BULLETIN: Dozens of members of a church congregation were scammed by husband-and-wife pastors and a church administrator in a Forex fraud and “loan” scheme in which money was funneled to Panama, Toronto police say.
Arrested were Lorraine Bahlmann, 47, Verna Hibbert, 48, and Marlon Hibbert, 49. They’ve been charged with with 38 counts of fraud over $5,000 in the alleged scam, which reportedly gathered about $8.6 million.
Millions of dollars appear to be missing, police said.
“Each month, the accused would have statements, which he would send to the victims showing growth in their investment accounts when in fact the accused was losing money,” said Det. Gail Regan of the Service’s Financial Crimes Unit.
The Ontario Securities Commission was involved in the probe, police said.
“[L]arge portions of the victim’s money” are believed to have been transferred to Panama, Regan said.
“The victims are hurt and distraught,” she said. “They still can’t believe that someone like him has done this to them.”
Investigators have identified 38 victims, but Regan said there may be nearly 200. The phone number to contact police is 416-808-7238.
Some of the victims lost their homes and life savings, Regan said.
Between January 2005 and December 2010, “the accused convinced congregation members and their families and friends to invest money with the pastor in the form of loan agreements and investment contracts,” police said.
UPDATED OCT. 19, 2013. George Sepero has been sentenced to 100 months in federal prison. Our earlier story is below and has been edited to correct spelling.
The word “proprietary” has been used again to mask a large financial swindle, federal prosecutors said.
George Sepero, 39, of Glen Rock, N.J., has been indicted on charges he was running a hedge-fund scam and a separate scam designed to steal the life savings of an elderly New Jersey woman with serious medical problems.
Sepero now has been charged in a 17-count indictment with 16 counts of wire fraud and one count of conspiring to commit wire fraud.
The caper involved Pelt Capital, Caxton Capital Management, SP Investors Inc. and CCP Pro Consulting Inc., prosecutors said.
As part of the hedge-fund scam, Sepero and co-conspirators “claimed they owned and controlled a proprietary computer algorithm for trading foreign currencies, that they had used the algorithm to achieve returns of more than 170 percent in the prior two years, and that any investment funds would be highly liquid and could be withdrawn on days’ notice,” the office of U.S. Attorney Paul J. Fishman of the District of New Jersey said.
In reality, “Sepero and others invested little money in foreign currency or any other investment vehicle, instead diverting the vast majority of victims’ investments to pay prior victims in Ponzi-scheme style and to finance extravagant personal expenditures,” Fishman’s office said.
Any number of scammers have used the word “proprietary” as a part of explanations designed to cover up an underlying fraud, discourage investors from asking questions or to make an opportunity appear to be unique. Such explanations often also include the words “secret” or “algorithm.”
The Sepero scam gleaned more than $4 million, and Sepero and others spent investor money on credit card bills averaging about $25,000 per month, prosecutors said.
Here is how other money was spent, prosecutors said.
Bar tabs of approximately $18,241, including a $4,000 tip at Drai’s Hollywood nightclub in Los Angeles.
Luxury hotel rooms for tens of thousands of dollars, including suites costing more than $4,000 at W Hotels in New York.
Flights to Paris, Los Angeles, Chicago and elsewhere.
A customized Ford F-350 “Harley-Davidson Edition” pickup truck costing more than $80,000.
A Mini Cooper automobile.
A leased a BMW.
“Sepero also spent victims’ money on other personal expenditures, including mortgage payments, home improvements, meals at high-end restaurants, jewelry and limousines,” prosecutors said.
The hedge-fund scam also included the mailing of false statement to customers and emails sent by “Mel Tannenbaum,” whom prosecutors described as “a fictional character of the conspirators’ invention.”
And bogus “screen shots” also were used to dupe investors, prosecutors said.
“Sepero and others also emailed to several investors ‘screen shots’ of a computer-based trading program, which they claimed represented the investors’ funds being traded in the currency markets,” prosecutors said. “In reality, the shots reflected trading in fictional accounts set up by the co-conspirators to dupe investors.”
In the scam targeting the senior citizen in poor health, Sepero took charge of her annuity account” and drained it down to less than $17 while making the woman’s family believe the account contained more than $750,000.
The woman was a widow, and Sepero “convinced her to write checks to entities that Sepero controlled,” prosecutors said. “Sepero promised to add the money to the annuity account, but instead spent hundreds of thousands of dollars for his personal use.”
From Google cache: A company known as Landen Options and Futures uses the acronym LOFL. The same acronym is web shorthand for "Laughing Out Freaking Loud." Belgium authorities say the firm is not registered to conduct business in investments and that no such firm is located at the listed address in Brussels. Meanwhile, the firm's website has gone missing.
DEVELOPING STORY: A financial firm purportedly headquartered in Belgium quickly may become a source of international intrigue as regulators seek to piece together clues to solve what appears to be an evolving mystery.
For starters, the company — Landen Options and Futures — used the acronym LOFL on its website, according to search results accessible in Google cache. The site itself now is returning a “Server not found” error.
It was not immediately clear if the firm has gathered money from investors.
Although LOFL could be an actual, legitimate acronym a company might choose for itself, it also is web shorthand for “Laughing Out [Freaking] Loud” and “Lots of [Freaking] Luck.”
On May 20, the Financial Services and Markets Authority of Belgium (FSMA) issued a warning about the purported firm.
FSMA said the firm “claims to offer investment services from premises at Avenue Louise/Louizalaan 149, 1050 Brussels.”
But Landen Options and Futures “does not have the authorization in Belgium necessary to offer investment services in or from Belgium,” FSMA said. “Moreover, it is not situated at the address provided.”
FSMA “thus advises the public against responding to any offers of investment services made in the name of Landen Options and Futures and against transferring money to any account number they might mention,” the agency said.
Web cache also reveals that a copyright notice on the firm’s website purported to date back to 1990:
Records, however, show that the domain, which is behind a privacy proxy, was not registered until Jan. 3, 2011.
Other records show that the purported firm issued bizarre, awkwardly worded news releases through online PR sites to drive traffic. The news releases also speak to Forex trading.
One vague, poorly worded release claims the firm is establishing a Forex platform in “some part” of the United Kingdom.
“Landen Options and Futures, a prominent independent brokerage firm with main office located at Brussels Belgium, and has been providing brokerage trading services to international traders and investors, recently announced that it will soon commence its brokerage trading operations in some part of the United Kingdom,” the Feb. 16 release on PR.com read in part.
The release further claimed the company “has built two new branch offices in London and Scotland ” and “will provide foreign Exchange and futures trading services to traders and investors in UK with service highlights on online trading capabilities.”
Meanwhile, the release claims that the UK venture “recently received regulatory approval from UK Financial Services Authority.”
It quoted a person identified as “Mr. Harvey Davies,” purportedly the firm’s chairman and chief executive officer.
“In (sic) behalf of the entire company, we are glad to announce the commencement of our brokerage trading services in some part of United Kingdom,” the release referencing Davies read in part.
A Feb. 19 release quoted a person identified as Nathan Wauters, the firm’s purported “Managing Director.”
On Jan. 21, nearly a month prior, Wauters was quoted in a news release speaking about something called “The Algorithmics.”
The PP Blog confirmed this morning that the U.S. Commodity Futures Trading Commission is seeking information on the purported firm.
