EDITOR’S NOTE: If you’ve been keeping a “Bubba Blue” notebook on ways to have your Ponzi scheme as opposed to shrimp, here is another entry . . .
BULLETIN: A California man, his wife and his Indiana-based mother have been arrested in an alleged $2.5 million Ponzi scheme tied to a bogus insurance company known as “State Bonding California,” which purportedly was in the business of arranging bail, authorities said.
Anthony Trae Carlson, 42, was charged with 40 felony counts. His wife, Mariah Waterfall O’Brien, 40, was charged with 23 felonies. Meanwhile, his 68-year-old mother — Arvina Joyce Carlson — also was charged with 23 felony counts.
Bail for Anthony Carlson was set at $2.5 million. Bail for his wife and mother was set at $1.9 million each.
“This family conspired to rip off honest investors,” said Dave Jones, California’s insurance commissioner.
The scheme began in February 2005 and ran through December 2008, investigators at the California Department of Insurance (CDI) said. Among the claims were that the bogus bonding firm conducted business in nearly all of the U.S. states (at least 44 of 50) and produced more than $1 billion in annual revenue.
Such a purported widespread geographic presence and such purported fabulous revenue numbers apparently tricked investors into believing they’d receive “guaranteed” annual returns of between 19 percent and 21 percent after purchasing “membership interests.”
At least seven people plowed more than $2.5 million into the scheme, investigators said.
“At least one suspect used fraudulent multimillion dollar State Bonding California dividend checks to persuade victims to invest in the bogus company,” investigators said.
But “State Bonding California was never licensed to sell insurance by CDI nor was it licensed to offer securities by the California Department of Corporations,” investigators said.
The probe “revealed that the only address associated with the company was a post office box located in Hollywood,” investigators said. “In addition, none of the defendants were licensed to offer securities in the State of California.”
Anthony Carlson and his wife lived “a lavish Hollywood lifestyle” in the hills of Los Feliz, investigators said.
If Anthony Carlson is convicted on all counts, he will face a potential sentence of more than 27 years in state prison, investigators said. His wife and mother could be sentenced to 21 years each in state prison, if convicted on all counts.
BULLETIN: In a case that could have been taken from the MLM and security swindler’s playbook, James A. Sweeney and Patrick M. Ryan have been found guilty by a state jury in California of operating a pyramid scheme and stock fraud and stealing $8.2 million after soliciting business at “seminars.”
The men face more than 20 years each in prison. Prosecutors said they told members that their “opportunities,” known as Big Co-op Inc. and Ez2Win.biz, represented the “future of online commerce.”
The firms were compared in promos to Google and eBay, and members were told an IPO was “imminent” and that “when the company went public, the stock would double or triple and [stockholders’] investment[s] could climb to well over $100 per share,” prosecutors said.
At an October 2006 pitchfest attended by a state undercover agent, prospects were falsely told that the company that had taken Google public had been hired to manage Big Co-op’s purported IPO and that the company would go public in December 2006, according to the state.
But no arrangements with Google’s IPO manager to take the firm public had been made and no “application to any governmental or regulatory agency to allow Big Co-op to make an initial public offering of stock in 2006, or at any other time thereafter” had been filed, the state charged.
Filings by the California Department of Corporations paint a picture of affiliates making wild claims to drive business to the company. The company itself lured prospects by planting the seed they’d be driving a Mercedes Benz and wearing a Rolex wristwatch, according to state filings.
Vague — and even wild claims of future success — often are part of MLM scams. It also is common for hucksters to plant the seed that a company “soon” will go “public” and become the “next” Google, Microsoft or eBay. At least one Big Co-op promoter declared the firm the next Walmart, according to records.
Even if no claims that a firm will go “public” are made, it is common for MLM hucksters to leech off the brands of famous companies to create a sort of legitimacy by osmosis. In the universe of MLM fraudsters, it is common for hucksters to plant the seed that figures such as Donald Trump, Warren Buffett and Oprah Winfrey have endorsed the “opportunities,” when no such endorsement had occurred.
Some MLM hucksters even have traded on the names of various presidents of the United States and other world figures.
Sweeney, 64, of Afton, Tenn., and Ryan, 35, of Canyon Lake, Calif., were arrested in June 2009.
By the time it was all over, more than 1,000 California residents had been lured into the scheme, prosecutors said.
The scam “purported to be an online shopping hub where consumers could go to purchase thousands of goods and services at discounted prices from big-name retailers including, Sears, Target and Macy’s,” prosecutors said.
Members were told they’d earn “rebates” and “rewards,” which never came. In reality, the state said, any “monetary gains” were based on a member’s ability to recruit people into a pyramid, have those people recruit others “and so on.”
Taking another page out of the scammer’s playbook, the “opportunity” sold stock ranging in price from 50 cents a share to $5, “with two-for-one deals offered to investors willing to pay cash,” the state charged.
“Sweeney and Ryan bought luxury homes, country club memberships, five Mercedes, and ran up $30,000 to $50,000 in monthly credit card bills,” prosecutors said. “Investor funds were also used to pay for an elaborate bachelor party in Las Vegas, a $23,000 wedding ring and a $100,000 wedding.”
EDITOR’S NOTE: The PP Blog has covered a number of stories in which U.S. residents living overseas were extradited to the United States to face Ponzi charges. The case against Ronald Paul Shade is another one — and it’s one that demonstrates that an extradition can occur even if a defendant is not charged with a federal offense.
Indeed, the warrant for Shade’s arrest was issued by a state-level Superior Court judge in California, according to Interpol. Shade’s case is instructive because it defeats some of the myths propagated on Ponzi boards such as MoneyMakerGroup, ASAMonitor, TalkGold and MyCashForums. Among the myths is that “offshore” equals “safe” for both investors and Ponzi perpetrators.
Don’t tell that to Shade, now jailed in California after being extradited from Bangkok by local — as opposed to federal — prosecutors in California. His bail was set at $3.9 million.
And don’t tell it to Jeffrey Lane Mowen, extradited from Panama to face federal Ponzi charges in Utah and later indicted in an alleged murder-for-hire plot. Here’s a quick side note on the Mowen case: If you like the recruitment fees paid by HYIP, autosurf and corrupt MLM or commission-based investment programs and make claims about the “due diligence” you’ve performed and try to impress prospects with your insider knowledge, your willful blindness may put you at great risk.
Mowen had three prior convictions in Utah for securities fraud and two for theft, according to records. Despite Mowen’s criminal record and history as a fraudster, promoters still did business with him. Their faith drained millions of dollars from investors, the SEC said. Using language apt to cause unease in the Ponzi-promoting world, the SEC said at least one promoter “either knew or was reckless in not knowing that Mowen had multiple recent felony convictions involving crimes of dishonesty.â€
Indeed, the SEC said, the promoter learned in approximately late June 2007 that Mowen had been convicted of securities fraud . . . [but] “continued to solicit new investor funds for several months while failing to disclose Mowen’s criminal history to any of the Promoters or their investors.†Downstream promoters who entrusted the promoter “conducted virtually no due diligence in connection with [his] purported investment opportunities, but transferred investor money to [him] without any documentation or limitation on his use of the funds,†the SEC said.
Perhaps the biggest myth exposed by the Ronald Paul Shade case is that going offshore takes state attorneys general and local prosecutors totally out of play. Longtime PP Blog readers will remember that the “offshore” pitch was pivotal in promotions for AdViewGlobal, AdGateWorld, MegaLido and other autosurfs that surfaced in the aftermath of the seizure of tens of millions of dollars by the U.S. Secret Service in the AdSurfDaily Ponzi scheme case. Some ads claimed that the “offshore” surfs neutralized state-level investigators.
Shade, however, was brought back to the United States at the request of the San Bernardino County District Attorney’s Office in California to face state charges filed by local investigators.
Still promoting investment-fraud schemes on the Ponzi boards and supplementing your pitches with myths about “safety” and how the overseas schemes are insulated from prosecution? Perhaps this story on the dramatic extradition of Colombian national David Murcia to the United States will help you snap out of your delusion that Ponzi and pyramid businesses cause no harm and represent “freedom” of choice. Perhaps this story on Robert Hodgins, who goes to bed at night knowing he’s wanted by Interpol, will help you shape your thinking.
The cases of John and Marian Morgan, U.S. residents extradited from Sri Lanka, also are instructive.
Finally, it’s worth noting that, after the United States charged Canadian national Nicholas Smirnow in May with operating an HYIP Ponzi scheme, a MyCashForums poster was quick to claim that “the USA has no extridition (sic) agreement ion (sic) place with the Phillipines (sic) . . . “
The claim was false. Federal prosecutors said they are seeking Smirnow’s extradition. He was accused of operating a $70 million, international fraud known as Pathway to Prosperity (P2P).
Here, now, the story of Ronald Paul Shade’s extradition . . .
A California man living in Thailand was extradited to the United States to face charges he ripped off senior citizens in a real-estate Ponzi scheme, authorities said.
Ronald Paul Shade, 39, formerly of Riverside, was arrested by local detectives Friday at Los Angeles International Airport. He was charged by investigators from the San Bernardino District Attorney’s Office with 29 felonies, including financial elder abuse, filing forged documents with the County Recorder’s Office and grand theft.
San Bernardino County District Attorney Michael A. Ramos, who also is the president of the California District Attorneys’ Association, led the probe.
Among the detectives involved in the Shade probe was Michael Leibrich, a senior investigator with the DA’s office.
“From 2006 to 2008, Shade solicited money from numerous investors for his company, Orange Crest Realty,” investigators said. “Investors were promised a high rate of return for a short-term investment. Elderly victims later discovered that their life’s savings were being used to further a Ponzi scheme.”
Shade had been living in Thailand for about two years, investigators said.
In 2008, the California Department of Corporations issued a “desist and refrain” order against Shade and his company after alleging that they were selling unregistered securities and recruiting prospects by urging them to “Get 18% APR Today†through the company’s “wonderful†investment.
Shade and the company used a now-defunct website known as OCRFunding.com to pitch the purported program, authorities said.
Among the misleading claims made to investors, according to authorities, were these:
That Orange Crest Realty was founded in 1993. (Authorities said Orange Crest Realty was not incorporated until June 2004.)
That Orange Crest Realty is a “registered investment advisor.†(Authorities said neither Shade nor the company and its associates were registered.)
That each investment was secured by actual title to specific existing real property. (Authorities said that “each investment was not secured by real property.”)
That a Deed of Trust And Assignment of Rents in the Property would be recorded with the Office of the County Assessor/Recorder and the investor would be provided with the recorded deed. (Authorities said a deed promised an investor who sent in $50,000 was not recorded and the “investor never received a recorded deed.”)
That the investor would receive regular monthly interest payments. (Authorities said “payments ceased shortly after the investment was purchased.”)
San Bernardino County investigators were assisted in the extradition by the Southwest Regional Fugitive Taskforce of the U.S. Marshals Service.
The scheme, which allegedly gathered $14 million, also fleeced investors who responded to newspaper ads, investigators said.
EDITOR’S NOTE: If you’ve been keeping a “Bubba Blue” notebook on ways to have your Ponzi scheme as opposed to shrimp, here is another entry . . .
