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Tag: FBI

  • In Case Investigated By FBI, U.S. Secret Service, Maryland Man Pleads Guilty To Threatening Federal Judge By Mail; Willie Ray Bryant Also Planned To Mail Threat To President Obama, Prosecutors Say

    A Maryland prison inmate who sent a threatening letter to a federal judge was monitored — and then sought to send a death threat to President Obama, the office of U.S. Attorney Rod J. Rosenstein said.

    Willie Ray Bryant, 41, now has pleaded guilty to threatening U.S. District Judge William D. Quarles Jr. Bryant, who is serving a 40-year term in state prison, faces up to 10 years on the federal charge.

    “BOOM,” a section from the letter to the judge began. “[S]ee how easy this was, next time you wont (sic) be so lucky[.] ERM Family ANTHRAX!!”

    The FBI found Byrant’s fingerprints on the letter, and alerted prison officials. Maryland corrections officers then “intercepted a letter Bryant had addressed to President Obama excoriating the President for turning his back on Islam and threatening to kill the President,” prosecutors said.

    U.S. District Judge Richard D. Bennett is scheduled to sentence Bryant on Dec. 9.

    The letter to Obama said that Bryant wanted to chop off the President’s head, according to the Baltimore Sun.

  • UPDATE: Eliott Jay Dresher Pleads Guilty In $13.5 Million Ponzi Scheme That Traded On Famous ‘NASCAR’ Brand

    UPDATE: Eliott Jay Dresher, the California man whose Ponzi scheme traded on the famous racing brand of NASCAR, now faces up to 20 years in federal prison after pleading guilty in Los Angeles to mail fraud.

    Dresher, 64, of Chatsworth, was jailed in December 2009 in a case brought by the FBI and the U.S. Postal Inspection Service. Investigators said he promised investors returns of up to 25 percent every six months for financing a purported NASCAR merchandising business.

    The business, however, was bogus — and Dresher had been using NASCAR’s name and operating a Ponzi scheme for about 10 years before the scheme collapsed in 2008.

    “[A]ll of the funds paid to investors were ‘Ponzi’ payments that came from money invested by victims,” prosecutors said.

    Among the victims was a Dresher friend from whom Dresher had solicited more than $250,000, prosecutors said. All in all, victims’ losses could total $9.5 million.

    U.S. District Judge Philip S. Gutierrez is presiding over the case. Dresher is scheduled to be sentenced on Dec. 19.

    Dresher was arrested in Las Vegas in 2009. He has been held without bond since then. Family members also were among his victims, prosecutors said.

    It is common for Ponzi and fraud schemes to trade on the names of famous people and companies.

    Famed “Cheers” and “Fraiser” actor Kelsey Grammer claims he was duped by pyramid-scheme promoters tied to Staropoly.com and that his name and image were used without authorization, RadarOnline reported yesterday.

     

     

     

  • Recidivist Felon Robert Stinson Of ‘Life’s Good’ Pleads Guilty To 26-Count Ponzi Indictment, Faces Decades In Prison

    Robert Stinson Jr., the Philadelphia-area recidivist felon and securities swindler accused last year of stealing $17 million in a Ponzi scheme and wiring money to prevent it from being seized even as the FBI was conducting a raid, has pleaded guilty.

    Stinson, 56, of Berwyn, faces a maximum under federal sentencing guidelines of nearly 34 years in prison, federal prosecutors said. In his most recent scam, he pleaded guilty to nine counts of money laundering, five counts of wire fraud, four counts of mail fraud, three counts of filing false tax returns, two counts of obstruction of justice, two counts of making false statements to federal agents and one count of bank fraud.

    Investors in various entities under Stinson’s Life’s Food Inc. were wiped out, and Stinson stole $17 million, prosecutors said.

    In 1986, Stinson was convicted of wire fraud and larceny in U.S. Court in Delaware, according to records. In 1987, he was convicted of forgery and larceny in New Jersey state court. During the same year, he was convicted of mail fraud in U.S. District Court for the Eastern District of Pennsylvania.

    Meanwhile, in 1996, he was convicted of criminal conspiracy in state court in Pennsylvania. In 2001, he was convicted of bank fraud in U.S. District Court for the Eastern District of Pennsylvania.

    Stinson filed two bankruptcy petitions in 1999, one in October and another in December, according to records.

    Nine years earlier, in 1990, he was charged with fraud by the SEC. He was ordered to pay a judgment of $7,680, but the judgment remains unpaid, according to court filings.

  • Senior Who Swindled Seniors In $18 Million Ponzi Scheme Sentenced To 108 Months In Federal Prison; Case Sends Message To ‘Con Artists,’ Top Federal Prosecutor Says

    Louis J. Borstelmann, a California senior citizen who swindled “elderly and retired” investors in Oregon and elsewhere in an $18 million Ponzi scheme, has been sentenced in Oregon to 108 months in federal prison, prosecutors said.

    Borstelmann is 69. Most of his victims resided in the area of Florence, Ore., although others hailed from Hawaii, Montana and Texas, the office of U.S. Attorney Dwight C. Holton of the District or Oregon said.

    “Borstelmann wreaked havoc on his victims — mostly older folks — stealing their retirement funds, their homes, even the nest eggs they’d set aside for their grandkids’ education,” said Holton. “We can’t get all the money back, but at least we can achieve some measure of justice — and let other con artists know that we will hold them accountable and send them to prison.”

    Not only did the victims suffer financial abuse, they also suffered emotional abuse, the region’s top IRS investigator said.

    “Hopefully, this prosecution provides them with some peace of mind in knowing that their suffering did not fall on deaf ears,” said Marcus Williams, special agent in charge of IRS Criminal Investigation for the Pacific Northwest.

    He was backed by a top FBI agent.

    “Borstelmann stole more than money from these vulnerable victims — he stole their hopes for the future,” said Alan J. Peters, acting special agent in charge of the FBI in Oregon. “These families worked their whole lives to be able to put their kids through college and have a safe, comfortable retirement. Now that is gone.”

    Borstelmann  ran a real-estate Ponzi through a California company known as Sunburst Associates Inc., prosecutors said.

  • KABOOM! 16 Arrested In Alleged DDoS Attack Against PayPal; FBI Executes 35 Search Warrants ‘Throughout The United States’ In Cybercrime Probes

    EDITOR’S NOTE: Having experienced DDoS attacks that crippled our ability to publish and inform readers, researchers and victims of Ponzi schemes, pyramid schemes and other forms of fraud about investigations, arrests and court cases, the PP Blog is not sympathetic to the points of view of the attackers and their apologists.

    Readers and researchers have come to rely on the PP Blog as an important information source. Victims and persons affected by various schemes visit the Blog daily, as do financial institutions performing research on potential trouble spots and law-enforcement agencies at the local, regional, national and international levels.

    The PP Blog, whose monthly costs have increased more than tenfold owing to sustained DDoS attacks beginning last fall, frequently writes about the incongruities that often accompany Ponzi and other fraud schemes. Hackers, DDoSers and cyber bullies use the same type of illogical and incongruous “explanations” to rationalize their particular brand of crime.

    DDoS attacks, cyber intrusions and cyber bullying chill speech and threaten domestic and international security, thus putting both commerce and the free marketplace of ideas at risk. Period.

    It is simply untrue that hackers, cyber bullies and DDoSers are the modern-day equivalent of freedom fighters. Simply put, they are anarchists who do not respect private and public property, rules of decorum, the rights of sovereign nations and the rights of people living free or yearning to live free. Nor do they respect the rights of merchants, information purveyors and their customers, clients and readers to have access to the marketplace of commerce and ideas.

    Many of the attackers and cyber bullies, though, would have you believe the opposite — that they’re serving a higher good by bringing down a server, by harassing people and companies on the Internet and even cackling about it, by subjecting their targets to economic and potentially even physical danger, by forcing their will on individuals and entities with whom they have political or philosophical disagreements.

    Here, now, the story of yesterday’s arrests . . .

    The FBI arrested 16 individuals and executed more than 35 search warrants “throughout the United States” yesterday in a coordinated response to cyber attacks, including last year’s DDos attack on PayPal and intrusion attacks on AT&T and on InfraGard in Tampa Bay.

    InfraGard is an FBI-led, public-private partnership that shares information on terrorism, intelligence, criminal and security matters.

    Separately, authorities in Europe rounded up five more individuals for alleged cyber crimes.

    Although some of the alleged attackers apparently see themselves as advocates for a free exchange of ideas and modern avengers for societal injustices, the U.S. Department of Justice described them as free-wheeling marauders who attacked two famous companies and the FBI-led public-private partnership.

    After WikiLeaks “released a large amount of classified U.S. State Department cables on its website” last year, members of the Anonymous hacking group retaliated by executing a “coordinated”  DDoS attack on PayPal, which had blocked WikiLeaks’ ability to collect donations for a Terms of Service violation, U.S. officials said.

    Anonymous, according to the Justice Department, even had a name for its PayPal assault: “Operation Avenge Assange.” Beyond that, WikiLeaks itself declared that PayPal was trying “to economically strangle WikiLeaks,” the Justice Department said.

    Julian Assange, who is under investigation in Sweden for alleged sexual assaults, is the founder of WikiLeaks. He has denied wrongdoing.

    In bringing the attacks, members of Anonymous compromised the ability of legitimate PayPal users to access the PayPay website, the Justice Department said. Fourteen people were charged in a federal indictment brought in San Jose, Calif., that alleges a conspiracy to damage protected computers at PayPal.

    Named in the San Jose indictment were Christopher Wayne Cooper, 23, aka “Anthrophobic”; Joshua John Covelli, 26, aka “Absolem” and “Toxic”; Keith Wilson Downey, 26; Mercedes Renee Haefer, 20, aka “No” and “MMMM”; Donald Husband, 29, aka “Ananon”; Vincent Charles Kershaw, 27, aka “Trivette,” “Triv” and “Reaper”; Ethan Miles, 33; James C. Murphy, 36; Drew Alan Phillips, 26, aka “Drew010”; Jeffrey Puglisi, 28, aka “Jeffer,” “Jefferp” and “Ji”; Daniel Sullivan, 22; Tracy Ann Valenzuela, 42; and Christopher Quang Vo, 22.

    One individual’s name was withheld by the court, the agency said. The reason was unclear.

    Charged in the Middle District of Florida in the alleged InfraGard attack was Scott Matthew Arciszewski, 21. The Justice Department described him as a hacker who uploaded files without authorization and provided instructions “on how to exploit the Tampa InfraGard website.”

    Meanwhile, in a complaint in federal court in New Jersey, Lance Moore, 21, of Las Cruces, N.M., was charged with stealing information from AT&T and posting it on a public file-sharing site.

    The Metropolitan Police Service in the United Kingdom also made a cyber-crime arrest yesterday, and the Dutch National Police Agency made four arrests, the Justice Department said.

  • BULLETIN: Vincent McCrudden Pleads Guilty To Threatening Regulators, Government Officials

    BULLETIN: Vincent McCrudden, who was arrested in January amid allegations he threatened to kill 47 regulators and government officials, has pleaded guilty to two counts of transmitting threats to kill.

    McCrudden, 50, faces up to 10 years in prison. He has been jailed since his arrest in New Jersey.

    “Mr. McCrudden made bone-chilling and graphic threats against dozens of public officials,” said Assistant Attorney General Lanny Breuer. “As this prosecution reflects, the Department of Justice will act swiftly to identify and prosecute anyone who attempts to retaliate against public officials. Public servants must be able to carry out their duties without fear of being targeted.”

    On Sept. 30, prosecutors said, McCrudden sent an email to an employee of the National Futures Association (NFA) that made a death threat.

    “[I]t wasn’t ever a question of ‘if’ I was going to kill you, it was just a question of when,” the email read, prosecutors said. “And now, that question has been answered. You are going to die a painful death.”

    McCrudden also published an “Execution List” on his website. The list included the names of 47 current and former officials of the SEC, FINRA, NFA, and CFTC.  Included on the list were the names of the “the Chairperson of the SEC, the Chairman of the CFTC, a former Acting Chairman and Commissioner of the CFTC, the Chairman and CEO of FINRA, the former chief of Enforcement at FINRA, and other employees of the NFA and CFTC,” prosecutors said.

    “[T]hese people have got to go,” McCrudden wrote, prosecutors said. “And I need your help, there are just too many for me alone.”

    And McCrudden “posted a $100,000 reward on his website for personal information of several government officials and proof that those officials were punished,” prosecutors charged.

    On Dec. 16, according to the complaint, McCrudden sent a CFTC official an email with a subject line of, “You corrupt mother[*!&$$%]!”

    A top FBI official said such behavior would not be tolerated.

    “The conduct of McCrudden was way beyond mere speech,” said Janice K. Fedarcyk, assistant director in charge of the agency’s New York office. “By his admission, he not only directly threatened to kill government and regulatory officials, but he also listed dozens of officials and offered a reward to others to kill them. This outrageous conduct is not only dangerous, but an affront to civil society.”

    Fedarcyk was backed by U.S. Attorney Loretta E. Lynch of the Eastern District of New York.

    “This defendant crossed the line when he directly threatened to kill public officials who were working to keep our financial markets fair and open, and invited others to join him,” Lynch said. “He thought he could hide in the shadows of the Internet and disseminate his threats and instructions. He was wrong. This office will not tolerate, and will vigorously prosecute, those who threaten to kill men and women who dedicate their lives to public service.”

  • URGENT >> BULLETIN >> MOVING: KABOOM! Feds, SEC, CFTC Move Against Alleged U.S. Huckster Who Ran Forex Ponzi Scheme From Panama And Fled To Peru; Self-Styled ‘Christian’ Jeffery A. Lowrance Registered Business In New Zealand And Routed Ponzi Payments To And From The Netherlands, Officials Say

    URGENT >> BULLETIN >> MOVING: A U.S. citizen who told investors he was a “Christian” who shared their political philosophy of “limited government” ripped off hundreds of people in a $21 million Forex Ponzi scheme involving “fictitious trading,” used some of the cash to start an alternative newspaper, preyed on followers of U.S. Rep. Ron Paul and fled to Peru when his Panama-based scheme collapsed, U.S. officials said today.

    Jeffery A. Lowrance, 50, was arrested in Lima earlier this year. He was extradited to the United States yesterday and arraigned today on criminal charges filed in the Northern District of Illinois, federal prosecutors said. Separately, the SEC charged Lowrance with fraud in a civil complaint, as did the CFTC.

    The office of U.S. Attorney Patrick J. Fitzgerald of the Northern District of Illinois said this afternoon that Lowrance operated his Forex swindle from Panama, involving as many as 400 investors and causing losses of at least $5 million.

    Fitzgerald is perhaps the most famous prosecutor in the United States, and has served during both Republican and Democratic administrations in Washington. Lowrance was jailed in the United States today after his arraignment in Chicago on charges of wire fraud and money laundering.

    In bringing the case, government officials described Lowrance’s alleged crimes as a form of affinity fraud targeted at Christian voters with a keen interest in politics. Investigators have fretted that certain types of schemes have been designed deliberately to trade on sentiment against big government and that scammers have lined up to take advantage of the sentiment while leaving investors holding the bag.

    Investors in 26 states, including California, Oregon, Illinois and Utah, were targeted in the scam, the SEC said.

    Paul, R.-Texas, is an advocate for limited government and is a candidate in a crowded GOP field for next year’s Presidential nomination.

    During the 2008 U.S. election cycle, Lowrance showed up at a Paul political rally in Minnesota, placing a copy of a newspaper Lowrance produced with investor funds he had “secretly” diverted “on every seat at the rally,” the SEC charged.

    Even as he was touting his newspaper and his investment program at the Paul rally, the Ponzi scheme already was in a state of collapse, the SEC charged.

    And, the SEC added, Lowrance’s purported investment firm — First Capital Savings & Loan Ltd. — actually was registered in New Zealand. Investors were instructed to send money to a “money converter” in Maryland, where it was whisked overseas to the Netherlands.

    Ponzi payments were made from the Netherlands, the SEC alleged.

    A Lowrance predecessor entity known as Mentor Investing Group had been ordered by the state of California in 2006 to “cease and refrain” from selling commodities and Forex contracts, according to records.

    “[Lowrance]  used a significant portion of the money he raised from investors to fund the creation of his alternative newspaper, USA Tomorrow, which claimed to promote ‘truth in journalism’ and contained articles and advertisements advocating a limited government ideology,” the SEC charged. “He then included in at least one edition of USA Tomorrow a flyer advertising the First Capital investment opportunity which he distributed at the September 2008 Ron Paul Rally for the Republic in Minneapolis, Minnesota. USA Tomorrow was placed on every seat at the rally,” the SEC charged.

    Lowrance specifically targeted Christians and inexperienced investors in his sales pitches, the SEC charged.

    Along the way to ruin, “Lowrance and First Capital knowingly and/or recklessly made the materially false claim that First Capital used investor money to trade foreign currency and in return, pay them a high,  fixed, monthly rate of return,” the SEC charged.

    “Before February 2008, First Capital offered monthly rates of return ranging from 4% to 7.15% (resulting in annual rates of return up to 85.8%),” the SEC charged. “It also offered to pay referral fees for new investors ranging from 5% to 6% of the amount invested. As of July 2010, First Capital’s website offered monthly rates of return ranging from 1.104% to 1.558% (resulting in annual rates of up to 18.7%) and referral fees ranging from 1 % to 2%.”

    Like other investment scams, the Lowrance Forex Ponzi used “a chart and spreadsheet purporting to show its multi-year history of profitable trades,” the SEC alleged.

    But “First Capital never entered into the trades detailed on First Capital’s website,” the SEC charged. “Moreover, First Capital never was profitable.”

    Even after the scheme collapsed, Lowrance continued to solicit funds, telling some investors in early 2009 that “the millions lost [did] not shake [him],” the SEC charged.

    He urged investors that he had just acknowledged swindling to continue to have faith in him and said that he would trade foreign currency “to pay them back,” the SEC charged.

    When some of his investors told others that Lowrance had swindled them, Lowrance sent “purported updates to other investors disparaging the character of those persons who circulated his earlier admissions and disparaging the character of anyone who questioned L[o]wrance’s integrity,” the SEC charged.

    What he did not do was stop soliciting prospects for money and take his website offline. The site remained active until “at least” July 2010, despite the scheme’s 2008 collapse, the SEC charged.

    On March 5, 2009, a month after Lowrance acknowledged that investors had lost their money, the Netherlands bank account contained $121, the SEC charged.

    “In addition to failing to disclose First Capital’s true financial condition and operations to investors solicited between June 2008 and February 2009, Lowrance did not use any new investor money to trade foreign currency,” the SEC charged. “Rather, he used new investor money to pay himself, pay some 6 investors’ returns, and to pay for expenses associated with his start-up newspaper.”

    Also involved in the probe are the FBI and the IRS. Elements of the investigation were assembled by member agencies of the interagency Financial Fraud Enforcement Task Force created by President Obama in 2009.

  • URGENT >> BULLETIN >> MOVING: Paranoia-Maker: FBI Undercover Sting In Florida Leads To Criminal, Civil Charges Against 5 In Alleged Penny-Stock Capers; Agents Established ‘Phony’ Consulting Company

    URGENT >> BULLETIN >> MOVING: An undercover sting by the FBI in Florida has led to criminal and civil charges against five alleged penny-stock fraudsters in Florida, Texas, Nevada and California.

    The sting featured a phony “consulting” company created by the FBI, authorities said. News about the make-believe consultancy followed on the heels of news last month that U.S. investigators had created a “payment processor” as part of a different probe into illegal gambling.

    Charged criminally in today’s undercover cases were Brian Gibson, 63, of Coconut Creek, Fla; Donald W. Klein, 40, of Frisco, Texas; Douglas Newton, 66, of Rancho Mirage, Calif; Charles Fuentes, 66, of Dana Point, Calif; and Thomas Schroepfer, 54, of Las Vegas. Schroepfer also is known as Thomas Schroepfer Baetsen.

    The men and several companies also were charged civilly by the SEC in what the agency described as a coordinated law-enforcement assault against microcap hucksters.

    “Investors deserve better than secret investment strategies based on kickbacks and bribes,” said Robert Khuzami, director of the SEC’s Division of Enforcement.

    The Miami region’s top federal prosecutor, meanwhile, said the cases evolved from the Southern District of Florida’s ongoing Securities and Investment Fraud Initiative, a task force aimed at criminals and fraudsters operating in the region.

    “The defendants charged today abused their knowledge of the capital markets hoping to misappropriate money held in pension fund and brokerage accounts to enrich themselves and their co-conspirators,” said Wifredo A. Ferrer.

    Undercover FBI agents posed as scammers and set up a phony “consulting” business as part of the probe, the SEC said.

    “The defendants charged today were intent on making profits for themselves while defrauding others,” said Eric I. Bustillo, director of the SEC’s Miami Regional Office.

    Newton, the SEC said, was chief executive officer of Real American Brands Inc., now known as Real American Capital Corp. He was accused of paying kickbacks to a “purported employee pension fund trustee” to buy more than 6.2 million shares of restricted Real American Brands stock.

    He further was accused of trying to conceal the kickbacks through a “consulting” firm.

    However, the trustee Newton believed to be corrupt actually was “a fictitious person,” the SEC said. Meanwhile, “the trustee’s business associate who helped arrange the deal was an undercover FBI agent,” and the consulting company was a “phony” one created by the FBI, the SEC added.

    Klein was the president and chief executive officer of KCM Holdings Corp. He is accused of engaging in two restricted stock transactions and one market transaction involving KCM Holdings’ stock.

    “Klein and the company paid kickbacks to an undercover FBI agent who portrayed himself as a business associate of a corrupt trustee of an employee pension fund, in exchange for the fund’s purchase of 2.5 million shares of restricted KCM Holdings stock,” the SEC said. “Klein attempted to conceal the kickbacks through a consulting agreement with a phony company that would receive the kickbacks. In another scheme, Klein bribed a purported corrupt stockbroker (actually an undercover FBI agent) to purchase KCM Holdings stock in the open market for brokerage clients with discretionary accounts.”

    Thomas Schroepfer was president and president of of SmokeFree Innotec Inc. He, too, got caught in the sting, the SEC said.

    For his part, Fuentes was a promoter of SmokeFree’s stock, and “paid kickbacks to an undercover FBI agent, posing as the business associate of a corrupt employee pension fund trustee, in exchange for the fund’s purchase of 400,000 shares of restricted SmokeFree stock,” the SEC said.

    Schroepfer, the SEC said, “attempted to conceal the kickbacks through a consulting agreement with a phony company created to receive the kickbacks.

    “In addition, SmokeFree issued shares of its stock to a cooperating witness for acting as a middleman in the scheme,” the SEC said.

    Gibson “created a now-defunct website, Roaringpennystocks.com, to promote shares of Xtreme Motorsports International Inc., as part of a planned pump-and-dump scheme,” the SEC charged.

    He is accused of touting Xtreme Motorsports “by blasting a series of e-mails to potential investors” and posting “false testimonials on the site from purported investors raving about their success in following the website’s stock picks,” the SEC said.

    In a separate case in Maryland last month, prosecutors announced that federal agents had created a “payment processor” to infiltrate illegal gambling operations.

    The name of the Feds’ “payment processor” was Linwood Payment Solutions — and its website now serves this message:

    “Linwood Payment Solutions is a Department of Homeland Security Undercover Business set up to identify and prosecute companies accepting and paying out funds for U.S. customers who gamble online illegally.”

    In response to a white-collar fraud epidemic involving huge sums of money and fraudsters and criminals operating both domestically and internationally, U.S. agencies, including the Secret Service, ICE and others, have been employing techniques once largely reserved for organized-crime probes.

  • Man Who Fled To Philippines After Bizop Scam Was Exposed By Postal Inspectors Sentenced To 125 Months In Federal Prison; Robert Nicol Bilked More Than $5 Million In Utah-Based Fraud Ventures

    A man who ran a Utah-based fraud scheme has been sentenced by a federal judge in Florida to 125 months behind bars.

    Robert Nicol initially fled to a remote section of the Philippines after the U.S. Postal Inspection Service executed a search warrant in an investigation of Gold Star Vending Inc. in 2007. But authorities tracked him down, and the Philippine government deported Nicol to the United States in 2010 to face justice, federal prosecutors said.

    “This defendant used his business opportunity scam to target those trying to make an honest living, and then fled to the Philippines when his fraud was discovered,” said Tony West, assistant Attorney General for the Civil Division of the U.S. Department of Justice. “As this stiff sentence demonstrates, we will see to it that fraudsters who cheat others to make a quick buck cannot escape justice.”

    In addition to sentencing Nicol to more than 10 years in prison, U.S. District Judge Patricia A. Seitz ordered him to pay more than $5.2 million in restitution to customers he scammed through Gold Star Vending and an entity known as Table Top Vending Inc.

    Customers believed they were buying everything they needed to run coin-operated games businesses successfully in places such as restaurants, but Nicol had lined up shills to sing the praises of the venture and purchasers lost millions of dollars, prosecutors said.

    “Fraudsters can run but they cannot hide,” said Henry Gutierrez, Miami’s U.S. Postal Inspector in charge. “Robert Nicol joins a growing number of business opportunity defendants the U.S. Postal Inspection Service, along with prosecutors, have brought to justice after being apprehended in other countries.”

    More than 100 bizop fraudsters in South Florida have been convicted and sentenced in recent years, noted U.S. Attorney Wifredo Ferrer, the Miami region’s top federal prosecutor.

    “Fraudulent telemarketers must realize that all financial fraud will be prosecuted vigorously,” Ferrer said.

    Utah also has been plagued by fraud schemes, perhaps especially investment-fraud and Ponzi schemes with a companion element of affinity fraud. The FBI said last year that various recent scams in the state had cost residents an estimated $1.4 billion and that the agency had identified at least 370 “potential perpetrators.”

    Two others implicated in Nicol’s Utah-based vending scam also were sentenced to hefty terms in federal prison.

    Seth Lehrenbaum, who provided shilling services for Nichol, received a sentence of 78 months. Meanwhile, Charles Nicol, Robert Nicol’s son and a pitchman for the scam, received a sentence of 41 months.

    In a separate case, the Salt Lake Tribune reported yesterday that Utah resident Wayne R. Ogden, who’d been charged, convicted,  jailed and paroled in a fraud scheme in the 1990s involving $7 million, now has been charged in an alleged $29 million caper.

  • BULLETIN: Christopher Pettengill Pleads Guilty In Trevor Cook Ponzi Scheme

    BULLETIN: Christopher Pettengill, a figure in the $194 million Trevor Cook Ponzi scheme, has pleaded guilty in Minneapolis to securities fraud, money-laundering and conspiracy, the FBI said.

    Read Breaking News coverage in the Star Tribune, which is reporting that Pettengill says he has been cooperating with federal investigators since January.

    Pettengill, 54, of Plymouth, Minn., was charged criminally on June 13. He potentially faces up to 20 years in federal prison.

    Cook is serving a 25-year sentence. Pettengill conceivably could be sentenced to a prison term shorter than 20 years, depending on his level of cooperation and his ability to persuade a federal judge that he deserves less time behind bars.

    Part of the Cook scheme traded on the acronymn UBS, a famous financial company, according to court records.

    It is common in the fraud universe for hucksters and criminals to leech off the brands of famous companies and to use famous names to sanitize fraud schemes.

    The Cook scheme also traded on the name “Oxford.” Some of the money ended up in  a company known as Crown Forex, which had a regal theme.

    Cook, former radio host Pat Kiley, and Jason Bo-Alan Beckman have been sued by the SEC. Cook and Kiley also confront a lawsuit from the CFTC.

    Jon Jason Greco, 40, of Minneapolis, was charged criminally in March with making false statements to federal agents. Greco was accused of hiding loot from the scheme.

     

  • BULLETIN: Nevin Shapiro, Operator Of $930 Million ‘Grocery’ Ponzi Scheme, Sentenced To 20 Years In Federal Prison; Fraudster ‘Used Other People’s Money To Live A Fantasy Life,’ U.S. Attorney Says

    BULLETIN: Nevin Shapiro, the Florida-based operator of a bizarre “grocery” Ponzi scheme that gathered nearly $1 billion and caused losses approaching $100 million, has been sentenced to 20 years in federal prison.

    Shapiro, 42, was charged by federal prosecutors in New Jersey last year after investigations by the FBI and the IRS. He pleaded guilty in September to one count of securities fraud and one count of money-laundering. All in all, the scheme brought in $930 million, prosecutors said.

    The SEC also sued Shapiro.

    “Nevin Shapiro used other people’s money to live a fantasy life built on false promises to unsuspecting victims,” said U.S. Attorney Paul J. Fishman.

    Elements of the case were brought by the interagency Financial Fraud Enforcement Task Force established by President Obama in November 2009.

    Shapiro operated a company known as Capitol Investments USA Inc., which purported to be in the wholesale grocery business.

    In reality, prosecutors said, Capitol “had virtually no income-generating business” between January 2005 and November 2009 — and Shapiro was running a colossal Ponzi scheme to fund his extravagant personal spending and penchant for gambling.

    At least $5 million evaporated when Shapiro stole from investors to pay illegal sports bets. He stole $26,000 a month to pay the mortgage on his Miami Beach home, which has been appraised at $5 million. Meanwhile, he stole $400,000 to pay for floor seats to watch the Miami Heat play basketball, while stealing $7,250 a month to make payments on his yacht and $4,700 a month to make payments on a leased Mercedes.

    Shapiro also lavished celebrities and sports figures, including college athletes, with gifts, prosecutors said.

    By the time the scheme collapsed and investor losses were totaled, Shapiro had stolen more than $82 million. He was ordered by U.S. District Judge Susan D. Wigenton to make restitution in the amount of $82.6 million.

    Prior to his arrest, he told investors one of the reasons they weren’t getting their payments was that his accountant was “on vacation,” prosecutors said.