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Tag: FBI

  • Appeals Court Upholds 65-Year Prison Sentence Of Eddie Smith, Alabama Man Who Solicted Murder Of Federal Judge, Prosecutor, Deputy Sheriff And Newspaper Reporter

    Edmond H. “Eddie” Smith IV had two plans: One was to pay a hitman to kill U.S. District Judge William H. Steele, assistant U.S. Attorney Greg Bordenkircher, a deputy sheriff, a former business associate and newspaper reporter.

    Smith’s other plan was to implicate his murder targets in a plot to frame him by planting false evidence on their computers. Part of the framing plot involved smuggling bogus letters out of prison and planting them at the murder scenes of Steele, Bordenkircher and the others.

    Steele and Bordenkircher work in the Southern District of Alabama.

    According to court records, Smith wanted the bodies of Steele, Bordenkircher and at least one other person to be subjected to a complete “erasing.”

    “They need to be wiped off the face of the earth,” Smith said, in a tape heard by the jury.

    “Needs to be no f[!!!!!!]’ skulls. No f[!!!!!]’ teeth. No bones,” Smith said.

    But he wanted to body of Eddie Curran, the reporter, to be found, according to the tape.

    “And the only one they need to have a body for is f[!!!!!]’ Curran,” Smith said.

    Senior U.S. District Judge William H. Stafford Jr. of the Northern District of Florida sentenced Smith to 65 years in federal prison for the murder plot. The 11th Circuit Court of Appeals upheld the sentence last week.

    Steele had been the presiding judge in a 2007 civil case against Smith, and also presided over a 2009 criminal case in which Smith was convicted of being a felon in possession of ammunition. The FBI learned of the murder plot and staged a sting, according to court records.

    The U.S. Attorney’s Office for the Northern District of Florida prosecuted Smith’s murder-for-hire case. The FBI and the Mobile County, Ala., Sheriff’s Office assisted in the probe.

     

  • Alfred Gerebizza Arrested In $105 Million Ponzi Case; PP Blog Received Threatening Communication About Alleged Fraud Caper Last Year

    UPDATED 5:25 P.M. EDT (U.S.A.) Alfred Gerebizza has been charged with mail fraud and tax crimes in a superseding indictment in the Daniel Spitzer Ponzi case, which alleged both domestic and offshore fraud. The SEC initially charged Spitzer civilly in June 2010, accusing him of “moving investor money through a complex network of foreign bank and brokerage accounts” and spending more than $900,000 “in cash at the Wynn Las Vegas Casino.”

    Spitzer later was charged criminally after investigations by the FBI, the U.S. Postal Inspection Service and the IRS.

    Gerebizza, 56, formerly resided in the Chicago suburb of Crystal Lake. A criminal indictment against him was unsealed last month, and Gerebizza surrendered in Atlanta, federal prosecutors in the Northern District of Illinois said yesterday. He is in federal custody at a prison facility in Chicago, according to records.

    The superseding indictment naming Gerebizza as a new criminal defendant with Spitzer alleges that Gerebizza was a pitchman who “held himself out as a trader for a dozen investment funds, known collectively as the ‘Kenzie Funds,’ purportedly operated by Kenzie Financial Management in the U.S. Virgin Islands.”

    Spitzer was a Kenzie principal, prosecutors said. He has been charged with 10 counts of mail fraud.

    Gerebizza faces 10 counts of mail fraud and six counts of filing bogus tax returns. Both men were named in forfeiture allegations that seek $34 million.

    “Through sales agents and various marketing materials, they informed investors and potential investors that their investments would be used primarily in foreign currency trading, that the Kenzie Funds had never lost money, and had achieved profitable historical returns,” federal prosecutors said of Spitzer and  Gerebizza. “The defendants had to continually raise funds through the solicitation of new investors in the Kenzie Funds to make payments on investments made by earlier investors, all of which they concealed and intentionally failed to disclose to both new and earlier investors. Ultimately, between 2004 and July 2010, the defendants allegedly raised approximately $105 million from investors, misappropriated a significant portion of those funds, and caused losses totaling approximately $34 million.”

    On Sept. 12, 2010, the PP Blog received a communication purportedly from Gerebizza that threatened a lawsuit if the Blog did not remove Gerebizza’s name and/or alter or delete comments from readers.

    “I will sue you personally as well as your web site for slander as well as other charges,” the communication read in part.

    The Blog did not submit to the threat. Instead, the Blog reported on the threat.

    It is somewhat common for the PP Blog to receive threatening communications related to its coverage of Ponzi probes.

  • Arrest Warrant Issued For Jacob Franz Dyck; Purported Florida ‘Sovereign Citizen,’ 72, Wanted For ‘Committing Criminal Acts Through Simulated Use Of The Legal Process,’ Polk County Sheriff’s Office Says

    Jacob Franz Dyck: Source: Polk County Sheriff's Office

    Jacob Franz Dyck, a purported Florida “sovereign citizen,” is wanted on a felony arrest warrant for “Criminal Act Under Color Of Law Or Committing Criminal Acts Through Simulated Use Of The Legal Process,” the Polk County Sheriff’s Office said.

    Dyck, 72, has been the subject of considerable reporting by the St. Petersburg Times. See story about Dyck’s alleged filing of “wild deeds” to cloud property titles here. See story here about a missing pickup truck that led to the issuance of the arrest warrant.

    Three of Dyck’s associates, including a notary public, have landed in jail, the Times reports.

    See August 2011 PP Blog story on an FBI report that asserts there is a “continued effort by Sovereign Citizen domestic extremists throughout the United States to perpetrate and train others in the use of debt elimination schemes.”

    See July 2011 PP Blog report on a 25-year prison sentence handed down to Jeff McGrue, a Washington state man who targeted people “at the end of their rope” in a foreclosure-rescue scam.

    See August 2011 PP Blog report about disciplinary actions against notaries public associated with AdSurfDaily figure Kenneth Wayne Leaming.

    Leaming is a purported sovereign citizen whom records show once filed an involuntary bankruptcy petition against the Washington State Bar Association and a community hospital in Washington state.

  • UPDATE ON DECEMBER 2009 SPECIAL REPORT: 3 Figures In Philip R. Lochmiller Sr. Ponzi Case Will Go To Federal Prison; ‘Elderly Victims Were Financially Devastated,’ FBI Agent Says; Case Involving Recidivist Fraudster Drew Comparison To AdSurfDaily

    In a case that drew comparisons to AdSurfDaily because of recidivism, undisclosed bankruptcies and ties to Utah, the three principal figures of the Philip R. Lochmiller Sr. real-estate Ponzi scheme in Colorado will be going to federal prison.

    Lochmiller Sr., 63, was found guilty in July after a 10-day trial in which the jurors returned the verdicts in three hours. He will be sentenced after a final computation of losses is completed. The case involved a company known as Valley Mortgage Inc. The case involved about $30 million.

    Lochmiller Sr. was found guilty of conspiracy, money laundering conspiracy, money laundering and mail fraud.

    His stepson, Philip R. Lochmiller Jr., 38 when charged, has been sentenced to eight years in federal prison for conspiracy to commit securities and mail fraud and money laundering. Business associate Shawnee N. Carver, 33 when charged, has been sentenced to two years for conspiracy to commit securities and mail fraud.

    Prosecutors announced the sentences imposed on Lochmiller Jr. and Carver yesterday.

    “Philip Lochmiller Jr. helped orchestrate an investment scheme which defrauded over 400 victims out of more than $30 million,” said James Yacone, special agent in charge of the Denver FBI office. “Several elderly victims were financially devastated.  [The] sentencing sent a strong message that white collar criminals will not be tolerated.  The FBI will continue to aggressively investigate and seek prosecution against the groups and individuals who defraud unwitting victims out of their earnings.”

    Lochmiller Sr. was sentenced to three years in a California state prison in the 1980s after he was charged with 60 counts of securities fraud and pleaded guilty to about half of them. Investors in his new scheme at Valley Mortgage were not told of his history as a securities swindler, federal prosecutors in Colorado said.

    Federal prosecutors in the District of Columbia said the same thing about ASD President Andy Bowdoin, who was charged with felonies in Alabama in a securities scheme in the 1990s.

    Meanwhile, Lochmiller Sr.’s investors also were not told that both Lochmiller Sr. and Jr. had bankruptcies on their records. Federal prosecutors in the District of Columbia alleged in August 2008 that ASD members and members of a companion autosurf known as Golden Panda Ad Builder were not told about the bankruptcy of Golden Panda President Clarence Busby.

    Nor were they immediately told that Busby had a run-in with the SEC in the 1990s and was accused of purveying three prime-bank swindles, according to records.

    The Lochmiller case also has a tie to Vernal, Utah, a community to which ASD also has a tie. The Lochmiller case was in part about real estate in Vernal. Vernal is the community in which the so-called “Arby’s Indians” got their start.

    ASD mainstay Curtis Richmond was a member of the bogus “tribe” based in Vernal. The tribe, which used the address of a Vernal doughnut shop as the address of its purported “Supreme Court” and was ruled a “complete sham” by a federal judge, got its derisive name because it once held a meeting at an Arby’s restaurant in Provo.

    Richmond went on to become a pro se litigant in the ASD Ponzi case, accusing the judge overseeing the case in the District of Columbia of “TREASON” and operating a kangaroo court. Richmond claimed the judge overseeing an unrelated case in Utah owed him $30 million. Other ASD figures later claimed government officials owed them sums ranging from the millions of dollars to the trillions.

    Another parallel between the ASD case and the Lochmiller case is the presence of the IRS. ASD’s early deceptions were uncovered by a U.S. Secret Service/IRS Task Force operating in Florida, according to court filings.

    “Investment fraud is like a ‘house of cards’; the underlying structure can fall apart at any time leaving many investors in financial ruin,” said Sean Sowards, a top IRS agent working the Lochmiller case.

    Sowards is the special agent in charge of the IRS-Criminal Investigation unit in Denver.

    “These sentences should remind us that defrauding investors is a serious offense and those who do will be held accountable,” Sowards said.

    Both Lochmiller Jr. and Carver testified at the Lochmiller Sr. trial, prosecutors said.

     

     

  • URGENT >> BULLETIN >> MOVING: FDA Chemist Cheng Yi Liang Pleads Guilty In Insider Trading Case; ‘Shocking Abuse Of Trust,’ Feds Say Of Schemer’s Plot To Use Database To Harvest Illegal Profits

    >> BULLETIN >> MOVING: Cheng Yi Liang, the FDA chemist accused in March of mining the agency’s database for drug approvals or denials and using the information to make insider trades, has pleaded guilty to securities fraud and failing to disclose illicit profits.

    Liang, 57, of Gaithersburg, Md., faces a maximum term of 25 years in federal prison. Sentencing is scheduled for Jan. 9. The case was one that embarrassed the FDA and its employees, but one that exposed the corruption of a federal worker who used the tools of government to line his own pockets.

    The SEC simultaneously charged Liang civilly in March, opening up a second litigation front.

    As part of a plea agreement in the Feds’ criminal case, Liang will forfeit $3.7 million, a home and condominium in Maryland and funds  in 10 bank or investment accounts, federal prosecutors said.

    The FDA is a branch of the U.S. Department of Health and Human Services (HHS).

    “Profiting based on sensitive, insider information is not only illegal, but taints the image of thousands of hard-working government employees,” said Elton Malone,  special agent in charge of the HHS-Office of Inspector General Special Investigations Branch.  “We will continue to insist that federal government employee conduct be held to the highest of standards.”

    “Mr. Liang used inside information about pharmaceutical companies — information he had access to solely because of his position at the FDA — to pocket millions in illicit profits,” said Assistant Attorney General Lanny Breuer. “In a shocking abuse of trust, Mr. Liang exploited his position as a chemist in the FDA’s Office of New Drug Quality Assessment to cash in, using the accounts of relatives and acquaintances to hide his illegal trading.  Now, like many others on Wall Street and elsewhere, he is facing the significant consequences of trading stocks on inside information.”

    Breuer is head of the Justice Department’s Criminal Division.

    While employed at FDA, Liang “was required to file a Confidential Financial Disclosure form disclosing, among other things, investment assets with a value greater than $1,000 and sources of income greater than $200.,” investigators said. “During the time period of his insider trading scheme, Liang annually filed these forms and failed to disclose using the controlled accounts or his income from the illicit securities trading.”

    The FBI participated in the criminal probe.

    “Those who use privileged and valuable information for personal gain, break the trust placed in them as a government employee and the integrity of the research they conduct on behalf of the U.S. government,” said James W. McJunkin, assistant director in charge of the agency’s Washington Field Office.

  • BULLETIN: Michigan Ponzi Schemer Keith Epstein, Who Sanitized Caper With Charitable Donations While He Ripped Off Senior Citzens And Spent Their Money On Strippers, Sentenced To Federal Prison

    Keith Epstein, 56, told senior citizens they could trust him with their money. Some of his investors believed him — and they liquidated legitimate holdings and gave the cash to Epstein.

    But Epstein, of Farmington Hills, Mich., was running a $4 million Ponzi scheme, the FBI said.

    He took the cash from his victims, spending it on gambling and to support “multiple exotic dancers,” investigators said.

    Some investors received Ponzi payments, investigators said. Epstein plied his marks in part by visiting their homes, participating in their family functions and by putting “money toward[] charitable causes important to clients,” the FBI said.

    Epstein, who’d been held in the Macomb County lockup for violating state laws and writing a bad check, now is on his way to an unspecified federal prison. He was sentenced yesterday by U.S. District Judge Nancy G. Edmunds to 97 months for the Ponzi scheme.

    “We hope to send a message to investment advisors that we will aggressively prosecute those who steal from the elderly and other small investors,” U.S. Attorney Barbara McQuade of the Eastern District of Michigan said.

    “Many of his victims’ retirement funds have been completely eviscerated, leaving them with nothing after lifetimes of saving and hard work,” the FBI said.

    Edmunds ordered Epstein to make resitution of $4.1 million to victims.

     

  • 2 X BIZARRE: (1) SEC Says New York Man Used Proceeds From Unregistered Offering To Pay Restitution In Criminal Case; (2) Feds Say Philly Man Illegally Used Investor’s Funds To Pay For ‘Joy To The World’ Gala And Make Purported ‘Gold’ Purchase In West Africa

    EDITOR’S NOTE: If you’ve been wondering whether there was any ceiling to the bizarre nature of securities-fraud cases as the white-collar fraud epidemic continues, it perhaps is best to stop wondering now . . .

    A New York man has been accused by the SEC of using the proceeds of an unregistered offering for StratoComm Corp. to pay restitution owed in a previous criminal case.

    Roger D. Shearer, StratoComm’s chief executive officer, was sued Tuesday by the SEC in federal court in Albany, N.Y.

    Meanwhile, StratoComm’s outside counsel has been accused in Miami by the SEC of securities fraud amid allegations he knew StratoComm was under investigation but disclaimed knowledge of the probe in letters designed to ensure the firm’s stock would continue to be quoted on the Pink Sheets.

    Attorney Stewart A. Merkin was sued by the SEC on Monday.

    In a separate, unrelated case, a suburban Philadelphia man has been arrested on charges he solicited $4 million from an investor and “misappropriated at least half of it,” federal prosecutors in New York said.

    Charged criminally with wire fraud in the case was Tyrone L. Gilliams Jr. Gilliams owned a company known as TL Gilliams LLC, prosecutors said.

    Prosecutors said Gilliams’ victim believed the money would be used for investments in “treasury strips” — securities derived from U.S. treasury bonds.

    Gilliams, however, peeled off more than $2 million, using at least $1.3 million of it to fund a black-tie gala at the Ritz Carlton hotel in Philadelphia last year. The event was dubbed the “Joy to the World” festival. Another Joy to the World event was held in the Bahamas, prosecutors said.

    “His charade was funded by money he allegedly stole from an unwitting investor,” said U.S. Attorney Preet Bharara of the Southern District of New York.

    Another $450,000 of the $4 million was used “to refund a deposit from a prior investor,” and more than $200,000 went to a real estate title company, prosecutors said.

    Smaller sums went for other “improper purchases,” and Gilliams “wired approximately $1.6 million to Ghana, for what he has since claimed was an investment in gold,” prosecutors said.

    “Gilliams misrepresented to an investor how solicited funds would be used,” said FBI Assistant Director-in-Charge Janice K. Fedarcyk.

    In the civil case against Shearer and StratoComm, the SEC alleged that StratoComm, acting at Shearer’s direction and with the assistance of former StratoComm executive Craig Danzig, “issued and distributed public statements falsely portraying the company as actively engaged in the manufacture and sale of telecommunications systems for use in underdeveloped countries, particularly Africa.”

    But the firm “had no product and no revenue,” the SEC charged, alleging that “Shearer and Danzig sold investors approximately $3 million worth of StratoComm stock in unregistered transactions.

    “Shearer used much of that money for his own purposes, including paying a substantial part of the restitution he owed in connection with his guilty plea in a prior criminal proceeding,” the SEC said.

    Merkin, StratoComm’s counsel, wrote “four attorney representation letters for posting on the website of Pink Sheets LLC and its successor, Pink OTC Markets, Inc.,” the SEC said. “In those letters Merkin disclaimed knowledge of any investigation into possible violations of the securities laws by StratoComm or any of its officers or directors. However, the SEC’s complaint also alleges that Merkin was representing StratoComm and several individuals in connection with the SEC’s investigation at the time.

    “Nevertheless, in order that StratoComm’s shares would continue to be quoted, the SEC’s complaint alleges that Merkin falsely stated that to his knowledge StatoComm was not under investigation,” the SEC said.

     

  • BULLETIN: California Woman Pleads Guilty In ‘Christian Rock Concerts’ Ponzi Scheme; Recidivist Swindler Lauren Baumann Used Money From Latest Scam To Pay $10,000-A-Month Mansion Rent, Prosecutors Say

    BULLETIN: A California woman has pleaded guilty to wire fraud in a Ponzi scheme in which investors were falsely told their money was being used to fund “Christian rock concerts” and to flip real estate at a profit.

    Lauren Baumann, 43, of Downey, was a recidivist  huckster who failed to disclose she’d been sued for fraud by the SEC in 1998 and convicted in Texas of securities fraud in 1999 in a criminal case that evolved from the SEC probe. The 1990s-era caper gathered about $5 million, and the scam targeted at Christian music fans that would follow later netted about $1 million.

    Investors in the rock-concert scam were told their money would be used to finance “battle of the bands” events that would feature “Christian rock bands and other music groups that would generate profits from ticket sales and company sponsorships,” the office of U.S. Attorney André Birotte Jr. of the Central District of California said this afternoon.

    The scheme operated through a company known as Stewardship Estates LLC, prosecutors said.

    “Baumann also used investor funds to pay approximately $10,000 a month to rent a historic mansion in Downey and to pay private school tuition for her children, among other personal expenses,” prosecutors said.

    Although some of the investors got paid, the money they received was Ponzi proceeds. All in all, the scam sucked in more than two dozen investors and caused at least $560,000 in losses, prosecutors said.

    Baumann faces up to 20 years in federal prison. She is scheduled to be sentenced by U.S. District Judge Josephine S. Tucker on Dec. 12. The FBI handled the criminal probe in Baumann’s latest swindle.

  • URGENT >> BULLETIN >> MOVING: Richard Dalton, Marie Dalton Arrested In Atlanta; Colorado Couple Implicated In Bizarre Ponzi Scheme And Will Be Prosecuted In Denver By Special Government Counsel From Kansas

    URGENT >> BULLETIN >> MOVING: A Colorado husband and wife have been arrested by federal agents in Atlanta and will be returned to Denver to be prosecuted by special government counsel brought in from Kansas, authorities said.

    Why special counsel was appointed to oversee the prosecution of Richard and Marie Dalton was not immediately clear. The allegations in the case, which began as an emergency SEC civil prosecution last year reported on here by the PP Blog, are bizarre. The case may be linked to the mysterious, prime-bank allegations against Larry Michael Parrish of Walkerville, Md., which the PP Blog reported on here.

    Richard Dalton, 65, and Marie Dalton, 60, reside in Golden, Colo. They have been charged with one count of conspiracy to commit mail fraud, wire fraud and interstate transportation of stolen funds, according to the office of U.S. Attorney Barry Grissom in the District of Kansas.

    Parrish’s name was not referenced today in the announcement by Grissom’s office of the prosecution of the Daltons. In March 2011, the SEC described Parrish as a recidivist swindler with a tie to Richard Dalton. Parrish was accused by the SEC of posing as a concerned financial adviser and investment strategist and visiting a dying man in a Colorado hospital.

    The man was suffering from cancer. Parrish assured him that investing with him was safe, that the man’s wife would not have to worry about her finances after his death, that “the investment would provide for his wife for the rest of her life,” the SEC said in March.

    “That money is now gone,” the SEC said. And so is the money from 70 other Parrish investors in three states, about $9.2 million in all, the agency said in March.

    When the Daltons learned they were under investigation by the SEC, Grissom’s office, the FBI and the IRS said today in a joint statement, they discontinued making payments to investors and falsely represented to investors that they could expect payments soon.

    “They also misled investors with false claims that the company’s European trader was switching banks, that the company was liquidating a cache of diamonds to pay investors back, that a plane carrying diamonds had been forced to land in Amsterdam because three engines had gone out and that the company had discovered it was holding 18,000 fake diamonds,” prosecutors said.

    The SEC laid out largely the same fact set in November 2010.

    “This investigation is not over as we are committed to following the money trail,” said Sean P. Sowards, IRS Criminal Investigation Special Agent in Charge. “We will continue to pursue the evidence wherever it leads.”

    The Dalton caper used a “diamond” theme and had an element known simply as “the Trading Program.” It gathered $17 million through a company known as Universal Consulting Resources LLC (UCR)., investigators said.

    “As part of soliciting investors for the Trading Program, Dalton and UCR falsely told prospective investors that their invested funds would be held safely in an escrow account at a bank in the United States, and that a European trader (often referred to simply as ‘the Trader,’ but never known or referred to by name) would use the value of that account, but not the actual funds, to obtain leveraged funds to purchase and sell bank notes,” the SEC charged last year.

  • BULLETIN: FLORIDA — AGAIN: CFTC Says Civil, Criminal Charges Filed Against Miami Resident Oscar Hernandez In Alleged Commodity-Pool Ponzi Scheme In Which A Customer Was Check-Waving Cheerleader

    BULLETIN: Civil and criminal charges were filed in Florida today against Miami resident Oscar Hernandez, amid allegations he was operating a $3 million Ponzi scheme through Midway Trading Company LLC and Conquest Investment Group Inc., the CFTC said.

    The office of U.S. Attorney Wifredo A. Ferrer of the Southern District Of Florida said Hernandez has been charged criminally with fraud and conspiracy.

    In its complaint, the CFTC painted a picture of a noxious financial fraud that proliferated in part because a Hernandez customer led cheers for the scheme. The customer displayed copies of checks presented him by Hernandez, and the checks became a form of social proof that Hernandez was on the up-and-up, according to the complaint against Hernandez.

    The customer ultimately persuaded about eight others to invest with Hernandez, which caused at least $1 million more to flow to the Hernandez Ponzi, the CFTC alleged.

    The scheme operated between 2005 and 2009, netting more than $3 million. Hernandez and the firms “misappropriated approximately $1.8 million of participants’ funds for personal use, including car, mortgage, and credit card payments, and used misappropriated funds for so-called profit payments to participants,” the CFTC said.

    Investors were told Hernandez had developed a “special program” to trade futures and that annual returns of 180 percent were possible, the CFTC said.

    The CFTC, the FBI and federal prosecutors in the Southern District of Florida cooperated in the probe, the CFTC said.

    “By late 2008, Defendants made payments only intermittently, not monthly,” the CFTC charged. “Participants received their last payments in early 2009, and have not received a monthly payment or the return of their principal since that time.”

    Neither Hernandez nor the companies was registered with the CFTC “in any capacity,” the agency said.

    A Hernandez customer named Omar Aguilera began trading with Hernandez with $50,000 in 2005, according to the CFTC. By 2007, Aguilera and his wife upped their stake to $1 million with borrowed money.

    “Aguilera began to recommend the investments that Hernandez was making through Midway and Conquest to many of his friends and relatives, showing them copies of the checks he had received as proof of the profits he was earning,” the CFTC said. “Aguilera repeated what Hernandez had told him — that he would use any funds they invested for futures day trading, and that the investment carried no risk.”

    Over time, the scheme spread by word-of-mouth — to the point where “some participants invested without ever talking to Hernandez,” the CFTC said. “Early participants in the scheme received considerable ‘returns.’”

    But “the checks that Hernandez sent to Aguilera from the Midway and Conquest bank accounts were not profits from futures trading, but were funds that Hernandez had received from other participants and deposited in the Midway and Conquest bank accounts,” the CFTC charged. “Hernandez used only a portion of the funds he obtained from participants to trade futures in the Midway and Conquest trading accounts, losing approximately $1.3 million in the process, and used the remainder either to pay off obligations to other participants, or to pay for his own personal living expenses.”

    When the Ponzi collapsed, Hernandez told “a variety of false stories,” the CFTC said.

  • BULLETIN: 77-Year-Old Amish Man Now Faces Criminal Charge In Alleged ‘Massive’ Caper; Monroe L. Beachy Indicted For Mail Fraud; SEC Filed Civil Charges Earlier This Year

    An Amish man has been indicted in Ohio in an alleged long-running scheme that devoured more than $16.8 million.

    Victims of Monroe L. Beachy included fellow Amish and the Amish Helping Fund, according to court filings.

    Beachy, 77, resides in Sugarcreek, Ohio. He was charged civilly by the SEC in February 2011. A criminal indictment charging Beachy with mail fraud was announced today by federal prosecutors in Cleveland.

    “This is fraud on a massive scale,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio. “This defendant took advantage of people’s trust in him and squandered the life savings of hundreds upon hundreds of families.”

    Beachy operated a company known has A&M Investments, and customers believed their money was safe in conservative Ginnie Mae Bond Funds, prosecutors said.

    There are at least 2,698 victims, according to the indictment.

    A top FBI agent described the scheme as elaborate.

    “Unfortunately, he violated[investors’] trust over and over again resulting in a combined loss of over $16 million,” said Stephen D. Anthony, special agent in charge of the Cleveland FBI office. “The FBI and its partners were committed to unraveling this elaborate scheme . . . and to work with those victims who were affected by this large-scale investment fraud.”

    Beachy did not invest the money as promised, prosecutors said, noting that he had been gathering money for 20 years before the scheme collapsed last year.

    The Amish Helping Fund helps members of the Amish community purchase land and buildings, among other things, prosecutors said.