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  • Ponzi Suspect Michael Greenberg Commits Suicide, Police Say; Florida Man Stood Accused Of Bilking Parents, Investors, Banks In New Scheme That Emerged After Prison Release

    Michael Greenberg, charged last week in a Ponzi scheme that allegedly bilked members of his family, investors, banks, a law firm and the U.S. Small Business Administration, has committed suicide.

    Greenberg hanged himself inside his home, police in Clearwater, Fla., told the Tampa Tribune. His body was found Wednesday. News of the suicide broke in the newspaper, which reported Greenberg was out on a signature bond of $50,000 after he was charged last week.

    On March 25, the U.S. Secret Service alleged that Greenberg was operating a Ponzi scheme that involved nine different company names and scammed investors and businesses out of more than $24 million.

    Among the victims in the case were Greenberg’s parents, the Secret Service said.

    Records show that Greenberg had been charged in a previous Ponzi scheme that bilked his father out of more than $1 million and resulted in a 46-month prison sentence.

    Within two years of his release from federal custody in 1996 — and while still on supervised probation — Greenberg started another scheme.

    Hiding behind a proxy and forming a corporation fraudulently, Greenberg ultimately was able to gather $53 million from investors and businesses and persuade banks to make loans, the Secret Service said.

    Greenberg stole his parents’ identities to get the loans, and also forged his wife’s signature on documents, the Secret Service said. The agency said the case also involved the theft of a notary’s stamp, forgery of the notary’s signature and the formation of “sham” corporations that existed “on paper.”

    Elizabeth Watts, a spokeswoman for the Clearwater Police Department, was not immediately available Friday afternoon to answer questions about whether the suicide investigation was closed.

    Greenberg used 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, according to the complaint.

  • NEWS/UPDATES: Feds Charge Donald Young In Massive Ponzi In Pennsylvania; Matthew Pizzolato Pleads Guilty In Louisiana; Jeffrey Mowen Loses Cars In Utah; ‘Today’ Show Interviews Daughter Who Turned In Mom For Ponzi

    A grand jury has returned an indictment against a suburban Philadelphia man, accusing him of operating a Ponzi scheme that gathered at least $95 million and fleeced investors of more than $25 million.

    Charged criminally with mail fraud and money-laundering was Donald Anthony Young, who also has been sued by the SEC.

    Meanwhile, Matthew Pizzolato has pleaded guilty in a separate Ponzi case targeting senior citizens in Louisiana, prosecutors said.

    Pizzolato, 26, of Tickfaw, pleaded guilty to 21 counts of mail fraud, three counts of money-laundering, and single counts of wire fraud, securities fraud and witness tampering. In all, Pizzolato pleaded guilty to 27 felonies. He also was sued by the CFTC.

    At the same time, accused Ponzi schemer Jeffrey Lane Mowen has lost his monstrous collection of vehicles in Utah. The U.S. Marshals Service began selling the 210-vehicle collection at auction yesterday — April Fool’s Day.

    Marshals were authorized to sell the cars because the bill to store them cost $21,000 a month. Mowen, 47, was arrested in Panama in 2009, extradited to the United States and jailed in Utah on Ponzi charges. He later was charged in an alleged murder-for-hire plot in which he was accused of trying to recruit a fellow prisoner to kill witnesses in the Ponzi case.

    The auction had been delayed twice, but proceeded yesterday. It was billed by Erkelens & Olson Auctioneers as the “Largest collection of Muscle, Collector & Exotic vehicles ever [offered] in Utah!”

    Elsewhere, NBC’s “Today” show this morning featured a daughter who turned in her mother in a Ponzi scheme. The mother ultimately was not charged because authorities came to view her as a victim who had been recruited to sell the scheme.

    Authorities busted the California scheme, operated by Pastor Robert Jennings and Henry Uliomereyon Jones, a magnetic figure. The affinity-fraud scheme involved investments in coal and a bogus international gold deal.

    Jones was arrested in Hong Kong and extradited to the United States. He and Jennings were convicted last year.

    Kim Flanigan told Today that she reached her limit when she observed her mother, a widow, trying to recruit a widow with nine children into the Ponzi scheme. Both widows attended the same church.

    “That was my breaking point,” Flanigan told Today. (See link to story below. NBC’s “Dateline” program will feature Flanigan tonight 9 EDT.)

    In the Donald Anthony Young case in Pennsylvania, prosecutors said Young stole from investors so he could live in the lap of luxury.

    “Ponzi schemes are usually a vehicle for an unscrupulous person to live high off of someone else’s wealth,” said U.S. Attorney Michael L. Levy. “According to the indictment, this defendant helped himself to others’ fortunes, living a life of luxury, with little or no regard for the damage to our financial markets, our economy, and the reputation of the investment advisors who follow the rules.”

    A veteran FBI agent said the agency was committed to destroying Ponzi fraud.

    “The FBI views these types of financial investment Ponzi fraud schemes as significant criminal problems, because of the devastating effect they have not only on the individual victims who are preyed upon but also the effect they have on financial markets and on the overall economy,” said Janice K. Fedarcyk, special agent-in-charge of the Philadelphia Division of the FBI.

    Prosecutors and agents involved in the Pizzolato case, meanwhile, also said Ponzi fraud will not stand in the United States.

    “[Pizzolato’s]  plea demonstrates our resolve, along with our partners in federal law enforcement, including the FBI, IRS and U.S. Postal Inspection Service, to aggressively investigate and pursue those economic predators who seek to take advantage and prey upon the most vulnerable among us, including our senior citizens who most desperately need our protection,” said U.S. Attorney Jim Letten.

    Letten thanked the Office of the Louisiana Commissioner of Securities for its assistance in the Pizzolato case.

    An FBI agent said the case sends a signal.

    “This guilty plea represents once again, the FBI’s resolve to aggressively investigate financial crimes which victimize our most vulnerable citizens,” said David Welker, special agent in-charge. “It is reprehensible that Mr. Pizzalotto would target senior citizens and defraud them of their life’s savings. The FBI, along with our law enforcement partners, will continue to identify and investigate frauds such as this.”

    An IRS investigator said authorities would leave no stone unturned to expose financial fraudsters.

    “This investigation shows that the appearance of success can be a mask for a tangled financial web of lies,” said Michael J. DePalma, special agent in-charge of the IRS New Orleans’ office.

    “No matter what we call this type of crime, the bottom line is that Mr. Pizzolato robbed over a hundred investors of more than $19 million and spent just about all of it,” DePalma said. “Special Agents of IRS Criminal Investigation will continue to work with our federal and state law enforcement partners and the United States Attorney’s Office to pursue evidence of criminal activity wherever it leads, leaving no financial stone unturned.”

    Visit the Today show site to read about Flanigan’s experience.

  • SEC: ‘Sham Operation’ Run By Convicted Felon In U.K. Took $10.2 Million From Investors; U.S. Investment Adviser Charged With Fraud

    Want international, real-life intrigue? It’s in there. Want venues from the United States to the United Kingdom and Switzerland? They’re in there. Want allegations that a mysterious criminal in Britain used two identities and operated a sham investment company?

    Today’s your lucky day. They’re in there, too.

    Now, a former investment adviser from Arizona has been charged with fraud by the SEC for arranging a sweetheart deal, starting a secret company and setting the stage for his clients to be fleeced by putting millions of dollars in the hands of a convicted felon using a temporary office.

    Charged by the SEC was Kevin H. Blood, of Scottsdale. Blood formerly was  president and chief executive officer of Capital Wealth Management Inc. (CWM), which formerly was a registered investment adviser.

    Meanwhile, Patrick Danison, who also is known as Eric F. Danison, has been jailed in the United Kingdom on criminal charges. Danison was the president of a mysterious firm known as Amkel Capital, which had a Swiss bank account and received $10.2 million in a deal arranged by Blood through a conduit known as Adelaide Partners LLC.

    The SEC said Amkel was “a purported financial services firm.” It is listed as an “unauthorised” firm by the U.K.’s Financial Services Authority, which regulates markets, exchanges and firms in the United Kingdom.

    Blood has settled the SEC charges without admitting or denying the allegations. Based on his sworn financial statements and other documents and information submitted to the SEC, a civil penalty was not imposed, the agency said.

    The scheme began in February 2009, when Blood recommended that his clients provide a $10.2 million loan to Adelaide, which would invest the money with Amkel in the United Kingdom, the SEC said.

    Blood formed a hedge fund with 20 of his clients, dubbing the fund ABC-CWM Inc.

    “Blood represented to these clients that any investment opportunity that ABC-CWM made would be backed by a legitimate bank guarantee or other form of collateral,” the SEC said.  “[He] also allegedly represented that their principal would never be at risk and that he would not personally profit from any transaction he recommended to them other than his CWM management fee.”

    Clients were told “ABC-CWM would receive a bank guarantee in exchange for the $10.2 million loan and earn 20% per month for two months,” the SEC said.

    When recommending the investment, Blood did not tell clients he had arranged “a side compensation agreement with Adelaide Partners wherein he would receive 85% of any excess profits resulting from the investment,” the SEC said.

    To siphon the excess profits, Blood started a company “using his wife’s name,” the SEC said. This company was known as LWJR Group Inc.

    Adelaide ‘s role “was to act as the middleman and transfer the $10.2 million to Amkel Capital in exchange for [a] $200 million line of credit to trade in Amkel Capital’s medium term notes,” the SEC said.

    A Meeting In London

    As part of what the SEC described as “purported due diligence,” Blood traveled to the United Kingdom and met with Danison in London on Feb. 10, 2009.  He then caused Adelaide Partners to transfer the $10.2 million to an Amkel Capital bank account in Switzerland without ever securing a bank guarantee or any other form of collateral, the SEC said.

    At that point, Blood had no control over his clients’ money. By April 2009, Blood had lost contact with Amkel and his clients’ $10.2 million loan to Adelaide was delinquent.

    “Amkel Capital’s alleged U.K. headquarters was only a short-term rental space,” the SEC said. “Eric Danison, the president of Amkel Capital, has a criminal record, and he is currently incarcerated in the U.K. pending criminal prosecution.”

    The agency noted that “Blood’s clients have not received the return of any of their $10.2 million investment” and that Danison’s operation was a “sham.”

  • SHOCKING FRAUD AND PRIVACY ALLEGATIONS: FTC, Florida Say Alcoholism Cure Corp. Used .Org Domains, Threatened To Disclose Members’ Drinking Problems If They Canceled Program

    The FTC and Florida Attorney General Bill McCollum have charged a Florida company that “touted a phony cure for alcoholism” with false advertising claims, false efficacy claims, false privacy claims, false claims about professional qualifications, unauthorized billing and deceptive trade practices.

    Among the allegations in a civil lawsuit against Alcoholism Cure Corp. were that it offered tiered programs depending on the severity of a member’s involvement with alcohol — and if a member wanted to pull out of the program, the company threatened to expose the member’s alcohol dependence publicly.

    Alcoholism Cure Corp. also did business as Alcoholism Cure Foundation and used at least two .org websites to sell its program, according to court filings.

    Among the other allegations in the case were that the company disclosed health information about its customers to bill collectors, credit-card companies and the Better Business Bureau in a bid by the firm to win cases when customers disputed charges.

    The company, which is operated by Robert Douglas Krotzer, also placed restrictions on how clients could cancel.

    “Defendants require consumers to submit ‘Proof of Continued Drinking’ to prove that they are not cured,” the FTC and McCollum said in court filings. “Defendants state the submission should include, among other items, notarized notes from the consumer’s doctor and five friends stating that the consumer continues to drink, liquor receipts from the previous two months, and several kinds of laboratory testing.

    “Unless consumers meet all the requirements set forth in this paragraph, Defendants deem them ‘cured’ and claim the consumers owe the full cost of the Program, which differs by consumer but generally ranges from $9,000 to more than $20,000,” the complaint alleged.

    Litigation threats against customers occurred routinely, according to the complaint.

    “Defendants warn consumers that failure to pay the demanded amount could result in litigation and the attendant ‘unwanted publicity,’” the complaint alleged. “In fact, Defendants have filed at least eleven cases in Jacksonville, Florida small claims court against consumers who registered for the ‘Permanent Cure’ Program seeking several thousand dollars each. In the cases, Defendants reveal the consumers’ personal and health information, including the fact they are alcoholics, by not filing the court pleadings in a nonpublic manner.”

    Customers were billed when canceling or attempting to cancel the program, according to the complaint.

    “Defendants bill consumers’ credit card or PayPal account consecutive times without authorization, often in amounts far exceeding the monthly subscription fee, until the account will no longer accept charges,” the complaint alleged. “When consumers reverse or dispute the unauthorized charges, in numerous instances Defendants disclose consumers’ personal and health information to consumers’ credit card company or to PayPal in an effort to discredit consumers and retain the money obtained as a result of the unauthorized charges.”

    The company also disclosed members’ health information to the Better Business Bureau if they lodged a complaint, prosecutors said.

    Even bill collectors hired by the company were given access to members’ health information, prosecutors said.

    “In some instances, when Defendants have referred a consumer to a debt collection agency for collection, Defendants have disclosed to debt collection agents the personal and health information of all the consumers who have registered for the ‘Permanent Cure’ Program,” the complaint alleged.

    “Defendants disclose the information by giving the debt collection agents full access to the unencrypted email account where Defendants store consumers’ personal and health information and instructing the debt collection agents to search through all the consumers’ personal and health information until they find the information related to the particular consumers at issue,” the complaint alleged.

    Krotzer, the FTC said, was referred to as “Dr. Doug” — even though he is not a physician.

    The program pitched monthly subscriptions for what it dubbed the “Heavy Drinker” program ($59.96 for the first month and $179.96 per month thereafter) or the “Very Heavy Drinker program” ($99.96 for the first month and $269.96 per month thereafter), the FTC said.

    Sales totaled at least $693,000 between 2005 and 2009, the FTC said.

    Four websites were used to pitch the program: AlcoholismCure.org,
    DetoxificationThatWorks.com, Healthy-HighAlcoholSubstitute.com, and
    AlcoholFree.org.

    The program also was advertised “on online search engines, such as Google and Yahoo; through dissemination of newsletters via email distribution lists; and via individual emails,” the complaint alleged.

    “Permanent Cure” relied on “concoctions of dietary supplements such as vitamin C, St. John’s wort, and niacin,” the FTC said.

    Read the FTC/McCollum complaint.

  • Moved By Gesture Of Kansas Mayor, Google Changes Its Name To ‘Topeka’; Search Giant Not Worried About Loss Of Brand Identity; Announcement Also Honors Maddy

    Search-engine and advertising giant Google has changed it name to “Topeka,” the company said today.

    The company did so in tribute to the city of Topeka, Kan. Topeka’s mayor, Bill Bunten, wants to call the city “Google” for a spell.

    Google’s announcement about its name change came one year to the day after it announced the debut of its Gmail Autopilot by Cadie. Cadie purportedly was designed to automatically send the “perfect” response to scammers who spam gmail accounts.

    For two years now, Google has timed critical business announcements to coincide with Maddy’s birthday. Maddy’s second birthday is today.

    She was born April 1, 2008. April 1, of course, always has been one of the most important dates on the calendar. Maddy’s birth only made the date more important.

    Maddy became an international sensation and Google star on Christmas Eve 2008, when she rocketed to the top of search results for the phrase “Maddy Santa world debut” — without the quotes. People the world over clever enough to search under that precise string learned part of the story of Maddy’s first Christmas.

    It was kind of Google — and now “Topeka” — to tie its key business decisions to Maddy’s birthday. Maddy also is known the world over as “The Wonder Puppy.” She owns an entire search category under the string, “Maddy The Wonder Puppy” — with the quotes.

    Happy Birthday to Maddy — and we wish Google our best with its shift to Topeka!

    Read about Google’s Gmail Autopilot by Cadie announcement, which occurred on Maddy’s birthday last year.

  • Royal Canadian Mounted Police Announces Charges In Alleged $60 Million Ponzi Scheme, Asks Victims To Come Forward

    Supt. Eric Mattson of RCMP's 'K' Division asks victims of an alleged $60 million Ponzi scheme in Canada and the United States to come forward. The number to call is: 403-699-2581

    The Royal Canadian Mounted Police (RCMP) have charged three men and a woman in an alleged $60 million Ponzi scheme.

    Canada’s famous police agency, known informally as the Mounties, has asked victims to come forward.

    Charged in the case were Murray Stark, 73, Robert Fyn, 62, Garth Bailey, 57, and Katherine Rodrique Bailey, 53. Bailey formerly was an attorney who was suspended, according to records. He also has been referenced in U.S. securities litigation. The scheme operated from Alberta, and there may be thousands of victims in the United States and Canada.

    A company known as HMS Financial Inc. is at the heart of the scheme, authorities said. Victims and persons with information are asked to call the RCMP Commercial Crime Section at 403-699-2581.

    View a YouTube video that includes remarks from Supt. Eric Mattson of RCMP’s “K” Division. The video was produced by the Calgary Herald. Read a story by the Herald.

  • Sean Healy Sentenced To Nearly 16 Years, Ordered To Pay $16.7 Million In Ponzi Case; Meanwhile, Trevor Cook Reportedly Has Plea Deal

    A federal judge has ordered a Florida man to spend nearly 16 years in prison and pay $16.7 million in restitution for fleecing investors in a Ponzi scheme.

    Sean Healy, 39, of Weston, scammed dozens of investors in Pennsylvania. He went on to live in the lap of luxury in Florida, acquiring a $2.4 million waterfront home, a Bentley, several Ferraris, Lamborghinis and Porsches worth more than $2.3 million and jewelry worth $1.5 million.

    Meanwhile, Trevor Cook, charged criminally with mail fraud and tax evasion in a separate, $190 million Ponzi case in Minnesota, has struck a deal with prosecutors, the AP is reporting. Details about the deal are unclear, but the AP, citing comments by Bill Mauzy, Cook’s attorney, reported that Cook will plead guilty in the coming weeks.

    Healy became infamous in Florida, and was described as a smaller version of  former Wall Street titan Bernard Madoff and former Fort Lauderdale attorney Scott Rothstein. He was charged in a 55-count indictment unsealed in Pennsylvania last year with multiple counts of wire fraud, mail fraud, money laundering and obstruction of justice.

    Initially Healy tried to sandbag prosecutors by providing “phony bank statements and phony trading records” to thwart a grand-jury probe, but the government didn’t buy it.

    “When the authentic records were obtained, they revealed that Healy had simply spent the money on his extravagant lifestyle and used some of it to pay back earlier investors who he defrauded between 2003 and 2008,” prosecutors said.

    Healy was sued separately by the SEC and the CFTC, which said he used investor funds to purchase gold bullion and “to lease a luxury suite at Miami’s BankAtlantic Arena.”

    For its part, the SEC said the sky was the limit for Healy.

    “Rather than investing the money as he promised, Sean Healy used investor funds to finance an extravagant lifestyle for himself and his family,” the SEC said.

  • Judge Orders More Than $5.5 Million In Penalties In George Theodule Ponzi That Targeted Haitian-Americans; Massive Litigation Involving Family Members, Winners, Attorneys Continues

    It is not nice to be George Theodule today. For starters, the expensive cars and other luxuries are gone — and now a federal judge has issued orders of disgorgement and penalties totaling more than $5.5 million in a Ponzi scheme case brought by the SEC in 2008.

    Beyond that, though, people associated with Theodule — family members, winners in the scheme, employees and attorneys who worked for him while the scheme was ramping up — find themselves battling a blizzard of lawsuits filed by the court-appointed receiver in the case and either going to trial or trying to work out settlements.

    Read a Dec. 31 filing by Jonathan E. Perlman, the receiver in the case against Theodule, Creative Capital Consortium LLC, A Creative Capital Concept$ LLC and other entities. The filing shows the type of legal exposure individuals who emerge as Ponzi scheme winners may confront, as well as the litigation individuals who allegedly aid and abet a Ponzi may confront.

    Several Theodule employees have taken the 5th Amendment, according to Perlman.

    Among his assertions was that more than $24 million in fraudulent transfers occurred during the scheme, which now is estimated to involve more than $60 million.

    Earlier estimates in the case put the figure at about $23 million.

    Theodule, through a network of “investment clubs,” largely targeted Haitian-Americans, the SEC said. Investors, who were told that some of the company’s profits were set aside to help Haiti and Haitian communities in the United States and Sierra Leone, were promised a 100 percent return on their money within 90 days.

    In reality, the SEC said, Theodule lost $18 million trading stocks and options, commingled funds and pitched a purported, self-regulatory agency called Smart Investment Management Services LLC (SIMS).

    Investors were told SIMS provided “independent verification of their deposits” and provided an “added measure of safety and security,” the SEC said.

    It turned out that SIMS was a private company run by a former Creative Capital employee, the SEC said.

    Investors said Theodule portrayed himself as a thoughtful, religious man.

  • Numerous Domains Linked To INetGlobal Entity Offline; V-Webs Domain And Sites That Use V-Web’s Nameserver Will Not Resolve

    UPDATED 12:28 P.M. EDT (U.S.A.) Sites appear to be back up. They were offline for at least seven hours. Earlier story is below . . .

    Widespread maintenance? Moving to a new server? Several domains linked to an entity associated with INetGlobal have gone offline in recent hours and will not resolve. Why the sites are offline was not immediately clear.

    The extent of the outage also was unclear. Sites that use a nameserver known as V-Webs.com appear to have been affected. V-Web’s own website will not resolve to a server, and sites at the same IP address in the Minneapolis area also will not resolve.

    Attempts to “ping” the domains to determine if they were live resulted in this error message: “Destination host unreachable.”

    It is not unusual for servers to have maintenance problems and for websites to go offline. What’s unusual about the current outage is that every URL at V-Webs itself appears to be offline, along with domains that use the V-webs.com nameserver. Customers affected by the outage may not be able to reach V-Webs through its website.

    INetGlobal’s domain, meanwhile, is online. The site did not have a message that explained the outage at V-Webs, which it highlights as a service.

    Among the domains affected by the outage is CheapClix.net, a Blog that showcases its support for INetGlobal. Other sites affected by the outage include mlm-im.com and homesquadcities.net, both of which are operated by Ken Haugen, who also operates the CheapClix site.

    INetGlobal was implicated last month by the U.S. Secret Service in a Ponzi scheme. The company denied the allegations. A company known as V-Webs LLC was registered in 2004, but appears to be an inactive corporation, according to an affidavit filed by the Secret Service last month.

    Haugen’s domains are not the only domains affected by the outage. Others affected include BillionaireByThirty.com, RevenueShareForum.com, WithGodItsPossible.com and JanetsMarketingBiz.com, among others.

    A site known as Zippe.net in the same IP cluster is producing the same error message when pinged, while also triggering a security warning in search results and the Firefox browser window: “This site may harm your computer.”

    Pings to the 207.67.5.19 IP address associated with V-Webs are timing out, meaning a Web browser cannot load the pages.

  • BULLETIN: Trevor Cook Charged Criminally With Mail Fraud And Tax Evasion In Alleged $190 Million Ponzi Case In Minnesota

    BULLETIN: Trevor Cook, the reputed head of a $190 million Ponzi scheme in Minnesota, has been charged criminally with mail fraud and income-tax evasion.

    Cook, 37, previously had been charged civilly by the SEC and the CFTC. The criminal charges filed today came after a probe by the FBI and the IRS Criminal Investigations Unit, working with the regulatory agencies.

    Prosecutors alleged Cook filed a false tax return in 2009, failing to report report taxable income of at least $5.2 million “upon which there was tax due in the amount of at least” $1.8 million, prosecutors said.

    Cook was charged via a criminal information, rather than an indictment. Such charging documents sometimes mean a defendant is negotiating with prosecutors.

    Prosecutors said Cook was “aided and abetted by others” in a scheme that fleeced at least 1,000 people “out of at least $190 million by purportedly selling investments in a foreign currency trading program,” prosecutors said.

    “In reality,” prosecutors continued, “he was diverting the money provided him for other purposes, including making payments to previous investors; providing funds to Crown Forex, SA, in an effort to deceive Swiss banking regulators; purchasing ownership interest in two trading firms; buying a real estate development in Panama; paying personal expenses, including substantial gambling debts; and acquiring the Van Dusen Mansion in Minneapolis.”

    The mansion has been sold by R.J. Zayed, the court-appointed receiver in the civil case. Zayed also has sold large-screen TVs and automobiles linked to the scheme, including a Rolls-Royce.

    Prosecutors said the Cook case was being tackled by the Financial Fraud Enforcement Task Force, which President Obama formed late last year.

    U.S. Attorney B. Todd Jones of  the District of Minnesota made the announcement of the criminal charges against Cook.

    Cook has been in jail since January as a result of a contempt of court order in the civil case, which was brought by the SEC and the CFTC.

    Former Christian radio host Pat Kiley also was charged in the civil case.

    The narrative of the Cook story occasionally has played out like a James Bond movie, with references to a submarine, an island retreat, Faberge eggs and foreign currency purportedly acquired by Cook with fraud proceeds.

    A real-estate agent ventured to Cook’s island in Canada during the winter on a snowmobile to get the lay of the land, according to court filings.

  • Financial Fraud Enforcement Task Force Credited With Bust In Bizarre Ohio Ponzi Involving ‘Unique Momentum Filter’; Enrique F. Villalba Charged With Wire Fraud

    An Ohio man who graduated from West Point and earned a law degree in Washington state has been charged in a bizarre Ponzi and investment-fraud scheme that allegedly combined the science of physics with a unique “momentum filter” that purportedly enabled him to predict how the futures market would behave with “an uncanny degree of certainty.”

    Enrique F. Villalba, 47, of Cuyahoga Falls, was charged in the scheme, which was conducted from Beachwood Ohio, prosecutors said.

    Villalba is a graduate of the United States Military Academy at West Point and  the University of Puget Sound School of Law, prosecutors said. Separately, he was sued by the SEC and the CFTC.

    Prosecutors said investors losts millions of dollars in the scheme, and that Villalba used some of the money to fund coffee shops he owns in Hudson and Stow, Ohio. The coffee shops are known as “Rico Latte,” and the investment business was known as “Money Market Alternative LP.”

    Villalba called his investment methodology “Money Market Plus,” saying clients could realize long-term gains averaging between 8 percent and 12 percent, prosecutors said. The scheme collapsed last year, after perhaps operating for more than a decade.

    “Villalba represented that his knowledge of physics, when combined with his application of a unique ‘momentum filter,’ allowed him to predict with ‘an uncanny degree of certainty’ how the futures market would trend at various times during a given month, thereby allowing him to purchase and sell futures contracts to maximize gains,” prosecutors said.

    Investors were told Villalba would place stop orders as a hedge against losses, but he did not place the orders, causing investors to lose “millions of dollars,” prosecutors said.

    Money from investors was “converted” by Villalba to fund the coffee shops, buy property in Vermillion, Ohio, and also to make Ponzi payments to clients, prosecutors said.

    The scheme netted about $29.7 million, prosecutors said.

    “This case serves as an example to the public that the Department of Justice and the Financial Fraud Enforcement Task Force will fight fraud in order to protect the integrity of the financial markets,” said U.S. Attorney Steven M. Dettelbach.

    “If you lie to investors, there will be a steep price to pay,” Dettelbach said. “This case resulted from tremendous coordination between the Department of Justice and civil enforcement agencies to protect the rights of investors all over the country.”

    President Obama started the Financial Fraud Enforcement Task Force in November.