has been inaccessible for days.
In Italics below is a repost of our Dec. 15 donation post. Hate to pass the hat again so soon, but we’re at the edge of an abyss and are still short . . .
We’re midway through December [reposted Dec. 25, Christmas night] and are facing the challenge of carving out a tolerable existence and the costs of keeping the PP Blog going into the new year. The cupboard is bare, and today we’re once again asking for your help.
Today began as do so many days: A quick look in our queue to see how relentless the spammers were overnight, followed by a quick look at our email for the purposes of pruning spam and finding the notes readers submit. The spammers have been particularly relentless lately. The Blog received 13,167 spams in November alone. It has received 8,787 so far this month, a pace that promises to top the November standard.
Sifting through the mess creates an additional maintenance chore during these lean times. The situation places a demand on labor and time. There are very few short days at the PP Blog.
It has struck me recently how bizarre certain fraud cases continue to be; it’s as though there is no ceiling to the absurdity and that no human being is off-limits. In Illinois, for example, a man scammed a woman — now 85 — who survived a Nazi labor camp.
At the moment, this question cannot be answered: How low will they go.
Longtime readers probably have noticed we’ve also been covering more and more stories involving purported “sovereign citizens.” Navigating that thicket is important because it shows Ponzi and fraud madness sometimes are symptoms of a larger madness. In any event, the universe that emerges is one in which the adjectives contradict the nouns. It is worrisome because the crimes are borderless, which is to say the madness can spread electronically from state to state and even country to country.
Shawn Rice, a purported “sovereign citizen” the FBI described in March 2011 as a “fugitive,” has been arrested in Seligman, Ariz.
The Arizona Republic is reporting that the arrest occurred at 5:30 p.m. local time yesterday after a standoff that ended peacefully after negotiations with Rice, who had barricaded himself inside a house.
Rice, whom federal prosecutors in Nevada said was 48, was charged in Nevada with money-laundering and conspiracy in March 2009. His initial arrest occurred as a result of a sting in which he allegedly agreed with Samuel Davis, 56, of Council, Idaho, to launder proceeds from what the men believed was a bank-fraud scheme.
In reality, according to federal prosecutors, Rice and Davis were conducting business with undercover FBI agents posing as scammers.
Davis, another purported “sovereign citizen,” pleaded guilty to the charges in March 2011. He was sentenced in October to 57 months in federal prison. Rice, though, became a fugitive, the FBI said.
It was not immediately clear how the FBI learned yesterday that Rice was in Seligman. The arrest occurred while much of the nation’s attention was focused on the holidays.
The Southern Poverty Law Center (SPLC) has described Davis as a redemptionist-seminar tax scammer and “one of the elders in the Guardians of the Free Republics, a sovereign group that claims to have recently set up ‘common-law courts’ in all 50 states.”
It is becoming somewhat common for “sovereign citizens” to conduct “trials” — occasionally inside places such as restaurants — at which fellow “sovereigns” implicated in crimes and within the jurisdiction of real courts are “acquitted.”
Prior to his guilty plea, Davis advised customers of his tax scheme “that everything is going as planned,” SPLC reported.
Rice is known as “Rabbi Shawn Rice,” SPLC reported.
“According to the court records, from March 2008 through the date of the Indictment, Davis and Rice allegedly laundered approximately $1.3 million of monies for FBI undercover agents,” federal prosecutors said in March 2009. “Davis and Rice were told by the undercover agents that the monies were proceeds of a bank fraud scheme, specifically from the theft and forgery of stolen official bank checks. Davis and Rice laundered the monies through a nominee trust account controlled by Davis and through an account of a purported religious organization controlled by Rice. Davis and Rice took approximately $74,000 and $22,000, respectively, in fees for their money laundering services.”
STATEMENT: At approximately 8:33 a.m. today, a sudden swarm of international traffic affected the PP Blog’s server and its publishing operations. Like previous unusual incidents, the swarm consisted almost entirely of international IPs, many of which were recording their first “visit” to the Blog.
This morning’s swarm appears to have been almost exclusively targeted at the Blog’s archive and “tag” URLs. Tag URLs load archives of stories that reference specific subjects.
Today’s incident appears to have been particularly intense for a period of about five minutes. Although the intense swarm appears to have abated at approximately 8:38 a.m., certain swarm signatures continue to appear.
As of this post, the Blog’s server is functional — though sluggish.
Here is a screen shot that shows part of the swarm:
Screen shot from Dec. 14 evidence exhibit filed as part of an emergency motion in the Jeremy Johnson/IWorks fraud cause brought by the FTC. The site shown in the exhibit and described in the emergency motion by an attorney for the court-appointed receiver in the case is not the actual site of the receiver. Rather, it is an imposter site that uses the receiver’s name and is designed to intercept traffic and undermine the receivership estate, according to the emergency motion. The bogus site later was altered further and the words “Thieves,” “Lairs” (sic) and “Crooks” were placed near the top of the page, according to a separate evidence exhibit.
EDITOR’S NOTE: This story originally was published Dec. 22, 2011, 10:41 a.m. It was updated at 8:11 a.m. on Dec. 23, 2011. The PP Blog temporarily “unpublished” the story on March 23, 2012. Explanation of why it was taken offline temporarily is here. On March 23, 2012, the PP Blog’s security software recorded a “mass injection attack” as the Blog visited a domain styled CollotGuerard.com while researching matters pertaining to Jeremy Johnson. Collot Guerard is an attorney for the FTC and an alleged subject of harassment by Johnson or people close to Johnson because of the FTC actions against Johnson. The PPBlog is not revisiting the CollotGuerard.com domain and believes it is imprudent for readers to visit the domain.
Our Dec, 22, 2011, story is republished below. The republication date is Jan. 15, 2013 . . .
UPDATED 8:11 A.M. ET (DEC. 23, U.S.A.) Robb Evans, the court-appointed receiver in the Jeremy Johnson/IWorks Internet Marketing fraud case filed by the FTC a year ago, first came to national prominence as a liquidator in the Bank of Credit and Commerce International case in the 1990s. If the bank’s name alone doesn’t spark your memory, think of the acronym by which it was known: BCCI.
If you’re, say, over 40, images of BCCI and the spectacle it created perhaps are seared in your memory. The bank’s criminality and 1991 collapse created a scandal royale on both sides of the Atlantic and all over the world, including the Middle East. BCCI, the Wall Street Journal (Europe) wrote on Aug. 3, 2001 — a little more than a month before the 9/11 terrorist attacks — was a “renegade bank” that had relied on secrecy and had been designed to be “offshore everywhere” to evade regulatory scrutiny. The stunning collapse amid allegations of international money-laundering and a disguised takeover of U.S. banks initially put customers on the hook for $9 billion in losses.
BCCI, which allegedly conducted business with the terrorist Abu Nidal (died 2002) and the now-dead or imprisoned dictators of Iraq and Panama (Saddam Hussein [died 2006] and Manuel Noriega) — and also could not say no to the Medellin Cartel and Colombian narcotics traffickers — went on to become perhaps the most infamous acronym in the history of banking. Evans has testified before Congress on the subject of offshore banking, corruption and the war on terrorism. His bona fides and expertise in unraveling the affairs of companies implicated in complex fraud schemes are firmly established in the courts.
U.S. District Judge Joyce Hens Green of the District of Columbia once described Evans’ efforts as “remarkable.” In 1998, noting that she had presided over elements of the multibillion-dollar BCCI case for eight years and calling it the “longest-running forfeiture proceeding in the history of federal racketeering law,” the judge thanked Evans and others publicly for helping preserve $1.2 billion in U.S. assets for distribution to defrauded BCCI customers.
Evans is the namesake of Robb Evans & Associates LLC. What does the company do?
“What we do in my organization is we trace money, and we try and recover it for the victims of fraud, and we do it mostly on behalf of the United States Government,” Evans told the House Subcommittee on Oversight and Investigations in 2006.
Despite his bona fides — despite his record as a court-appointed receiver in numerous cases and his testimony before the U.S. Congress on critical matters of U.S. and international financial security — someone with a Google AdWords account and perhaps some knowledge about SEO planted the seed earlier this month that Evans was presiding over a fraudulent company, according to new federal court filings in the Johnson/IWorks case.
For a yet-to-be-determined period of time, the names of Evans and his company were pushed down in Google search results and replaced at the top of the rankings by a domain styled RobbEvansFraud.com — with a paid AdWords ad to the right of the No. 1 search result driving traffic to the faux Evans site, according to an evidence exhibit filed in federal court on Dec. 14.
The faux site planted the seed that Robb Evans & Associates consisted of “Thieves,” “Lairs” (sic) and “Crooks,” according to to an emergency motion filed by an attorney for Evans.
“Warning,” the first sentence on the faux site blared, “this website is dedicated to collecting information from victims of Robb Evans and Associates.”
In June, Johnson, 35, was arrested at the Phoenix airport at which federal agents allegedly found him in possession of $26,400 in cash and a one-way ticket to Costa Rica. He asserts his innocence to both the criminal and civil charges brought in the case. Johnson now is free on bond.
Stop The Madness
The FTC moved against Johnson, IWorks and other companies in December 2010, alleging an Internet-fueled fraud involving hundreds of millions of dollars. Evans was appointed receiver by a federal judge in Nevada, the venue from which the action was brought. The agency alleged that at least 51 shell companies were set up to dupe banks and to carry out the fraud, which resulted in “hundreds of thousands” of chargebacks and threats to consumers who filed chargebacks.
FBI Director Robert Mueller III warned Congress in March 2010 and again a month later about the dangers of shadowy banking practices, noting that that shell companies often play a role in disguising fraudulent proceeds.
“Money laundering allows criminals to infuse illegal money into the stream of commerce, thus manipulating financial institutions to facilitate the concealing of criminal proceeds; this provides the criminals with unwarranted economic power,” Mueller said.
IWorks operated out of an office at 249 E. Tabernacle St. in St. George, Utah. The street intersects with nearby South Main, home of the historic St. George Tabernacle. The Tabernacle opened in 1876. The city of St. George is famous for its geology, its climate and for its historic ties to Brigham Young and The Church of Jesus Christ of Latter-day Saints.
The city, unfortunately, also is becoming increasingly known as the town from which Johnson allegedly carried out a fraud involving hundreds of millions of dollars, in part by manipulating the banking system through dozens of shell companies in Nevada and other states.
In the emergency motion, an attorney for Evans now says that Johnson and perhaps others are seeking to interfere with the courts and the receivership estate by using the Internet to slime Evans, the FTC and Collot Guerard, an attorney for the FTC. The FTC has filed its own emergency motion.
Despite Hunt’s order, Johnson sued Evans in Utah state court. On Dec. 7, Hunt ordered the Utah state action brought by Johnson dismissed.
Johnson also asked Hunt to order the FTC to pay the legal fees of corporate defendants. The judge refused.
Of all the troubling developments, perhaps the most troubling is the allegation that Johnson and perhaps others have weaponized the Internet to interfere with the administration of justice. The site that attacks Guerard — a career civil servant — clams she has been “accused of fraud and corruption.” The site was created on Oct. 7, 2011, months after Hunt issued the preliminary injunction and order not to interfere. The site appears to operate from servers in Utah, with the registration hidden behind a proxy.
“[W]e are collecting information related to any wrongdoing on her part,” the site informs visitors.
The attack on Guerard is just the latest in a string of attacks or veiled threats against law enforcement. AdSurfDaily figure Kenneth Wayne Leaming, for example, is jailed near Seattle on federal charges he filed bogus liens against public officials in the ASD Ponzi case, including a federal judge, three federal prosecutors and a special agent of the U.S. Secret Service.
Vincent McCrudden, meanwhile, was arrested and jailed in January 2011 amid allegations he threatened to kill 47 regulators and government officials while using a website and emails to terrorize public servants. Just last week, federal prosecutors in Virginia said that Roger Charles Day Jr., who endangered the U.S. military and others in an offshore scam and was sentenced to 105 years in federal prison, had “filed hundreds of billions of dollars of fraudulent default judgments against more than 100 people who Day claimed had prosecuted him unfairly.”
The Day procurement scheme involved at least 18 companies, prosecutors said. When the scheme was exposed, Day simply “directed his conspirators to discontinue bidding through those companies and instead form and use new companies,” the Justice Department said.
In the new filings by the attorney for Evans in the FTC’s case against Johnson and IWorks, is is alleged that Johnson had a role in the posting of “false and scurrilous” material on the Internet in a bid to hamstring the administration of the receivership estate.
Among other things, one of the websites tied to Johnson “makes false allegations concerning ‘mass fraud and corruption by Robb Evans and Associates,’” according to the attorney’s emergency motion to disable the site.
Gmail addresses using the names of Evans and Guerard were created and were designed to “impersonate and/or interfere” with the receiver and others associated with the case, according to the emergency motion.
Johnson and others created other websites — including EvilFTC, FTCTactics and a site in Guerard’s name — to further undermine the legal process, according to the receiver’s emergency filing. Two other sites in the names of other FTC attorneys also were created, according to the receiver’s emergency motion.
Those sites, according to records, both were created on Dec. 1. Like the site in Guerard’s name, the servers appear to be based in Utah.
When the receiver’s attorney contacted Johnson to demand the site targeted at Evans be taken offline, Johnson claimed he did not own, host or control the site while insisting that “the domain has not been used for anything deceptive.”
“It is a constitutional right to be able to speak freely even if your client does not like it,” Johnson informed the receiver’s attorney in an email, according to an exhibit attached to the receiver’s emergency motion.
BULLETIN: The SEC has gone to federal court in Minnesota, alleging that two executives of a clean-coal tech firm repeatedly lied to investors and that one of the executives had a conviction for bank fraud — a fact not disclosed to investors when the company was trawling for cash and using unregistered brokers to do so.
Bixby Energy Systems Inc. raised at least $43 million from more than 1,800 investors between 2001 and 2010, the SEC charged.
Bixby executives Robert A. Walker and Dennis L. DeSender, according to the SEC, touted the firm’s purported coal-gasification machine as “proven and operating when in fact it had substantial technological defects, did not function properly, and was at risk of self-destruction.”
“Investors were falsely informed that Bixby’s coal gasification technology was proven, fully functional, and ready for market,” said Merri Jo Gillette, director of the SEC’s Chicago Regional Office.
Records show that DeSender, 64, of Minneapolis, was released from federal prison in 1998, about three years prior to Bixby’s offering. He went on to work for Bixby as its CFO and COO, and also as an independent consultant, according to the SEC.
In September 2011, DeSender pleaded guilty to a criminal charge of securities fraud that flowed from his role at Bixby, according to records. But he was arrested again on Dec. 1 “for soliciting investors for another issuer in violation of his plea agreement,” the SEC said.
Bixby itself was charged with securities fraud in September 2011, entering into a deferred- prosecution agreement with the government after the firm accepted accountability for fraud committed by “former officers and agents” and its board ousted an individual federal prosecutors described only as an “unidentified coconspirator.”
In its complaint today, the SEC said Walker — Bixby’s 69-year-old former president, CEO and board chairman — no longer held any titles at the firm and had “asserted his Fifth Amendment right against self-incrimination and refused to provide testimony in response to a Commission investigative subpoena.”
Walker resides in Anoka, Minn.
The SEC today also charged six individuals and three companies with hawking Bixby’s offering illegally.
“Investors who purchased Bixby shares through the unregistered brokers were deprived of the protections afforded under the federal securities laws requiring the registration of broker-dealers and securities offerings like these,” Gillette said.
BULLETIN: The SEC has gone to federal court in the Central District of California to charge former U.S. Olympian and NFL wide receiver Willie Gault in an alleged stock scheme involving Heart Tronics Inc.
Gault, 51, was a member of the 1980 U.S. Olympic Team that boycotted the summer games in Moscow. He later played in the NFL for 11 seasons for the Chicago Bears and the then-Los Angeles Raiders. With Gault playing wide receiver, the 1985 Bears team won the Super Bowl over the New England Patriots. The Bears’ team also was famous for the “Super Bowl Shuffle” video and recording.
Just last week, the SEC charged former Notre Dame walk-on Daniel “Rudy” Ruettiger and 12 others in an alleged penny-stock caper. Ruettiger, 63, was the inspiration behind the 1993 movie “Rudy.” The agency said today that the separate scheme involving Gault also involved others, including J. Rowland Perkins, a founder of the Creative Artists Agency talent agency, and Mitchell J. Stein, an attorney in Hidden Valley, Calif., and Boca Raton, Fla.
Perkins and Gault were charged civilly. Stein, 53, was charged both civilly and criminally.
Stein was arrested Sunday at Los Angeles International Airport, the Justice Department said this afternoon. He is charged with one count of conspiracy to commit mail fraud and wire fraud, three counts of mail fraud, three counts of wire fraud, three counts of securities fraud, three counts of money laundering and one count of conspiracy to obstruct justice.
“Stein took advantage of Gault’s celebrity to further prop up the image of Heart Tronics as a successful enterprise,” said Stephen L. Cohen, associate director in the SEC’s Division of Enforcement. “Stein secretly sold millions of dollars in stock while peddling false claims of Heart Tronics’s lucrative sales orders, and has been living the high life off his illicit proceeds with multiple homes, exotic cars, and private jets.”
Also charged civilly was Martin B. Carter of Boca Raton. The SEC described him as Stein’s “chauffer and handyman.” Other civil defendants include Ryan A. Rauch of San Clemente, Calif., and Mark C. Nevdahl of Spokane, Wash.
“Stein and Gault together defrauded one investor into making a substantial investment in Heart Tronics based on false representations that his money would fund the company’s operations,” the SEC alleged. “Instead, Stein and Gault diverted the investor’s proceeds for personal use, including the purchase of Heart Tronics stock in Gault’s personal brokerage account ‘Catch 83’ to create the false appearance of volume and investor demand for the stock.”
Gault wore No. 83 for the Bears and the Raiders. The SEC said Heart Tronics installed him “as a figurehead co-CEO along with . . . Perkins in order to generate publicity for the company and foster investor confidence.”
“Stein orchestrated the repeated announcement of fictitious sales orders for Heart Tronics’ products in public filings with the Commission, press releases, and other public broadcasts, all designed to make it appear that Heart Tronics was more successful than it actually was,” the SEC charged.
As part of the fraud, the SEC charged, Carter flew to Japan to mail back a letter to the United States in a bid to advance the scheme.
Carter, the chauffer, also posed as a person named “Tony Nony,” the SEC charged.
BULLETIN: Federal prosecutors in the Northern District of Illinois have charged Steven W. Salutric with wire fraud, the office of U.S. Attorney Patrick J. Fitzgerald said.
