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.”
Anderson, the former pastor of a church in Canada who was arrested in Spain in 2007, was not linked to terrorism. But Canadian authorities said he pushed FEDI and another investment scheme known as Frontier Assets.
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.