Critics of Gold Nugget Invest (GNI), the collapsed Internet HYIP, do not understand that the program that advertised a return of 7.5 percent a week was “real,” according to a member writing on an online Ponzi board.
Bickering about GNI only will lead to additional problems for the company, which is faithfully trying to reorganize, and the critics should send money to Haiti instead of infecting the membership with negative thinking, according to the member.
“[W]hy not use your idle time for [the Haitian people?]” the GNI apologist asked on the ASA Monitor Ponzi board. “l doubt if you can do that ‘cos that is your true nature.”
In earlier posts, the apologist suggested that GNI critics were suffering from “mental illness” and observed that, “I will be very grateful if GNI runs for 20 years as a pronzi (sic) !!!!”
The poster did not explain how a program purported to be a “real” business could create legitimate profits by operating as a Ponzi scheme.
GNI, which positioned itself as a betting “arbitrage,” tanked last week. It is among a number of recent investment programs using the name of a precious metal or a precious mineral that have encountered difficulty either from members or law enforcement. GNI did not publish verifiable financial information. There is no way to verify GNI’s claims, including an apparent claim that certain resources are tied up in a purported banking investigation in Europe that has nothing to do with the company.
GNI now says its program will pay “up to” 20 percent monthly through a “No Risk Wager.” The company did not explain how it had categorically eliminated risk during a period in which it apparently did not have access to the capital it needed to operate and had suddenly changed the rules, leaving existing members holding the bag while apparently still advertising for new members to entrust their funds to the firm.
Some members, though, insisted they were standing by GNI because it always had “paid” and just hit a bump in the road.
Canadian regulators last week declared a collapsed program known as Gold Quest International (GQI) a “sham” and both a Ponzi and a pyramid scheme. Investors dumped at least $27 million into the program, according to the U.S. Securities and Exchange Commission.
GQI, which claimed Panamanian registration while operating from Las Vegas and saying it was immune to U.S. and Canadian law because it was affiliated with a “sovereign” Indian tribe, scammed thousands of investors, according to the SEC and the Alberta Securities Commission.
At least $3.15 million linked to GQI ended up in New Zealand, in one or more bank accounts tied to a company known as Topaz Group Ltd., according to court filings by Larry Cook, the court-appointed receiver in the SEC case. The majority of that money then was “immediately transferred from the Topaz Group business account to the account of Wendy Smurthwaite Davies, the wife of John Davies,” according to court filings.
John Davies was identified as the owner of Topaz Group.
Other GQI money made its way into E-Bullion accounts in California, according to court filings. The E-Bullion money is tied up in a fraud and murder investigation of E-Bullion owner James Fayed, accused of having his wife killed in a Greater Los Angeles parking garage.
Another “gold-themed” tie involves Brian David Anderson, a former Christian clergyman from Vancouver, British Columbia. Anderson recently was sentenced to 90 months in federal prison in the United States for operating a $4 million Ponzi scheme known as Frontier Assets.
Anderson also was linked to a mysterious scheme known as the “Alpha Project.â€
U.S. and Canadian investigators identified Anderson as a pitchman for an international HYIP known as Flat Electronic Data Interchange (FEDI). FEDI’s operator, Abdul Tawala Ibn Ali Alishtari, also known as “Michael Mixon,†was convicted in September 2009 of financing terror and fleecing investors in the FEDI scheme.
Records in the Anderson case include references to E-Bullion.
UPDATED 11:46 A.M. ET (U.S.A.) Final judicial action in the second forfeiture case filed against assets connected to AdSurfDaily “is not expected for at least several months,” federal prosecutors said.
The second action was filed in December 2008. It identified family members of ASD President Andy Bowdoin as beneficiaries of a Ponzi, wire-fraud and money-laundering scheme operated by ASD.
Among the family members identified in the December complaint were Bowdoin’s wife, Edna Faye Bowdoin, and her son, George Harris. Judy Harris, the wife of George Harris, also was identified in the complaint as a beneficiary of ASD’s alleged illegal conduct.
Prosecutors filed the initial action against ASD’s assets in August 2008. That case concluded with the Jan. 4 issuance of a final forfeiture order by U.S. District Judge Rosemary Collyer, prosecutors said.
The government now has title to nearly $80 million seized in the August 2008 case — the lion’s share of the liquid assets (cash) from the combined cases. Only about $635,000 in cash was listed as seized in the December case, meaning prosecutors have control of more than 99 percent of the money targeted in the combined cases.
Prosecutors did not explain why they anticipated a considerable delay in finalizing the December 2008 case. (UPDATE: 11:46 A.M: Citing an investigation in progress, a Justice Department spokesman declined to comment.)
Nothing so far suggests, however, that the December case has been delayed as a result of an appeal by Bowdoin in the August case. The record does not reflect an appeal. The delay appears to be procedural.
The December complaint alleged that Edna Faye Bowdoin and George Harris used money from two ASD Bank of America accounts to open an account at a third bank.
The new account was funded with an opening deposit of more than $177,000 — more than $157,000 of which was used to pay off the mortgage of the Tallahassee home George and Judy Harris shared, according to the complaint.
In yet another case in which the name of a precious metal or mineral was used in a Ponzi scheme, Milton Retana has been found guilty of six counts of mail fraud and one count of lying to federal investigators.
Evidence of the fraud was hidden in the back of a religious bookstore operated by Retana’s wife, prosecutors said. When investigators searched the bookstore, they found millions of dollars in cash, prosecutors said.
Retana, 46, of Huntington Park, Calif., faces a maximum of up to 125 years in prison. Sentencing is set for April 26. Investigators said he operated Best Diamond Funding, a Ponzi, affinity-fraud and real-estate investment scheme that fleeced more than 2,000 victims out of more than $62 million.
Best Diamond was located next door to the bookstore. The FBI and U.S. Postal Inspection Service smashed the scheme, prosecutors said.
Jurors returned the verdict in less than an hour, after a week-long trial. Dozens of victims appeared in court to hear the verdict, prosecutors said.
Beginning in 2006, Retana told investors their money would be used to buy and sell real estate. He targeted mostly a Spanish-speaking audience, and used religion in his pitches, prosecutors said.
“Retana guaranteed returns as high as 84 percent each year, claiming that he would purchase properties in bulk at below-market prices and immediately sell them for a profit,” prosecutors said.
But records showed Retana “used only a tiny fraction of the victims’ money to purchase real estate and that his company was actually losing money,” prosecutors said.
As often is the case in investment schemes, victims “mortgaged their homes and drained their retirement accounts because they believed Retana’s promises that their investments would be safe,” prosecutors said.
Among the victims were a stone mason, a truck driver and a roofer. The roofer also was the pastor of his church.
The scheme nearly was detected in 2008, when the California Department of Real Estate audited Best Diamond, prosecutors said.
Retana, though, stymied the probe “by ordering his employees to hide all of the investor files at the back of his wife’s religious bookstore, La Libreria Del Exito Mundial.
“His scheme was disrupted in October 2008, when federal agents from the United States Postal Inspection Service and the Federal Bureau of Investigation executed search warrants on the offices of Best Diamond Funding and the bookstore,” prosecutors said.
Agents found $800,000 in cash stashed in Retana’s desk and $3.2 million in cash hidden in the back of the bookstore. Investigators seized another $8 million from Retana’s bank accounts.
“Soon after the execution of the federal search warrants, agents interviewed Retana, who lied about how much money he had received from the investors and claimed that he could pay all of them back,” prosecutors said. “Retana was later secretly recorded telling a Best Diamond employee not to tell the government how much money Best Diamond had received from the investors.”
UPDATED 7:03 P.M. ET (U.S.A.) The Alberta Securities Commission (ASC) has ruled Gold Quest International (GQI) a Ponzi and a Pyramid scheme.
An ASC panel determined that GQI met the conditions for a Ponzi scheme because it had no viable product and paid earlier investors with money from new investors. It also was a pyramid scheme, ASC ruled, because of a commission structure that rewarded earlier entrants and left later entrants holding the bag.
“The Gold-Quest Offering was a sham investment,” ASC ruled. “On the evidence before us, we are satisfied that, during the relevant period, Gold-Quest itself did not receive income from any currency trading, have an active currency trading program or indeed any actual currency traders in its employ, or place investors’ money with external foreign currency traders.
“Rather,” ASC continued, “Gold-Quest depended on the influx of new investors’ money to make its payments to existing investors.”
In its ruling, ASC cited the SEC’s probe into GQI, and also referenced GQI’s claim that, although it was registered in Panama and operated from Las Vegas, it was immune from U.S. and Canadian law because of supposed ties to a “sovereign” Indian tribe in North Dakota.
“[W]hen securities regulatory authorities had begun investigating Gold-Quest, Gold-Quest claimed that it was subject only to the jurisdiction of the sovereign Little Shell Nation of the Anishinabe Culture . . . purportedly headquartered in North Dakota, and that it was not subject to the jurisdiction of Canada or the United States,” ASC said.
“In a 16 March 2008 e-mail to ‘Gold-Quest Members,’ the ‘Board of Directors’ of Gold-Quest asserted (emphasis added):
Note that while we have or have had offices in Panama and Costa Rica we operate under the legal Authority, venue, and Jurisdiction, of The Little Shell Nation.
But GQI had no authority to operate outside of either U.S. or Canadian law, investigators said. For its part, the SEC said the tribe had no federal recognition.
After regulators in Canada and the United States began to probe GQI, the firm blamed its predicament on the governments of both countries, according to ASC’s findings.
In late 2008, according to ASC’s findings, GQI told members it was under “attack.” (Emphasis added):
The recent attack on Little Shell Gold-Quest International and its members by the Securities Commissions of Canada and the United States has caused a severe breakdown of trust in these governments [sic] promise to protect the rights of private men and women to conduct business without governmental interference.
At the same time, GQI told investors they could get their money back if they paid $40 for a debit card, ASC said. (Emphasis added):
The use of this debit card Pay card through USA Global Trust is the safest way we can devise to return your investments. Let us pray our governments do not interfere any more.
GQI, which claimed it would pay back members for the debit card and also pay them 10 percent on their existing investment after they purchased the debit card, also instructed investors through its website FAQ that they could retrieve their lost profits from the SEC, according to ASC’s findings. (Emphasis added):
Q: What about the 87½% profit I was supposed to make?
A: All profits up to the May 6th 2008 seizure of Little [sic] Gold-Quest International by the receiver for the SEC will be paid in full. All other profits after that date were assumed by the receiver for the SEC. We will endeavor to work on your behalf concerning that matter in the near future.
“Investor witness GD said that he applied for such a debit card but did not pay the administrative sign-up fee and received no response to his application,” ASC said.
Another witness — “SB” — believed that “none of the investors she brought into the Gold-Quest Offering received a refund of, or a return on, their investments,” ASC said.
GQI, which promised an 87.5 percent annual return, misled investors, ASC ruled.
“The statements that investors would receive an 87.5% annual return were misleading and untrue,” ASC ruled. “The evidence does not disclose that Gold-Quest had produced any trading profits which could generate the promised return. Specifically, on the evidence, we are satisfied that, during the relevant period, Gold-Quest itself did not open any foreign currency trading account, receive income from any currency trading, have an active currency trading program or any actual currency traders in its employ, or place investors’ money with external foreign currency traders.
“Further,” ASC continued, “the evidence is that any foreign currency trading had been done through foreign currency trading accounts opened in the names of [David] Greene and [John] Jenkins, had been minimal and had resulted in heavy losses. The evidence does not disclose that this foreign currency trading was done for the benefit of Gold-Quest or its investors. Thus, there was simply no possibility that Gold-Quest could pay the promised return to its investors.”
Both Jenkins and Green — also known as “Lord David Green” — were named in complaints in the United States and Canada. Other named GQI figures included Michael McGee and Delroy Atwood.
“The evidence shows that millions of dollars of Gold-Quest investors’ money, in total, were transferred to Greene’s, Jenkins’ and McGee’s personal and trading accounts,” ASC ruled. “This money was apparently used to pay for their personal expenses, including purchases at stores, hotels, restaurants, golf clubs and an automobile dealership.
“It seems that a few investors — those who invested in the early days of the Gold-Quest Offering — received all the payments they expected, but that beginning in February 2008 Gold-Quest began to experience difficulties in making payments to its investors,” ASC ruled.
“Some investors received their monthly commissions for a time until these payments ceased in early 2008,” ASC said. “Many, if not most, investors received nothing back in principal or interest. In sum, Gold-Quest failed to make the payments promised to its investors, other than from other investors’ money.”
GQI was doubly bogus, meeting the conditions of both a Ponzi scheme and a pyramid scheme. ASC ruled.
“The Gold-Quest Offering, which extracted more than US$2 million from approximately 412 Alberta investors (approximately US$29 million from approximately 2940 investors in total), was a sham investment scheme,” ASC ruled. “The Gold-Quest Offering was both a classic Ponzi scheme and a classic pyramid scheme which denied Gold-Quest investors the very protections mandated by the fundamental registration and prospectus requirements of the Act.”
Alleged Minnesota Ponzi schemer Trevor Cook may be hiding “millions” of Iraqi Dinars once stored on the third floor of the Van Dusen mansion in Minneapolis, according to the court-appointed receiver in the case against Cook and former Christian radio host Pat Kiley.
Cook also had a “vast” collection of expensive watches and “numerous” jeweled Faberge Eggs that have not been located. He also had access to an unspecified sum of cash from purported “gambling” winnings stored in a drawer in his home, receiver R.J. Zayed said.
Despite Cook’s access to funds and his refusal to cooperate in the ongoing search for assets, Zayed said, Cook asked U.S. District Chief Judge Michael Davis to approve monthly payments from frozen assets totaling $6,679.
Included in the request, according to court filings, was a monthly outlay of $105 to cover the expenses of his three housecats, and $100 for a gym membership.
Cook had a ROM exercise machine that retailed for $14,165 in his Apple Valley, Minn., home, according to Zayed.
Zayed now wants to inspect the home, which Cook shares with his wife, Gina Cook, and the housecats, according to court filings. The purpose of the proposed inspection, which requires judicial approval, is to determine if Cook is hiding assets inside the home.
The filing by Zayed revealed that the SEC has “cooperating witnesses” in the case, identifying them as individuals who saw the assets before they vanished. Zayed said it was possible that Cook learned about the SEC probe in June 2009, and engaged in efforts to hide assets and shelter them from potential seizure by transferring them to family members, including his wife and brother.
“[Cooperating Witness] #8, a former associate of Trevor Cook, advised that Mr. Cook had millions of Iraqi Dinars located on the third floor of the Van Dusen mansion,” Zayed said.
None of the Iraqi currency has been located, Zayed said.
EDITOR’S NOTE: HYIP or autosurf promoter? Can’t say no to the commissions from recruiting people into scheme after scheme? Position yourself as an “expert” on Internet forums — even though you don’t have a clue about the motivations of the program owners and may not even know their names? Find yourself promoting programs that reference “gold” and “funds” and relying on marketing assertions that cannot be verified? Tell your recruits that the programs are money “games” or nontraditional investments? Been involved in one program after another that has failed in this seedy and dangerous world? Think that you’ll have a lifetime of plausible deniability and that professional investigators will believe you when you explain you didn’t really know what was going on — despite the fact you’ve been involved in one failed “program” after another, perhaps for months and even years?
Here’s a story about what can happen in the sea of HYIP, “Gold,” Ponzi and autosurf corruption . . .
UPDATED 12:42 P.M. ET (U.S.A.) Yesterday a reader provided us a document that can only be described as chilling. The document, from the Ontario Securities Commission (OSC), includes exhibits from a 2003 Canadian civil-securities case against convicted Ponzi swindler Brian David Anderson, a former Christian clergyman from Vancouver, British Columbia.
Last week, Anderson was sentenced to 90 months in federal prison in the United States for operating a $4 million Ponzi scheme known as Frontier Assets. Anderson also was linked to a mysterious scheme known as the “Alpha Project.”
U.S. and Canadian investigators, meanwhile, also identified Anderson as a pitchman for an international HYIP known as Flat Electronic Data Interchange (FEDI). FEDI’s operator, Abdul Tawala Ibn Ali Alishtari, also known as “Michael Mixon,†was convicted in September 2009 of financing terror and fleecing investors in the FEDI scheme.
Why is the document chilling? For starters, its references a bank account held by Goldfinger Coin & Bullion Inc. in Camarillo, Calif. If that name does not ring a bell, think “E-bullion,” the now-shuttered money-exchange business purportedly backed by gold.
James Fayed, the operator of Goldfinger and E-Bullion, was charged in 2008 with operating an unlicensed money-transmitting business. Investigators said E-Bullion had been used to transact at least $20 million in Ponzi scheme payments.
During the same general time period in 2008, the SEC was conducting a Ponzi scheme investigation into a separate company known as Gold Quest International (GQI), which used E-Bullion and claimed to be registered in Panama.
GQI operated from Las Vegas. It initially tried to claim that it was immune to U.S. law because of links to a “sovereign” Indian tribe. GQI was charged in May 2008 by the SEC with operating a Ponzi scheme. The purported “attorney general” of the purported “sovereign” tribe reacted by trying to file a lawsuit against the SEC for the preposterous sum of $1.7 trillion. A federal judge was not amused, and struck the bizarre filings.
Woman Stabbed To Death
On July 28, 2008, Pamela Fayed — James Fayed’s estranged wife — was brutally murdered in a parking garage in California. She was stabbed in the chest, neck and face — and left to die, according to court filings. Prosecutors said there was no evidence of robbery or carjacking. The murder, according to court filings, occurred just minutes after a meeting Pamela attended with her criminal attorney and her husband’s criminal attorney.
James Fayed was present at the meeting, according to court filings. A meeting with separate attorneys — this one involving a divorce hearing — had been scheduled for the next day, July 29, 2008. Prosecutors said that James Fayed was at risk of being ordered to turn over nearly $1 million to Pamela at the divorce proceeding.
Pamela had advised the government in June 2008 that she wished to cooperate in its criminal investigation of E-Bullion, according to prosecutors.
“Pamela’s murderer left the crime scene in a red SUV that was captured on surveillance video, along with its license,” prosecutors said. “The license was traced to Avis car rentals in Camarillo, not far from [the] defendant’s business. The vehicle had been rented from Avis on July 3, 2008 using an American Express card issued to defendant and GCB.
“An American Express credit card with the same account number was found in defendant’s wallet during a search of his residence in the days following Pamela’s murder. During the search of defendant’s residence, officers also found approximately $60,000 in cash wrapped in plastic material; approximately $3,000,000 in gold; and approximately 31 firearms, including one with a long-range night vision scope, along with thousands of rounds of matching ammunition,” prosecutors alleged.
Prosecutors also alleged James Fayed arranged for the July 28 meeting to create an alibi.
Read a court filing in the federal case against James Fayed in which prosecutors alleged he operated an unlicensed money-transmitting business. The filing references the alleged murder plot.
Murder Charges Filed
James Fayed and an employee — Jose Luis Moya — were charged by the Los Angeles District Attorney’s office with murder and a conspiracy plot in September 2008. Fayed paid Moya “approximately $25,000 to arrange the murder of Pamela Fayed,†investigators said.
On July 3, 2008, investigators said, “Fayed and his company — Goldfinger, Inc. — rented a Suzuki sport utility vehicle that was used by the killers at the Watt Tower parking garage where Pamela Fayed was killed.
“The Suzuki SUV was driven to Fayed’s Ventura County ranch on Happy Camp Road after the killing,” according to investigators. Moya returned the vehicle to Avis the next day.
OSC Document Outlined Purported Anderson/E-Bullion Meeting In 2003
The OSC document filed in Canada is important — and we suggest you read every word of it from the link below — because exhibits in the document show the murkiness and just plain creepiness of the HYIP and Ponzi worlds. One exhibit suggests Anderson planned to meet with Fayed and his wife in 2003 to discuss business.
The document also references Alishtari and FEDI, claiming an investment program was backed by $125 billion in gold. Among other things, the document lists the name of Goldfinger Coin & Bullion and an account number, along with directions on how to open an E-Bullion account.
Screen shot: From exhibit in 2003 OSC filing.
Also included in the document is a purported joint-venture agreement marked “STRICTLY CONFIDENTIAL” that purportedly was used by Anderson to recruit investors into an international fraud scheme.
Parallels To AdSurfDaily Case
Parts of the document include claims very similar to claims made by promoters of the alleged AdSurfDaily (ASD) Ponzi scheme in the United States. Anderson, for example, was positioned as a “very successful business executive” who attended a function to observe Alishtari receive an award “for Republican Business Man of the Year for the State of New York.” Similar claims were made about ASD President Andy Bowdoin.
Investor payouts, according to an exhibit in the OSC document, were called “rebates.” ASD, whose assets were seized by the U.S. Secret Service in August 2008 amid Ponzi allegations, also called its payouts “rebates.” Exhibits in the OSC document were thick with references to God and family — another similarity to the ASD case. Anderson’s efforts to promote the program were deemed “heroic,” and business was conducted in part from Boca Raton, Fla. ASD was thick with Florida members.
In a purported email from Anderson dated April 17, 2003, according to an exhibit within the OSC document, Anderson laid out the case for the new venture.
“Dear Family,” the email began. Chillingly, the email appears to reference Pamela Fayed, allegedly murdered by her husband and conspirators five years later. The email suggests there once were happy days between the Fayeds.
“I am very pleased that my recommendations and leg work have paid off and the Alpha Project will be merging its gold value/currency transfer through E-Bullion,” the email purportedly sent by Anderson claimed.
“E-Bullion is owned by a wonderful couple who have their roots in Egypt and, therefore, are Arab in descent. I will be spending personal time with them on Monday in California.”
Screen shot: Exhibit of purported Anderson email in 2003 OSC filing.
The email, which discusses a trip to Panama, promised investors an “offshore” company and outlined a plan to sell “debit cards” through vending machines that would be positioned in posts offices, hotels and college buildings.
Put “$20 into a vending machine and the machine spits out a loaded Debit card for you,” the email said. “Now you can begin to see why the Alpha Project in will in time be another Microsoft in size.”
Claims in HYIP and Ponzi schemes that a company is destined to become the “next” Microsoft or Google are common. Beyond that, the use of debit cards in the murky HYIP and autosurf words is becoming increasingly popular — as are appeals for investors to entrust funds to “offshore” businesses, amid claims that such businesses are outside the reach of U.S. law enforcement.
Disbarred attorney and Ponzi scheme suspect Scott Rothstein’s name is radioactive among politicians of both major parties in the United States. The embarrassment began to build when Rothstein, a celebrated schmoozer and source of campaign funds, fled to Morocco after the alleged $1.2 billion scheme began to unravel last fall.
Things got worse yet when federal prosecutors began to seize Rothstein’s assets, including an 87-foot yacht registered in the Marshall Islands, two $1.6 million Bugati Veyrons, a $495,000 Mercedes, two $484,000 Rolls-Royces and lots of Ferraris, Lamborghinis and other extremely expensive cars.
Rothstein’s vanity purchases knew no limits — and neither did his appetite for chumming up to politicians. The next round of embarrassment for politicians will occur Saturday in Tamarac, Fla.
Property linked to Scott Rothstein and his collapsed Fort Lauderdale law firm, Rothstein Rosenfeldt Adler, will be sold at auction.
Fisher Auction Co., appointed by the bankruptcy trustee, will conduct the event. The auction will take place at AMC Liquidators Showroom, 3705 West Commercial Blvd., in Tamarac. Registration opens at 8 a.m. Items go up for bid at 10 a.m.
“Prospective bidders must have a $500 refundable cash deposit in order to be a qualified bidder,” said Lamar Fisher, president and chief executive officer of Fisher Auction Co. “All purchases on auction day are payable in cash only. No checks, no credit cards.â€
Why the need for a cash deposit?
“We have a tremendous volume of items to move on auction day and must make sure those who are serious bidders have the opportunity to bid,” Fisher said. “We have security in place and have used a higher than typical deposit to help insure that.â€
Among the items: computers, telephones, conference room furniture, oriental carpets “from all locations” and “the contents of Scott Rothstein’s personal suite of offices.” Sports items, too.
“Mr. Rothstein was an obvious avid memorabilia collector,” Fisher said.
Sports items include (but are not limited to): a University of Florida – NCAA 2007 Final Four, Atlanta, GA. framed authentic cut from the original floor of this game #1/1900;Â an official art poster by Charles Fazzino; three dimensional artwork of Yankee Stadium; imitation player cards with original signatures of players Nos. 11, 24, 20, 35, 2, 13, 42, 51, 55 ; Manager Joe Torre – #187/500; an NFL football in a plastic display case; “1972 Perfect Season” (Miami Dolphins) signed by all players; and other signed memorabilia.
These items also are listed in the preliminary auction inventory:
Mens pair of cuff links in shape of gold star, signed by Sen. John McCain.
Mens pair of cuff links, Maverick, signed John McCain. With framed recognition letter.
President & Vice President of United States, Inauguration 2009, pair of cuff links with matching tie tack.
Mens pair of cuff links – United States Senate – goldtone.
China bowl signed – “Charlie Crist.” (Florida governor and Senate candidate.)
Jeweled figurine of elephant depicting Republicans.
Framed photograph of Scott Rothstein, Kim Rothstein & Sen. Joe Lieberman. Signed by Lieberman.
Framed photograph of Gov. Arnold Schwarzenegger with a signed personal note to Scott Rothstein..
Framed photograph of Scott Rothstein with Charlie Crist. Signed by Crist.
Framed photograph of Scott Rothstein with John McCain. Signed by McCain.
Framed photograph of Scott Rothstein with Alan Spector. Signed by Spector.
Framed certificate from the State of Florida Executive Department signed by Charlie Crist.
Framed photograph of Scott Rothstein, Cindi McCain, John McCain and Charlie Crist. Signed by McCain and Crist.
Framed photograph of Scott Rothstein and Gov. Jebb Bush. Signed by Bush.
Framed photograph of Scott Rothstein and Gov. Bill Richardson. Signed by Richardson.
Framed photograph of John McCain, Cindy McCain, Scott Rothstein and Kim Rothstein. Signed by McCain.
Framed photograph of Mel Martinez and Scott Rothstien. Signed by Martinez.
Framed photograph of Attorney General Bill McCollum and Scott Rothstein. Signed by McCollum.
Framed photograph of George W. Bush and Scott Rothstein. Signed by Bush.
Framed photograph of John McCain, Cindy McCain, Charlie Crist and Scott Rothstein. Signed byMcCain.
Framed photograph of Gov. Sarah Palin, Kim Rothstein and Scott Rothstein. Signed byPalin.
Framed letters to Scott Rothstein signed by Gov. Charlie Crist.
Framed invitation to dinner reception in honor of Gov. Charlie Crist at the Casa Casuarina.
Framed letter to Scott Rothstein from Gov. Arnold Schwarzenegger with photos.
Framed letter signed by Sen. Jeff Atwater.
Framed letters signed by Sen. John Ensign of the National Republican Senatorial Committee.
Player in a Ponzi scheme? If alleged Minnesota schemer Trevor Cook’s experience is any indication, you should expect to be placed under a microscope by local merchants and police if you’re named in a complaint by regulators.
Cub Foods, a Minnesota-based grocery chain, placed Cook under video surveillance when he entered a local store. A loss-prevention specialist cited fears Cook might use the store to purchase gift cards in a scheme to hide assets from investigators.
Meanwhile, the 71-member police department in Eagan, Minn., alerted the court-appointed receiver in the alleged Cook/Pat Kiley scheme that Cook was using a credit card after a federal judge froze his assets, according to court filings.
Cook now is the subject of a contempt hearing. Receiver R.J. Zayed said Cook initially failed to disclose the existence of four credit cards and is not cooperating, and the SEC said U.S. Chief District Judge Michael Davis may have to jail Cook to enable investigators to prevent assets from being dissipated.
Cook had at least one other undisclosed credit card, Zayed said.
“The only reason the fifth card was known to the Receiver was because the Eagan Police Department informed the Receiver of this account after Cook used it to purchase” gift cards, Zayed said.
Zayed said Cook used credit cards after the asset freeze was imposed in November to purchase more than $30,000 in gift cards at Target, Holiday, SuperAmerica, Home Depo, AMC Theater, Regal Cinema, Nordstroms, Cheesecake Factory, Olive Garden, Old Chicago, Ruby Tuesday, Chilis, Applebees, PetSmart and Bath&Body Works.
Cook also purchased “numerous phone cards,” Zayed said.
Although Cook now has turned over the gift cards and the credit cards, he has taken the 5th Amendment in the case. Zayed, though, argued that Cook was using the 5th Amendment in a bid to pick and choose when and how he would cooperate in locating and preserving receivership assets.
“Cook now tells the Court that he will not turn over any additional assets because it would violate his privilege against self-incrimination,” Zayed argued in a brief to Davis. “Cook cannot have it both ways, turning over assets when it benefits him while continuing to hide other assets from the Receiver. Approving Cook’s strategy would make a mockery of the Court’s Orders and runs afoul of basic Fifth Amendment jurisprudence.”
By turning over some assets and testifying to the existence of others, Zayed argued, Cook has waived his 5th Amendment protections.
“Cook voluntarily testified about assets in his possession when he turned over a portion of those assets to the Receiver,” Zayed said. “He did not do this accidentally or out of the goodness of his heart.
“He did it to present himself in the most positive light he could to the Court when he was caught violating the Court’s Orders,” Zayed continued. “Cook also testified with respect to his assets when he provided the Receiver with a laundry list of expenses and asked the Receiver to provide him and his wife with thousands of dollars in monthly living expenses from the Receivership estate to maintain his lifestyle. Having ‘testified about certain assets for his benefit, Cook cannot now shield all other relevant facts on these topics.”
Counting holiday delays and time scheduled for attorneys to file briefs, the Cook contempt proceedings have been under way for more than a month. The SEC and the CFTC sued Cook and Kiley in November, alleging an international Ponzi scheme involving more than $190 million.
In 2006, the National Futures Association (NFA) fined Cook $25,000, saying he had committed a “very serious violation” in the manner in which he treated funds entrusted to him by an 80-year-old woman who was the guardian over her elderly sister. The case featured assertions of side-dealing and fabricated signatures on account documents.
A footnote in NFA’s summary of the case concluded that Cook was operating an unregulated gold and bullion business. The name he chose for the business closely resembled the name of a futures-trading firm, but Cook told NFA that the name was a coincidence.
Read NFA’s summary of the evidence in the Cook case and its decision. Pat Kiley, a former Christian radio host, was among the witnesses called.
A federal judge has ordered a Florida man to surrender to U.S. Marshals Jan. 25 after finding him in contempt of court for hiding assets from the SEC overseas.
Should Jamie L. Solow fail to surrender by 2 p.m., U.S. District Judge Donald M. Middlebrooks said, marshals will be dispatched to arrest him. Middlebrooks already has issued an order authorizing marshals to enter his Fort Lauderdale luxury condominium to take him into custody and transport him to a federal detention facility.
Middlebrooks also banned Solow from traveling outside the jurisdiction of U.S. District Court for the Southern District of Florida between now and the surrender date and ordered marshals to notify the court immediately if Solow does not surrender.
“The Eleventh Circuit adheres to the ‘time-tested adage: if it walks like a duck, quacks
like a duck, and looks like a duck, then it’s a duck,’” Middlebrooks said in his contempt ruling.
“Mr. Solow still lives a luxurious lifestyle, enjoying the benefits of the money he has made over the years, yet he refuses to repay the victims of his fraud. Such a situation cannot stand,” Middlebrooks said.
The “duck,” according to Middlebrooks, was an attempt to insulate Solow against a judgment of more than $3.4 million in a securities-fraud case by transferring assets to his wife in a Cook Islands Trust. The Cook Islands are a group of small islands totaling 92.7 square miles in the South Pacific Ocean, northeast of New Zealand.
Possible air route between Miami and Rarotonga, Cook Islands. Source: TimeAndDate.com, using map based on NASA image.
For its part, the SEC said that, between January 2008 (the month in which Solow’s jury trial commenced) and April 2008 (several months after the jury’s verdict against him), “Solow and his wife liquidated securities accounts totaling over $1.5 million.
“Some of those funds were used to pay ‘asset protection attorneys’ retained by Mrs. Solow a mere four days after the jury verdict was entered against her husband,” the SEC said.
In March 2008, “Solow signed a $5.2 million mortgage on his residence in Hillsboro Beach,” the SEC said. “The proceeds of the mortgage were used to fund a CD now held by a Cook Islands trust for the benefit of Mrs. Solow. Notwithstanding these transfers, Solow claims to be a ‘ward of his wife.’”
Middlebrooks said the asset-protection scheme clearly was designed to permit Solow to live in the lap of luxury while leaving victims holding the bag.
“Mr. Solow would like the Court to believe that his best efforts to pay the disgorgement
obligation ended with the liquidation of an old truck, a desk set and a small income tax refund totaling $2,639.24,” Middlebrooks said.
“Mr. Solow lives in a beachfront condominium in Fort Lauderdale; owns a beachfront house on Hillsboro Mile; spends extended winter vacations at his family home in Park City, Utah; and enjoys the representation of sophisticated defense counsel in these proceedings,” Middlebrooks said. “According to Mr. Solow, all of these expenses are paid through the largesse of his wife. However, the record shows that this largesse is derived entirely from assets acquired with Mr. Solow’s earnings. The Court finds that Mr. Solow has purposefully sought to insulate these assets from the Court’s reach.”
Gina Solow, Solow’s wife, brought no assets into the marriage, had no inheritance and last had a job in 1989, Middlebrooks said.
“Notwithstanding the fact that Mrs. Solow has brought no income or assets into the marriage, she now pays for all of Mr. Solow’s living expenses,” Middlebrooks wrote. “At the hearing, Mr. Solow testified that he had ‘no clue’ as to the extent of the assets held by his wife. I find Mr. Solow’s claim of complete lack of knowledge of his wife’s financial dealings incredible.”
Middlebrooks’ 40-page ruling was blistering, citing one example after another of attempts to hide assets. The judge, however, did allow that “Mr. Solow may purge his contempt by making good faith reasonable efforts to retrieve his assets and apply them toward the Final Judgment.”
The SEC has sued Gina Solow separately to claw back the alleged fraudulent transfers.
EDITOR’S NOTE: In an earlier post, we briefly touched on Ponzi peddler Brian David Anderson and his tie to an HYIP operated by a man convicted of financing terror. Federal prosecutors now have released a formal statement on Anderson’s guilty plea in a related Ponzi scheme — and the statement thanked the FBI’s Joint Terrorism Task Force for its work in the case.
Here, now, the story . . .
Critics long have fretted about the often-murky world of brick-and-mortar and electronic HYIPs and autosurfs, pointing out that no one really knows the motivations of the operators and their pitchman and that vast sums of money easily could fall into the hands of terrorists.
Now federal prosecutors have lauded the FBI’s Joint Terrorism Task Force for its work in the successful prosecution of Canadian citizen Brian David Anderson, whom investigators linked to an international HYIP known as Flat Electronic Data Interchange (FEDI).
Anderson was identified in legal filings as a FEDI pitchman, claiming FEDI was a commodities exchange and that he was selling “seats.”
FEDI actually was a fraudulent loan-investment scheme operated as an HYIP by Abdul Tawala Ibn Ali Alishtari, also known as “Michael Mixon.†Alishtari, 46, of Ardsley, N.Y., pleaded guilty in September 2009 to fleecing investors out of millions of dollars.
In the same case — a case in which Anderson’s name was referenced as a FEDI pitchman in a grand-jury indictment — Alishtari pleaded guilty to financing terrorism.
“Alishtari . . . admitted that he stole millions from investors and knowingly financed what he believed to be tools of terror,” U.S. Attorney Preet Bharara said in September, after the guilty plea. “In enriching himself, Alishtari displayed a deliberate disregard for the financial and personal security of others.”
Investigators said Alishtari “facilitated the transfer of $152,000, with the understanding that the money would be used to fund training for terrorists.
“In the latter half of 2006,” according to investigators, “Alishtari agreed to discreetly transfer these funds for an undercover officer, believing that the money was going to be used to purchase night vision goggles and other equipment for a terrorist training camp in Afghanistan. During his guilty plea, Alishtari admitted that he sent the money from the United States knowing that the funds were to be used to help finance alleged terrorist activity in Pakistan and Afghanistan.”
He pleaded guilty in the United States to criminal charges stemming from the Frontier Assets scheme, and was sentenced last week to 90 months in federal prison. Prosecutors described it as a $4 million Ponzi scheme.
U.S. District Judge Alvin K. Hellerstein said Anderson “ripped out” investors’ hearts.
Prosecutors said Anderson told lie after lie to separate people from their money.
“Anderson touted Frontier Assets as an exclusive ‘private loan program’ that promised high rates of return in the form of interest payments on the invested principal,” prosecutors said.
The use of vague descriptions was part of the scheme, prosecutors said.
“[I]n a document titled ‘How Does Frontier Assets Make Their Income,’ Frontier Assets boasted that it had been appointed a ‘Program Manager’ to a ‘major International Business Corporation’ that participates at the ‘private banking level of several significant European and Asian banks,’” prosecutors said.
Investment jargon also was used to pique investors’ interest, prosecutors said.
“Frontier Assets claimed the ability to place investors with offshore entities, including ‘Private Placement Investment Programs,’ ‘Real Estate development in Asia and the United States,’ ‘Manufacturing plants,’ ‘Commodities worldwide,’ ‘Forex Exchange,’ and ‘Buying and Selling of specialized bank paper, i.e. CD’s and Bank guarantees,’” prosecutors said.
Investors’ funds were said to be insured by an “International Foundation,” prosecutors said.
But Frontier Assets was blowing smoke, prosecutors said.
“[T]he only funds paid into the Frontier Assets accounts were monies that had been provided by investors in the program, and the only payments out were payments of interest to investors, and transfers to Anderson and other co-conspirators. Like many other Ponzi schemes, more recent investors in Frontier Assets ultimately lost a substantial portion, if not all, of their invested principal. In total, at least 50 investors were defrauded of at least $4 million in funds.”
Bharara praised the FBI’s Joint Terrorism Task Force for its work in this case.
EDITOR’S NOTE: It’s often said that the script of Ponzi schemes does not vary much from case to case. The “story” below could be told by any number of Ponzi scheme figures. Although the words below are made up, the “story” is based on a Ponzi figure currently in the news. After you read the tale, click on the link at the bottom to see whose tale it is.
Here, now, the story of a schemer . . .
The records of my two arrests were hard to find — and I didn’t tell anybody. I was afraid that, if word got out, people might think I was a criminal and not do business with me.
I learned how to pull off my scheme by paying attention to earlier schemes I’d heard about. The banks? They didn’t have a prayer against me; I paid people commissions to bring me business and advertised a higher interest rate. People naturally reinvested their profits to earn more money. It truly was as simple as that. (And don’t let anybody tell you differently.)
People always want to believe. My clients were only too happy to help spread the good word about me. They called me a genius and got their friends and family involved. I didn’t even have to pay for the ads! The word spread like wildfire. I became the toast of the town.
It was odd, really: I hadn’t been the toast of my own household prior to getting my idea for the scheme. No one previously had associated me with money because I had none to speak of. Then — all of a sudden — everybody associated me with huge amounts of money. I had the magic touch. It happened practically overnight.
A reporter started digging around. I filed a lawsuit against him. You always can get the reporters to back off when you file a lawsuit.
Or so I thought.
Early on, I got one reporter off my trail. Hit him where it hurt. Made him spend money. I pretty much put him on the shelf.
But it turned out there was another reporter, one who didn’t care how much money I had or how many lawyers I could hire with my money. This reporter didn’t back off. He came up with a number while he was reporting: 160 million. It’s the number that contributed greatly to my demise.
Not right away, mind you. I hired a PR flak to spin my story. Beyond that, I spun my own story. I was a salesman. My job was to snow the snowman. I bobbed and weaved. I snowed. I put the investigators off for a while by pretending to be forthright and cooperative. I knew that my clients did not want to believe I was a thief. Some of them stuck with me even after the news broke.
My PR flak eventually turned on me. So did the government — federal and state. I didn’t quit, though — not even after I got caught. I got caught again in Florida. Moved offshore for a while. Got caught there, too.
For a while, I served as my own attorney. Part of me wishes I hadn’t done that — but, what the hell: I always enjoyed a good show.
Critics of Gold Nugget Invest (GNI), the collapsed Internet HYIP, do not understand that the program that advertised a return of 7.5 percent a week was “real,” according to a member writing on an online Ponzi board.
