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Tag: FBI

  • TOILET-PAPER CAPER: Tipster Told FBI That Some Of Trevor Cook’s Ponzi Loot Was Stashed Behind Bathroom Tissue Dispenser; In Blistering Memo, SEC Says Cook’s Word ‘Not Worth The Paper That It Is Written On’

    Trevor Cook

    “Based on his track record, there is no reason to doubt — and every reason to believe — that [Trevor] Cook is hiding assets, and that he can do much, much more to recover stolen funds. Why else would Cook send millions of dollars to 14 foreign countries, including Dubai, Cyprus, Greece, Belize, Antigua, England, Germany, Denmark, Mexico, Canada, Panama, Costa Rica, Jordan, and Switzerland?” — SEC, Sept. 24, 2010

    On July 21 — six months after Trevor Cook had been jailed for contempt of court in a civil case brought by the SEC, and three months after he had pleaded guilty to criminal charges and agreed to cooperate with investigators — the FBI received a tip that led agents to the home of Cook’s brother Graham.

    “The investigation involved assets hidden in Graham Cook’s home in ‘air ducts,’ in ‘ceiling rafters,’ and behind a ‘toilet paper dispenser,’” the SEC said yesterday.

    The FBI “learned about the assets through a tip, not from Cook,” the SEC stressed, arguing that Cook’s earlier pledge to cooperate to make victims as whole as possible was virtually meaningless.

    Agents later found even more loot stashed at a Minnesota shopping mall, the SEC said.

    All in all, federal agents “ultimately recovered over $200,000 in cash, over 2,000 gold and silver coins (worth an additional $200,000), numerous Rolex watches, and valuable sports memorabilia” from the home, the SEC advised Chief U.S. District Judge Michael Davis of the District of Minnesota.

    Meanwhile, at the mall, agents summoned by a security guard found “118 gold and platinum coins, as well as ‘stocks of different currency denominations from different foreign countries to include Iraqi Dinars, Turkish Lira, [and] Dominican Republic, Canadian, and Asian currencies,’” the SEC said.

    The money stashed at the mall was recovered July 24, three days after the FBI recovered the cash from Graham Cook’s home, the SEC said.

    Davis had jailed Trevor Cook in January for ignoring orders in the civil case. In August, he was sentenced to 25 years in federal prison by U.S. District Judge James Rosenbaum, who presided over the criminal aspect of the case brought by federal prosecutors.

    Now, the SEC says Cook never purged the contempt citation in the civil case and should remain jailed until he does. The blistering filing suggests that, in theory, the clock may not start running on Cook’s 25-year sentence in the criminal case until he purges the civil contempt.

    Some defendants jailed for contempt in civil cases involving large sums of money have remained behind bars for years, the SEC noted.

    Going against the prosecution’s recommendation, Rosenbaum did not give Cook credit for time served in the civil case when sentencing the Ponzi schemer last month.

    “I will tell you that I will not purge him of that contempt,” Rosenbaum said from the bench last month, according to a transcript of the proceeding in sentencing court. “That is an order of my Chief and that is his choice.”

    In a memo to Davis, the SEC said Trevor Cook simply cannot be trusted.

    “This Court ruled that Cook would remain incarcerated unless and until he performed 11 duties, including repatriating over $27 million from overseas, recovering over $6 million in preferential payments, and surrendering $2 million from domestic accounts, among others,” the SEC argued.

    “Since then, Cook has repatriated $0 from overseas, has recovered $0 in preferential payments, and has surrendered $0 from domestic accounts,” the agency continued. “Yet Cook now asks to be released [from the contempt citation], based on the notion that he has done everything that he can do, and based on his promise to be helpful in the future. He gives his word.

    “With all due respect, Cook’s word is not worth the paper that it is written on,” the SEC argued to Davis.

    Any bid by Cook to argue he has cooperated with investigators and genuinely sought to purge the contempt citation is defeated by the facts of the case, the SEC argued.

    “Cook promises that he is not hiding anything — honest — but Cook’s credibility has long since run out. As Judge Rosenbaum stated: ‘You haven’t got a clue what the difference is between the truth and a lie. The two words mean nothing to you,’” the SEC said, citing Rosenbaum’s courtroom comments to the Ponzi schemer.

    And Cook is thumbing his nose at both the court and victims, the SEC said.

    “Despite holding the keys to the jailhouse gates in his pocket, Cook has chosen to stay in jail, presumably in the hope of reaping a bounty someday,” the SEC said. “That is his choice, but he cannot now be heard to complain that his detention continues. Cook cannot secure his release by offering self-serving statements and empty promises.

    “One of Cook’s victims said it best at the sentencing hearing: ‘If he wanted to help, he’s been sitting in jail since January. He could have helped recover any money that there was between now and then. Promises now of being able to help in the future are ridiculous. It’s just not acceptable,’” the SEC argued, quoting a statement from a victim.

    Even as Cook professes to be cooperative, a laundry list of unanswered questions remains, the SEC said:

    • What were the circumstances surrounding each overseas transfer?
    • Who did Cook interact with concerning each transfer?
    • In particular, who did Cook communicate with at the foreign banks?
    • Who helped him create the accounts and/or wire the funds?
    • How much money was in each account at the time of the entry of the Asset
      Freeze Order?
    • Where are the account statements?
    • What, if anything, has he done to obtain the account statements and all other financial records?
    • Did Cook transfer any funds from those foreign accounts to other foreign or domestic accounts? If so, where, when, and how much? And why?
    • What role did Cook play in creating the accounts in the first place?
    • What was the purpose of the offshore accounts?
    • What was the purpose of each transfer?
    • Who are the signatories? Who else had access to the funds in the accounts?
    • What are the passwords?
    • If Cook has no access to the accounts, as he suggests, then how does he know that the accounts lost money in trading?
    • What, if anything, has he done to return the funds to the United States?
    • What, if anything, has prevented him from simply contacting the foreign institutions and having them return the money?

    Indeed, the SEC said, question-and-answer sessions involving the agency, Cook and R.J. Zayed, the court-appointed receiver, “were remarkable for [Cook’s] inability to remember and answer straightforward questions.”

    Although Cook has the keys to the contempt cell, he has chosen not to use them, the SEC argued.

    “Cook cannot lighten his burden by claiming that he has already sat in jail for eight months,” the agency said. By definition, there is no time limit for civil contempt. Sanctions for civil contempt include ‘confining a contemnor indefinitely until he complies.’”

    Meanwhile, one of Cook’s victims told the PP Blog late last night that Cook showed no respect for victims and set aside money to gamble even after the SEC probe began 16 months ago.

    A court filing suggests a bid was made to route the gambling money through Antigua.

    “The United States suggested I give you credit for the time which you have served, and I shan’t do that,” Judge Rosenbaum told Cook in sentencing court, according to the transcript. “You’re not doing my time, you’re in jail as a contempt order. That’s called
    dead time. That’s Judge Davis’s sentence. It’s not mine.

    “So whatever you’ve done up until now counts zero against the sentence I’m imposing. And as far as I’m concerned, but it’s not my opinion that matters, you’re still in contempt,
    and whether or not they’re going to run your time till you purge yourself with my brother, that’s up to somebody else,” Rosenbaum said.

  • FBI Says It Has Opened 291 New HYIP Cases And Has 780 Pending Cases Of High-Yield Fraud; Many Have ‘International Nexus,’ Agency Notes

    FILE: Kevin Perkins appears before the Senate Judiciary Committee in 2009. He appeared again today.

    How confident are you that the HYIP you’re flogging on the Ponzi boards isn’t already under investigation by any of a number of state or federal agencies?

    Court records show that the alleged Legisi HYIP Ponzi scheme (about $70 million) was under investigation by state and federal law-enforcement agencies even as promoters were pitching it. The same is true of the alleged AdSurfDaily (ASD) Ponzi scheme (about $100 million).

    In Congressional testimony today, Kevin L. Perkins, assistant director of the FBI’s Criminal Investigative Division, said the agency has opened 291 “new” HYIP case this fiscal year and has 780 pending cases of high-yield fraud.

    “Many of the Ponzi scheme investigations have an international nexus and have affected thousands of victims,” Perkins told the Senate Judiciary Committee.

    In February 2009, members of the alleged ASD scheme bizarrely asked the very same committee to investigate the prosecutors investigating the scheme — not ASD President Andy Bowdoin, the alleged schemer.

    By September 2009, Bowdoin was telling members the $65.8 million the government seized from his 10 personal bank accounts belonged to them — a position that contradicted his own court filings.

    Bowdoin told U.S. District Judge Rosemary Collyer the money belonged to him. The judge later ordered the money forfeited to the government, which is establishing a restitution fund. Bowdoin appealed.

  • Pensacola Fraudsters Sentenced To Federal Prison; Pinnacle Quest International Vendors Sold ‘Tax And Credit Card Debt Elimination Scams,’ Federal Prosecutors, IRS Say

    “They helped form a series of sham business entities and then promoted fraudulent debt elimination tactics intended for the sole purpose of concealing income from the IRS.” — Victor S. O. Song, chief, IRS Criminal Investigation

    As the U.S. Department of Agriculture was conducting a “review” of claims made by affiliates of a purported “grocery” business in Pensacola, Fla., that dispenses “gift cards” to winners in a 2×2 matrix cycler, a federal judge in Pensacola was handing out prison sentences to defendants convicted in a tax-fraud and debt-elimination scheme.

    All in all, nine promoters were implicated in the Pinnacle Quest International (PQI) case. Four were sentenced to prison in July. Two others will be sentenced in October, and three were sentenced yesterday for their roles in an elaborate fraud in which PQI served as an “umbrella organization for numerous vendors of tax and credit card debt elimination scams,” federal prosecutors said.

    Eugene Casternovia received 7 years in prison. Arthur Merino, meanwhile, was sentenced to 40 months. Mark Lyon, the third defendant sentenced yesterday, cooperated with prosecutors and received a sentence of 18 months.

    Among the PQI vendors was the Southern Oregon Resource Center for Education (SORCE), which “sold bogus theories and strategies for tax evasion,” prosecutors said.

    “For fees starting at $10,000, SORCE assisted its customers in the creation of a series of sham business entities in the United States and Panama,” prosecutors said. “Other tax-related PQI vendors denied the legitimacy of the income tax system on various theories and provided customers with a ‘reliance defense’ that consisted of a paper trail of frivolous correspondence which a client could allegedly use as evidence of good faith if the client were prosecuted.”

    Financial Solutions, another PQI vendor, sold “fraudulent schemes for eliminating credit card debt,” prosecutors said.

    “Financial Solutions charged its customers thousands of dollars for a series of letters to send to credit card companies disputing the lawfulness of the underlying debt,” prosecutors said. “The product was wholly ineffective, and customers typically were sued by their creditors and often forced into bankruptcy.”

    At the same time, yet-another PQI vendor known as MYICIS “operated as a sophisticated, computerized ‘warehouse bank,’” prosecutors said.

    “MYICIS was a single bank account in which customers pooled their money,” prosecutors said. “MYICIS was promoted to PQI’s clients as a method to hide their assets from the IRS as a result of the pooled nature of the account. MYICIS had 3,000 clients and approximately $100 million in deposits over a three year period.”

    A veteran IRS agent declared the business entities tied to the PQI case a “sham.”

    “These defendants are now being held accountable for their criminal behavior,” said Victor S. O. Song, chief, IRS Criminal Investigation. “They helped form a series of sham business entities and then promoted fraudulent debt elimination tactics intended for the sole purpose of concealing income from the IRS. Their tactics were fraudulent. There is no secret formula that can eliminate an individual’s tax obligation.”

    In July, Arnold Ray Manansala was sentenced to 12 years in prison; Dover Eugene Perry, meanwhile, was sentenced to 10 years. Michael Guy Leonard was sentenced to nine years and one month, and Mark Daniel Leitner was sentenced to five years.

    The trial in Pensacola took up a full month. Wayne Hicks, the operator of My Icis Inc., already was serving a five-year prison sentence.

    FBI Director Robert Mueller has warned Congress at least twice this year about a “shadow” banking system that is a threat to U.S. national security.

    In November, President Obama formed the Financial Fraud Enforcement Task Force to attack the problem with white-collar and other forms of fraud. It is billed the “broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.”

    MYICIS was a topic of discussion on known Ponzi scheme and fraud forums such as TalkGold. In May, the U.S. Postal Inspection Service referenced the forums in filings in a criminal case against an alleged Ponzi scheme known as Pathway To Prosperity.

    In recent months, a Pensacola business known as MPB Today (My Premier Business Today) has been operating an MLM program that purports to sell “groceries.” The program has been advertised on TalkGold, and other known Ponzi forums.

    One MPB Today affiliate attempted to sell the program by creating a video animation and depicting President Obama and Secretary of State Hillary Clinton as Nazis. Clinton was called “Hitlary” in the promo.

    Others have attempted to sell the MPB Today business “opportunity” by linking it to the federal Food Stamp program administered by the Department of Agriculture. The USDA announced earlier this month that it was conducting a “review” of affiliate claims.

    This video promo for Pensacola-based MPB Today is targeted at Food Stamp recipients.

    Still other MPB Today affiliates have focused on recruiting prospects by telling them they’d receive “gift cards” from Walmart. At least one promo on YouTube shows an envelope inside an envelope that had been mailed through the U.S. Postal Service.

    Such an approach is consistent with the practices of “cash-gifters” — people who use the mails to promote chain-letter pyramid and tax schemes. The inside envelope in the YouTube video showed that at least one MPB Today affiliate had been paid with a prepaid Visa card purchased at Walmart. The envelope also contained a Walmart gift card.

    In the YouTube video, the MPB Today affiliate appeared to be surprised about what he’d just received in the mail.

    One promo after another for MPB Today has emphasized the gift cards. Still other affiliates have produced videos that show checks drawn on an FDIC-insured bank in Pensacola that has been operating since January under a consent agreement with the FDIC.

    Florida has been plagued by mortgage foreclosures. MPB Today is targeting foreclosure subjects in a video pitch, as are many affiliates. Affiliates also have targeted the unemployed, senior citizens, people of faith and members of the alleged AdSurfDaily (ASD) Ponzi scheme.

    ASD also was based in Florida. The company is known to have attracted affiliates who participated in tax, debt-elimination and cash-gifting schemes. At least one ASD affiliate has been linked to a group that sought to imprison federal judges and litigation opponents in debt cases. Another affiliate filed papers in federal court that purported to show that a bank could be defeated in a foreclosure case by filing a bond consisting of $21 in “silver coinage.”

    At least one MPB Today promoter positioned the grocery company as an opportunity for religious members of ASD to make up losses in the failed autosurf. The U.S. Secret Service has seized tens of millions of dollars from bank accounts linked to ASD.

    Florida records show that MPB and its associated grocery company — Southeastern Delivery — have operated by at least five names since 2006. MPB Today operator Gary Calhoun was ordered by the U.S. Food and Drug Administration to stop violating federal law in promotions for a product marketed as a treatment for Lou Gehrig’s disease, among others.

    ASD President Andy Bowdoin also operated numerous companies in Florida. according to records.

  • INTERPOL Chief Says His Identity Was Stolen In Fraud Bid On Facebook; Meanwhile, MPB Today Members Post Check-Waving Videos On Social-Media Sites And WebsiteTester.biz Gathers 400,000 Names And Email Addresses

    Earlier this week the PP Blog reported that members of MPB Today were using YouTube and other sites to post images of checks drawn on a distressed Florida bank. The checks, which were supplied as purported “proof” of MPB Today’s legitimacy, may expose both the posters and the bank to security breaches and identity theft.

    The bank, Gulf Coast Community Bank of Pensacola, has been operating under an FDIC consent agreement since January. It did not respond to a request for comment from the PP Blog. It is possible that the bank was unaware that its name was being used as a form of purported “proof” that one of its customers — MPB Today, which operates an MLM advertised on Ponzi forums such as ASA Monitor — was above-board.

    Like MPB Today, the alleged Legisi Ponzi scheme was pushed on Ponzi forums such as MoneyMakerGroup. This bizarre section of the Legisi Terms of Service purports that members must avow they are not an "informant, nor associated with any informant" of the IRS, FBI, CIA and the SEC, among others. The others included "Her Majesty's Police," the Intelligence Services of Great Britain, the Serious Fraud Office and Interpol.

    In the alleged AdSurfDaily (ASD) Ponzi scheme in 2008, members cited ASD’s relationship with Bank of America as purported “proof” of legitimacy. Federal agents later seized more than $65.8 million from 10 bank accounts controlled by ASD President Andy Bowdoin amid allegations of wire fraud and money-laundering.

    ASD also was promoted on the Ponzi boards. Robert Hodgins, who operated a company ASD members said supplied debit cards to the firm, now is wanted by INTERPOL in a case that alleges he assisted in the laundering of money for Colombian narcotics traffickers. The money was accessed with debit cards through ATMs in Medellin, according to court records.

    A mysterious business opportunity known as WebsiteTester.biz also is being hawked at ASAMonitor and other Ponzi boards. WebsiteTester claims it has collected the names and email addresses more than 400,000 prospects across the world. WebsiteTester claims its legitimacy can be established by watching a YouTube video that shows no faces and by reading a news release published by an anonymous author.

    In July, the Financial Industry Regulatory Authority (FINRA) issued an alert about fraud schemes that use forums and social-media sites such as YouTube and Facebook to spread virally.

    Among the other “programs” pushed on the Ponzi boards was Legisi, an alleged Ponzi scheme that gathered more than $70 million. Legisi members were specifically prompted to “avow” they were not “an informant” for law enforcement, including INTERPOL, the FBI and the SEC, among other agencies.

    Despite repeated public warnings by authorities to exercise caution on the Internet, fraud schemes continue to proliferate globally. INTERPOL now says one of its own was targeted in an identity-theft bid on Facebook — and it was the boss himself.

    “Just recently INTERPOL’s Information Security Incident Response Team discovered two Facebook profiles attempting to assume my identity,” said Ronald K. Noble, INTERPOL’s Secretary General.

    “One of the impersonators was using this profile to obtain information on fugitives targeted
    during our recent Operation Infra Red,” Noble said. “This Operation was bringing investigators from 29 member countries at the INTERPOL General Secretariat to exchange information on international fugitives and lead to more than 130 arrests in 32 countries.”

  • Nevin Shapiro, Florida Man Who Ran ‘Grocery’ Ponzi Scheme, Pleads Guilty; Feds Say Con Gathered At Least $880 Million While Fraudster Leased Mercedes For $4,700 A Month

    When Nevin Shapiro was arrested in New Jersey for running a wholesale grocery scam in Florida, the FBI described the scheme as a “perfect example of greed run amok.”

    Shapiro, who was charged both criminally and civilly earlier this year after investigators uncovered his long-running Ponzi scheme, now has pleaded guilty to securities fraud and money-laundering.

    Shapiro, 41, once was a prominent Miami Beach businessman. His Ponzi scheme began in 2005 and eventually mushroomed to nearly the size of convicted Fort Lauderdale Ponzi schemer Scott Rothstein’s $1.2 billion fraud.

    Florida has been plagued by Ponzi schemes.

    Rothstein, a disbarred attorney, was sentenced earlier this year to 50 years in federal prison. Shapiro faces up to 30 years in prison when sentenced in January. His scheme netted at least $880 million.

    Shapiro spent about $26,000 per month on mortgage payments on his $5.3 million residence in Miami Beach, while directing about $7,250 per month for payments on a $1.5 million dollar Riviera yacht and roughly $4,700 per month for the lease of a Mercedes-Benz, prosecutors said

    Viewed on a yearly basis, the payments on the residence, yacht and car alone consumed more than $450,000 — and yet Shapiro’s purported business produced no sales.

    Earlier this year, a veteran FBI agent said the Shapiro case was about naked greed that preyed on “unsuspecting investors.”

    “This case is a perfect example of greed run amok,” said FBI Special Agent in Charge Michael B. Ward.

    Although purportedly in the business of buying groceries in a lower-priced market and selling them wholesale in markets in which they would fetch higher prices, Shapiro’s company largely was a mirage that conducted virtually no legitimate business after 2004 and sustained itself by paying investors with the money of other investors, prosecutors said.

    The case was brought by elements of President Obama’s Financial Fraud Enforcement Task Force.

  • UPDATE: Ponzi ‘Shakedown’ Suspects Who Impersonated Federal Agents Get 6 Months’ Home Detention And Are Placed On Probation For 2 Years

    Three people charged with conspiring to impersonate federal agents in a bid to rattle the nerves of a Ponzi scheme suspect and recover money have been sentenced to 180 days of home confinement and placed on federal probation for two years.

    A fourth defendant in the shakedown scheme avoided a sentence of home confinement but was placed on federal probation for two years.

    The bizarre shakedown scheme unfolded in March 2009, when Michael David Sanders, 43, of Fair Oaks, Calif.;  Craig Anderson, 41, of Chicago; Sean Smartt, 42, of Sacramento; and Cassandra Moore, 27, of Beverly Hills, Calif.,  entered a California hedge-fund office suite in a bid to recover investor money “lost in a Ponzi scheme carried out by federal defendant Anthony Vassallo,” the FBI said.

    “The defendants entered dressed to give the impression of authority (bullet proof vests, ear pieces, fake credentials, hand cuffs, and badges),” the FBI said.  “Sanders and Anderson announced they were with the FBI and the United States Security and Exchange Commission.

    “In their guilty pleas the defendants admitted to creating an environment that was intimidating and causing the individuals to believe that they were not free to leave,” the FBI continued. “Anderson told the hedge fund operators that they had until noon on Monday, March 9, 2009, to wire $378,300.16 to a Patelco Credit Union bank account in the name of the ‘Spirit Foundation’ and to send an e-mail confirmation to an e-mail address they provided. No money was ever turned over to the defendants.”

    Moore was the only defendant who avoided home detention.

    The shakedown bid was connected to the the alleged Equity Investment Management and Training Inc. (EIMT) Ponzi scheme that gathered more than $40 million.

    It is illegal to impersonate a federal agent. Had the defendants not accepted a plea deal and not qualified for probation, they could have been sentenced to federal prison. Each pleaded guilty and accepted the deal. The IRS assisted in the probe.

  • BULLETIN: Ponzi Scheme Figure William Walters To Be Extradited From Argentina, FBI, Colorado AG Say; Another ‘Offshore’ Myth Exposed

    William Walters: Extradited from Argentina to face Ponzi charges in Colorado.

    BULLETIN: (UPDATED 9:32 P.M. EDT (U.S.A.) William L. Walters has been extradited to the United States from Argentina to face Ponzi scheme charges in Colorado, prosecutors announced.

    “This extradition is the culmination of years of work and cooperation between my office and the FBI,” said Colorado Attorney General John Suthers. “In this case, justice delayed will not result in justice being denied. We look forward to presenting our case against Mr. Walters and securing justice for his victims.”

    Walters, 45, fled the United States prior to being indicted in 2007. Interpol “flagged” his passport, and the FBI traced him to Argentina, prosecutors said.

    The Walters’ case exposes a common myth on HYIP and autosurf Ponzi boards that “offshore” locations insulate Ponzi schemes from prosecution and that the schemers themselves can avoid arrest by operating outside the United States or fleeing from the United States to a foreign country after a scheme is exposed.

    “Pursuant to the FBI’s Project Welcome Home, the Denver Division was able to work closely with the Colorado Attorney General’s Office to insure that William Walters was returned to Colorado for prosecution,” said James H. Davis, FBI special agent in charge. “This is yet another example of law enforcement cooperation in Colorado and our commitment to pursue fugitives from justice, even if they attempt to flee outside of the United States.”

    Walters is accused of operating a “day-trading” Ponzi scheme that gathered more than $23 million from investors in Colorado, California, Florida, Hawaii, Illinois, Massachusetts, Pennsylvania, Texas and Wyoming.

    He operated companies known as Samurai Capital and Mana Trading Inc. A court in Argentina approved the extradition to the United States.

    Read the Walters’ indictment.

    Read more about the FBI’s “Project Welcome Home.”

    Read about the U.S. Secret Service case against Vladislav Horohorin, who was arrested in France earlier this month after undercover agents infiltrated an online crime forum.

    Horohorin allegedly operated an overseas fraud scheme targeted at U.S. residents.

    Court records show that the Secret Service infiltrated the AdSurfDaily autosurf by employing undercover agents. Records also show that the agency employed undercover operatives in the investigation of the INetGlobal autosurf.

    In the INetGlobal case, records show that undercover agents attended an INetGlobal function in New York earlier this year. The Secret Service said one of its agents was introduced to INetGlobal by an ASD member.

    In the ASD case, the Secret Service said it believed that ASD President Andy Bowdoin was planning to flee the United States prior to the seizure of tens of millions of dollars in August 2008 — amid Ponzi allegations.

  • BULLETIN: Ponzi Suspect Kills Self, New York Newspaper Reports; Ashvin Zaveri Was Implicated In $35 Million Swindle

    A New York man implicated by the FBI and the IRS in a Ponzi scheme has killed himself, the Democrat and Chronicle of Rochester is reporting.

    It is at least the second Ponzi-related suicide in the United States in recent weeks. Florida Ponzi suspect Wayne McLeod, suspected of bilking federal employees, killed himself in Florida in June.

    In the New York case, Ashvin Zaveri, 71, of Honeoye Falls, N.Y., was indicted in December 2009 for mail fraud, wire fraud and money-laundering.

    Prosecutors said Zaveri defrauded investors in an oil-and-gas scam that gathered $35 million.

    Read the story in the Democrat and Chronicle.

  • BULLETIN: Trevor Cook Sentenced To 25 Years In Federal Prison; Victims Lost At Least $158 Million In International Forex Ponzi Scheme That Traded On Religion

    Trevor Cook

    BULLETIN: Ponzi schemer Trevor Cook has been sentenced to 25 years in federal prison for his role in an international Forex Ponzi scheme that gathered more than $190 million and fleeced victims out of more than $158 million.

    In ordering the prison term, U.S. District Judge James Rosenbaum sided with the prosecution’s recommendation of a quarter of a century. It is believed to be the longest prison term ever imposed in a Minnesota financial-fraud case in which the defendant pleaded guilty.

    “Such a sentence fairly, adequately, and justly punishes the defendant for his offense, reflecting the seriousness of the offense, his willingness to plead guilty and provide information to law enforcement, and the need to protect the public,” prosecutors said last week in a sentencing recommendation to Rosenbaum.

    “Over the course of a few years, the defendant executed an investment fraud, victimizing approximately 923 victims and defrauding them of over $158 million,” prosecutors said. “As is all too common, the defendant often used victims’ religious beliefs as a means of enticing them to give him their money.”

    Cook, 38, is not out of legal harm’s way — even with the sentence of 25 years. Prosecutors disclosed last week that he has signed a waiver that would subject him to further punishment if the ongoing investigation shows he has “somehow secreted undisclosed assets.”

    Victims have expressed concerns that Cook could have stashed money from the scheme anywhere on earth. Cook failed a lie-detector last month about the whereabouts of assets.

    FBI and IRS agents later found more than $400,000 in undisclosed assets under the control of Graham Cook, Trevor Cook’s brother.

    Despite Cook’s lack of disclosure, prosecutors contended that it made no sense to delay Cook’s sentencing any longer as the asset search by the government and R.J. Zayed, the court-appointed receiver in a civil case filed against Cook and former Christian radio host Pat Kiley last year by the SEC and the CFTC, continued.

    Cook had been scheduled to be sentenced last month. Kiley, who called his radio listeners “truth seekers,” has not been charged criminally in the case.

    “The government has worked closely with the court-appointed receiver to assist its efforts in finding and identifying assets,” prosecutors said of Cook. “The government and the receiver now agree that any additional time prior to sentencing will not result in any additional information or assistance to the receiver’s efforts.”

    It is possible that Cook could prove to be a valuable source of information for the government — in the same sense that disbarred attorney, convicted racketeer and Ponzi schemer Scott Rothstein has become an information source.

    Rothstein, who presided over a $1.2 billion Ponzi scheme in Florida, was sentenced to 50 years in federal prison earlier this year. It is known that Rothstein has provided information helpful to the government.

    Cook “has been repeatedly debriefed by law enforcement in an effort to identify assets and to provide information regarding other individuals,” prosecutors said. “He has done so. The information has been of assistance to law enforcement in its ongoing investigation.”

    Ponzi schemes are toxic — and frequently are incredibly elaborate. Court documents in case after case show that the schemes frequently feature schemes within schemes and elaborate money-laundering networks. Criminals often go to fantastic lengths to disguise the conduits of the schemes, using shell companies and multiple bank accounts to funnel money and make the schemes difficult to reverse-engineer.

    FBI Director Robert Mueller has warned Congress at least twice this year about a “shadow” banking system criminals employ and an increasing reliance on “shell corporations” to commit crimes and hide from investigators.

    Cook’s scheme featured companies with confusingly similar names.

    Records show that Cook had a tie to a company the AdViewGlobal (AVG) autosurf claimed to be its facilitator of offshore wires.

    KINGZ Capital Management, AVG’s purported facilitator, denied any affiliation with AVG, which has close ties to the AdSurfDaily autosurf. ASD is implicated in a Ponzi scheme alleged to involve tens of millions of dollars.

    AVG collapsed in June 2009, after running a virtually nonstop promotion that advertised matching bonuses of 200 percent for both recruits and their sponsors.

    The National Futures Association said last year that Cook was managing money for KINGZ. AVG made the claim KINGZ was its wire facilitator on May 4, 2008 — the same day the Obama administration announced a crackdown on offshore fraud.

  • BULLETIN: $200 Million Ponzi And Affinty-Fraud Scheme Alleged By Feds In New Jersey; Eli Weinstein Arrested By FBI

    UPDATED 2:40 P.M. EDT (U.S.A) The Newark Star-Ledger and the Asbury Park Press are reporting that New Jersey real-estate developer Eli Weinstein has been arrested by the FBI in a Ponzi and affinity-fraud case that may involve $200 million or more.

    Both newspapers had photographers on the scene as the arrest was made this morning.

    2:40 P.M. UPDATE: Weinstein is 35. He lives in Lakewood, N.J. Federal prosecutors, led by U.S. Attorney Paul J. Fishman, have issued a statement that describes the case as a Ponzi and affinity-fraud scheme targeting orthodox believers of the Jewish faith.

    “Weinstein is charged with offering an array of lucrative investment opportunities that served the single purpose of fattening his wallet,” Fishman said. “It is always offensive when someone steals from others to finance his own luxurious lifestyle, but it is especially galling to exploit a community with whom one shares an inherent trust.”

    A veteran FBI agent said the scheme was contemptible.

    “Based on the allegations in the criminal complaint – lies, threats, deliberate misrepresentations, and even counterfeit checks, it is clear to us that the defendants in this matter exploited the close community ties of the Orthodox Jewish Community for one goal: to steal money through an elaborate real estate and Ponzi scheme,” said Michael B. Ward, special agent in charge of the Newark division.

    “This investigation highlights the need for consumers to do their own homework before entering into any business arrangements and not simply take the word of the other partners,” Ward continued. “If something seems too good to be true, it almost always is.”

    Ward credited the IRS for assisting in the probe, saying its role was important in unmasking the scheme.

    “At its most basic level, this is a case about greed and the abuse of trust,” Ward said. “The subjects in this case did not utilize overly sophisticated fraud schemes, but rather took advantage of trusted relationships to persuade victims to invest in their staged real estate ventures, which were often supported by false and forged documents.”

    Also charged in the case was Vladimir Siforov, 43, of Manalapan, N.J. He “remains at large,” prosecutors said.

    Read the breaking-news coverage at the Star-Ledger site at NJ.com.

    Read the Asbury Park Press coverage at APP.com.

    Weinstein’s New Jersey Ponzi arrest was the second in the state in recent months to allegedly involve a spectacular sum of money.

    Nevin J. Shapiro, 41, of Miami Beach, Fla., was arrested in New Jersey in April on charges of running an $880 million Ponzi scheme involving a bogus wholesale grocery business.

    The alleged Weinstein and Shapiro schemes combined may involve more than $1 billion.

  • EXPLOSIVE REVELATION: FBI, IRS Find More Than $400,000 In Stashed Loot In Trevor Cook Ponzi Case, Including More Than $200,000 In $100 Bills, Gold Coins, Watches, Baseball Cards

    Part of the loot the FBI and the IRS found under the alleged control of Graham Cook on July 23.

    Trevor Cook’s brother was hiding more than $400,000 in cash and valuables from a $190 million Ponzi scheme, according to an extraordinary statement by the court-appointed receiver in the case.

    The loot was found July 23 — after Trevor Cook, whose plea agreement in the case required him to submit to a lie-detector test if requested by the government — “flubbed” the test, according to the Star Tribune of Minneapolis/St. Paul.

    Graham Cook, Trevor Cook’s brother, has not been charged in the case. But the revelation that proceeds from the scheme allegedly were under his control and concealed for months from investigators and two federal judges presiding over elements of the case raise troubling, new questions about Trevor Cook’s capacity to tell the truth in any context and whether Cook and others had stashed money elsewhere.

    Trevor Cook was jailed in January by Chief U.S. District Judge Michael J. Davis for concealing assets and spending money frozen by court order on Nov. 23, 2009. Davis, who is presiding over the civil elements of the case filed by the SEC and the CFTC, said the government had established that Cook had violated the court order.

    Another part of the loot.

    At the time, Cook made a technical argument that he had not been properly served in the case at the Van Dusen mansion in Minneapolis on Nov. 24 and thus was not bound to follow the order, a position that gave short shrift to the hundreds of victims in the case, some of whom had been rendered destitute.

    Victims complained that Cook was thumbing his nose at both the court and investors. Cook also asserted his 5th Amendment right against self-incrimination, which caused victims to wonder what else he could be hiding.

    Davis did not buy any of Cook’s story, and jailed him.

    “[C]opies of said Orders were shown to Cook, and the relevant portions of the Orders were explained to him by the Receiver” on Nov. 24, 2009, Davis ruled. Regardless, Cook later used frozen assets to purchase $7,510 in gift cards from Cub Foods and $16,000 in gift cards from Target.

    “Given the amount of investor money at issue, and Cook’s repeated violations of the Asset Freeze Orders, the Court finds that the appropriate remedy for the contempt finding in this case is to incarcerate Cook until such time as he purges such contempt.”

    Jail was an appropriate remedy for Cook, even in a civil case, a top SEC official said at the time.

    Sports collectibles, such as this baseball card of Minnesota Twins' immortal Kirby Puckett, also were part of the stash.

    “Mr. Cook has elected to disregard the court’s orders and will now be a guest of the federal correctional system until he mends his ways,” said Merri Jo Gillette, director of the SEC’s Chicago Regional Office.

    In March, while Cook was jailed in the civil case, prosecutors charged him criminally with mail fraud and tax evasion, opening up a new round of litigation over which U.S. District Judge James M. Rosenbaum is presiding.

    Cook pleaded guilty to the criminal charges in April. His plea required him to take a lie-detector test “if requested” by prosecutors to determine “whether he has truthfully disclosed the existence of all of his assets and the use of the fraud proceeds.”

    It is believed the test was administered in mid-July, prior to Cook’s scheduled sentencing date of July 26. Sentencing has been postponed until Aug. 24, and Rosenbaum may have to determine whether Cook once again has thumbed his nose at the court, prosecutors, victims and the receiver in a bid to prevent the discovery of funds that could be used to make the victims as whole as possible.

    The discovery of the funds also raises questions about whether Cook failed to disclose the whereabouts of assets in a bid not to implicate others in the scheme.

    The stash also included Rolex and other expensive watches.

    Cook’s plea agreement also required him to to “fully and completely disclose to the United States Attorney’s Office the existence and location of any assets in which he has any right, title, or interest and the manner in which the fraud proceeds were used.”

    Prior even to Cook’s polygraph exam, R.J. Zayed, the court-appointed receiver, raised questions about Cook’s cooperation and level of truthfulness. The plea agreement, as written, conceived a 25-year sentence for Cook, although prosecutors said Rosenbaum had the final say.

    Victims fretted that Cook, who is in his late thirties, could emerge from prison as a relatively young man in his early sixties and have access to money that had been hidden from the court, investigators and the receiver.

    Zayed now says that federal prosecutors, the FBI and the IRS found the hidden loot July 23.

    Seized from Graham Cook were “$202,600.00 in cash, 2891 gold and silver coins, 27 watches, some sports memorabilia cards and other personal property belonging to the Receivership,” Zayed said yesterday.

    “A rough estimate of the value of the coins is approximately $200,000.00 to $225,000.00,” Zayed said.

    Read the Star Tribune story.

    Read this PP Blog story from April in which victims said they believed Cook was lying about the whereabouts of assets.

    Read this June PP Blog story in which Cook victims said they sought a meeting with prosecutors to delay Cook’s sentencing until more facts emerged. Victims said they feared he stashed money and covered his tracks so well that he could emerge from prison and benefit from his crime — or perhaps permit insiders or unknown criminal colleagues to benefit from the fraud while he is jailed.

    Read this July 12 PP Blog story in which a source told the PP Blog that Cook would be subjected to a lie-detector test.

    Read Zayed’s remarkable statement and see photos of the loot.