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Tag: Florida fraud schemes

  • FLORIDA — AGAIN: Parolee, Larcenist And Recidivist Huckster Charged In New Fraud Caper; Allen E. Weintraub Made Bogus Takeover Bids For Kodak And AMR — And Caused AMR’s Trading Volume To Mushroom Sixfold, SEC Says

    Allen E. Weintraub of Aventura, Fla.

    Is it the oddest fraud story coming out of Florida to date?

    A man who emailed Eastman Kodak and AMR in March with offers to purchase the famous companies for billions of dollars had declared bankruptcy in 2007, was on probation for grand theft when the offers were made and extended the offers through a shell company the state of Florida dissolved last year for not filing its first annual report, the SEC said.

    On March 19, a Saturday, Allen E. Weintraub emailed  Kodak with a “tender offer” to purchase the firm for $1.3 billion in an all-cash deal through Sterling Global Holdings, his dissolved shell company. Ten days later, with his purported Kodak deal percolating, Weintraub emailed AMR, the parent company of American Airlines, and offered to plunk down about $3.25 billion in cash to acquire the company, the SEC said.

    Sterling Global “conducts no business and has no assets,” the SEC said. Regardless, Weintraub allegedly offered a premium nearly 50 percent above the prices of each of the firms’ stock.

    In a securities-fraud complaint that reads like an impossible work of fiction, the SEC alleged that Weintraub had been convicted three times in criminal fraud and grand larceny cases between 1992 and 2008. In 2003, he was ordered by a federal judge not to act as an officer and director of a public company after the SEC accused him of breaking securities laws, not disclosing his criminal past in filings and “dumping” shares. The agency obtained a judgment of $1.050 million against Weintraub in the case, which was filed in 2002.

    Weintraub was arrested for selling bogus hurricane insurance in Florida in 2005, according to records.

    Weintraub had paid only $220 on the SEC judgment, according to records. He was on probation for 10 years at the time the Kodak and AMR offers were made, the SEC said.

    Although Weintraub claimed to have financial backing to take over the companies, the SEC said its investigation revealed that he made visits to at least three “branch offices” of large commercial banks in his neighborhood, but emerged with no money.

    Why Weintraub allegedly discussed financing for major corporate takeovers through branch offices that cater to commuters instead of dealing directly with investment-banking units was unclear. Also unclear is why Weintraub claimed to have secured financing when no lenders signed onto a deal with Weintraub, a recent bankrupt who had an unpaid judgment of more than $1 million from the SEC case and also had been the subject of a 2006 foreclosure action in Florida involving a $1 million promissory note on a property at Golden Beach in Miami-Dade County.

    What is clear is that Weintraub created a sideshow involving both firms by embarking on a media campaign after announcing his takeover bids, according to the SEC.

    “In an effort to generate publicity, Weintraub emailed the purported tender offers to media outlets and financial investment research firms,” the SEC said. “In published media interviews, Weintraub boasted that he has 15 years[‘] experience buying distressed companies, that banks had agreed to finance the acquisitions, and that letters of credit could be readily provided.”

    And Weintraub pumped up the offers by creating the appearance that he was at the helm of a global enterprise, rather than a dissolved Florida company formed in October 2009 that did not even file its first required annual report the following year.

    Indeed, the SEC said, Sterling’s Global’s “letterhead listed the cities Atlanta, Cleveland, Denver, Dubai, London, Los Angeles, Miami, New York, and Tel Aviv, creating a false impression that Sterling Global had offices in each of those cities.”

    The address used in the tender offers was a “nothing more than a mail drop” in Davie, Fla., the SEC said.

    As news about the AMR offer appeared, the trading volume of the stock jumped more than sixfold, the SEC said.

    “The trading volume in AMR’s stock rose from approximately 5 million shares on March 29 to approximately 31.5 million shares on March 30,” the SEC said. “The lack of any other AMR or airline industry news indicates that the March 30 price and volume movement were affected by the media coverage of Sterling Global’s AMR tender offer that occurred in the late afternoon of March 29.”

    Weintraub has been charged with securities fraud and violations of the tender offer rule.

    “Neither Weintraub nor Sterling Global has the means to purchase either Kodak or AMR by tender offer or otherwise as they have no substantial assets or resources,” the SEC said.

    Read the SEC complaint.

     

  • A FLORIDA TRIFECTA: FTC Goes To Federal Court To Halt ‘Timeshare’ Telemarketing Scheme; ‘When Consumers Realized They Had Been Duped, The Defendants Routinely Dodged . . . Phone Calls,’ Agency Says

    BULLETIN: Even as the SEC and CFTC were charging alleged Ponzi schemers and “precious-metal” fraudsters in Florida yesterday, the FTC was preparing to announce charges against an alleged “timeshare” telemarketing scheme operating in the Sunshine State.

    Charged by the FTC in the alleged timeshare scam were Albert M. Wilson, David S. Taylor, Frank M. Perry Jr., Vacation Property Services Inc. (VPS), Vacation Property Sellers Inc. (dba Timeshare Experts), and Higher Level Marketing Inc. (HLM, dba Vacation Property Services).

    Two of the companies — VPS and HLM — had previous run-ins with law enforcement over timeshare schemes, the FTC said.

    Although the telemarketing schemers were eager to sell their scam over the phone, they were less eager to pick up the phone to answer calls when confused or disgruntled customers called, the FTC said.

    A federal judge has issued a Temporary Restraining Order that halts the scam in its tracks, the FTC said. The scheme was operating in the St. Petersburg area, the agency added.

    Even customers on the FTC’s “Do Not Call” list were called by the scammers, the FTC said.

    “Defendants target consumers who own timeshare properties,” the FTC said. “Many of Defendants’ victims are elderly consumers and/or immigrants who speak English as a second language. Defendants also deceive many other segments of the population.”

    The scheme featured a pitch that the companies had buyers for timeshares, the FTC said. Prospects were told that, by paying an upfront fee ranging from $200 to more than $8,000, the firms could sell the properties and the customers could cash out.

    “[C]onsumers ultimately learned the defendants had no buyers lined up to purchase their timeshare properties and no such buyers were in the offing,” the FTC said. “And, when consumers realized they had been duped, the defendants routinely dodged consumers’ phone calls and denied their refund requests.”

  • INCREDIBLE: Florida — AGAIN: CFTC Charges Ft. Lauderdale Firm, Principals In Alleged Precious-Metals Scam; ‘Defendants Never Held Or Acquired Any Metals,’ Agency Says

    On the same day the SEC announced charges against two residents of South Florida in an alleged $30 million Ponzi scheme, the CFTC went to federal court and accused two other residents of the region of conducting a precious-metals scheme.

    Charged by the CFTC were James A. Ward of Ft. Lauderdale, and Nathaniel R. Walker of Lauderhill. Also charged was their firm, Kastle & Hawke Inc. of Fort Lauderdale.

    Florida has been plagued by spectacular fraud schemes. Just two days ago, David A. Smith, a citizen of Jamaica, pleaded guilty to charges in a $220 million Ponzi scheme. Last week, the U.S. Court of Appeals for the District of Columbia Circuit ruled that Ponzi-related orders of forfeiture totaling more than $65.8 million in a 2008 civil case would stand against Florida resident Andy Bowdoin, who now is charged criminally in the alleged AdSurfDaily Ponzi scheme. Prosecutors said Bowdoin’s ASD had gathered at least $110 million.

    In the case against Ward and Walker, the CFTC said “the defendants never held or acquired any metals for customers and charged customers interest on non-existent loans.”

    U.S. District Judge James I. Cohn has frozen their assets, amid allegations the company misappropriated at least $319,000 from customers hoodwinked in the scheme. Cohn also ordered books and records to be preserved.

    “To conceal their fraud, the defendants allegedly manufactured and sent false account statements and transaction confirmations to customers,” the CFTC charged.

    “K&H does not hold, nor has it ever acquired, any physical precious metals on behalf of customers,” the CFTC charged.

    When customers wanted to sell the metals they believed they had acquired, Ward manufactured one excuse after another, the CFTC alleged. Customers were told that “rogue” traders were responsible for his inability to sell the metals, according to the complaint.

    And they also were told that the metals could not be sold because of “problems in London,” because markets were closed for the holidays and because “force majeure” — things beyond the company’s control — had occurred, the CFTC charged.

    One of the things that occurred was that the unregistered company had advertised it was selling palladium on a leveraged basis to customers, an unlawful act in itself, the CFTC said.

    On the K&H website, the company told prospects they could take advantage of a “Leveraged Purchase Program” that allowed them to finance up to 77 percent of the costs of the precious metals over five years — “without having to make monthly payments or undergo credit checks,” the CFTC charged.

    Customers were told the company’s approach would lead to hefty profits, but it was all a scam, the CFTC charged.

    In April and May of 2010 — as the firm was explaining to customers why they could not claim their profits even as it was charging them interest on nonexistent loans — Ward withdrew $21,350 in cash from the company’s bank account “and spent nearly $9,000 at a grocery store chain, draining the bank account to a balance of less than $500,” the CFTC charged.

    Read the stunning CFTC complaint.

  • INCREDIBLE: Florida — Again: SEC Files Complaint Against Purported ‘Gold’ Mining Operation In Miami Known As Quri Resources And Its CEO, Jaime Santiago Gomez

    BULLETIN: The SEC has gone to federal court in Florida to accuse Quri Resources Inc. and its Chief Executive Officer Jaime Santiago Gomez of operating a pump-and-dump scheme to drive up the price of Quri’s unregistered stock.

    It was the second major action in Florida today against companies and individuals who allegedly were running stock-fraud schemes. Named defendants in a separate SEC case were Atlantis Technology Group and CEO Christopher Dubeau of Weston, Fla.

    “Investors were duped into believing that Quri Resources was a successful mining company and that Atlantis Technology Group was selling cutting-edge technology services,” said Eric I. Bustillo, director of the SEC’s Miami Regional Office.

    “Both companies misled investors with exaggerated claims while their respective senior executives illegally dumped shares into the market,” Bustillo said. “We will continue to crack down on companies that promote misleading information.”

    The SEC said that Quri purported to be a “mining company headquartered in Miami, Florida, and operating in Ecuador.”

    As was the case with Atlantis and Dubeau, Quri and Gomez were accused of issuing “a series of false press releases and other misleading public statements” as part of the scheme, the SEC charged.

    From February to July 2009, Quri claimed in several press releases that, among other things:

    • It was ready to begin drilling on a mining project in Ecuador with a probable gold reserve worth over $1 billion.
    • It had signed letters of intent to acquire two valuable mining projects in Arizona.
    • It had acquired a second mining project in Ecuador and anticipated producing gold within three months.
    • It had signed a letter of intent to acquire a third valuable mining project in Ecuador.

    “[A]t the same time, Quri’s website and other public statements described Quri as having ongoing operations, employees worldwide, and an impressive management team,” the SEC charged. “The complaint alleges that these claims were grossly misleading because, among other things:

    • The exact value of the gold reserves in Ecuador could not be known without further detailed exploration.
    • Quri never acquired any mining projects in Arizona, and it acquired, at most, only one project in Ecuador.
    • Quri never developed any of its purported mining projects and was never in a financial position to do so.
    • Quri had no money, was never able to raise any funds, had no reasonable expectation of any funding, and was heavily indebted.

    The SEC said the scheme also involved the misuse of a website and a social-networking site.

    “Gomez also authored Quri’s internet website and approved its profile on the social network website LinkedIn,” the agency alleged. “These falsely described Quri as having ongoing operations, 28 employees worldwide, a geologist with a PhD on staff, and an impressive management team led by Gomez, a college graduate. None of these claims were true.”

    Gomez simply fleeced investors, the SEC charged.

    “[T]aking advantage of Quri’s artificially inflated stock price, Gomez, through an entity he controlled, dumped over half a million shares of Quri stock on the unsuspecting public, selling Quri stock in unregistered transactions, earning at least $17,500 from the sale of the stock,” the SEC charged.

    See earlier story about Atlantis.

    Read the SEC complaint against Quri.