Tag: HYIP schemes

EDITOR’S NOTE: Make no mistake: America is at risk from an epidemic of white-collar crime. American money is at risk, American prestige is at risk, and national security is at risk — as Americans hatch one fraud scheme after another and recruit other Americans (and citizens of other countries) to help the schemes mushroom. Some of the conduct reads like fiction of the strangest sort. It’s enough to want to make you gag.

The story below may make some readers angry — and rightly so. It covers allegations against Larry Michael Parrish of Walkersville, Md. Parrish is accused by the SEC of orchestrating a $9.2 million swindle through IV Capital, his mysterious firm incorporated in Nevis, an island in the Caribbean.  The scheme allegedly had the characteristics of a sort of HYIP/prime bank hybrid.  “Programs” that resemble the one allegedly pushed by Parrish are regularly hawked on Ponzi scheme and criminals’ forums such as Talk Gold and MoneyMakerGroup. Because law enforcement has made inroads in educating the public about the dangers of HYIP schemes, the promoters of such schemes now are trying to make prospects believe they are not investing in an HYIP — and millions of dollars continue to vanish into giant, money-sucking sinkholes.

The alleged Parrish scheme also has a link to another scheme — this one a “diamond-themed” caper, the SEC said.

Get ready to gag . . .

Posing as a concerned financial adviser and investment strategist, recidivist securities swindler Larry Michael Parrish of Walkersville, Md., visited a dying man in a Colorado hospital, the SEC said.

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

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

Because Parrish had had well-documented run-ins with the SEC, a trove of information about him was available online and in public filings. Some of his investors even found it. When they approached him with questions, Parrish lied, the SEC said.

“When expressly asked by investors, Parrish denied that he was the named defendant,” the SEC charged.

Although Parrish claimed he’d been running a successful business, he’d been running a Ponzi scheme since 2005, the agency said.

The scheme began to collapse in June 2009, and the excuse-making began, the SEC said.

“On August 17, 2009, Parrish wrote to his investors to explain the ‘delay in the payment of past earnings,’” the SEC charged. “The letter claimed that some investors in IV Capital had not paid taxes on earnings which ‘triggered a bank audit for the entire group.’”

“Interest” payments could not be made until the purported bank audit had been completed and until the investors who purportedly weren’t complying with tax laws came into compliance, Parrish allegedly told investors.

“As part of its investigation, the SEC did not find — and Parrish and IV Capital did not provide — any evidence that there ever was a bank audit that resulted in Parrish being unable to make payments to the investors,” the SEC said.

But Parrish held to his cover story for months, the SEC said.

In October 2009, he told investors that “there were still four members who were out of tax compliance,” the SEC said.

By December 2009, the SEC said, Parrish was reporting good news to investors: Only three members purportedly remained out of tax compliance.

Even so, the SEC said, Parrish told investors he faced other challenges. These challenges purportedly included “administrative work and time traveling and meeting with non-U.S. clients.”

A Phantom Partner?

In February 2010, two investors scheduled a meeting with Parrish in New York to talk about “missed payments and [the] current status of IV Capital. Parrish and a “purported partner in IV Capital” were supposed to attend the meeting.

“The night before the two investors were to fly from Colorado, where they reside, to New York, Parrish contacted them to say the purported partner was unavailable to meet. As part of its investigation, the SEC did not find — and and IV Capital did not provide — any evidence that Parrish had any partner in IV Capital.”

What the SEC eventually discovered was that Richard Dalton, who was running a separate, “diamond-themed”  Ponzi scheme, was acting as an agent for Parrish in the Parrish Ponzi scheme, which was called the “Trading Program.”

Dalton’s alleged diamond-themed scheme also featured bizarre claims, including assertions that payments were delayed to investors because an airplane the firm used to shuttle diamonds from Africa lost an engine and had to make an emergency landing in Amsterdam.

Parrish “misappropriated” at least $780,000 in investor funds by awarding himself cash, luxury vacations, a motorcycle, shopping trips, and other extravagances, the SEC said.

He was not registered with the SEC, and had ignored orders handed down for previous misconduct, the SEC said.

The nature of his new scheme involved some sort of high-risk trading on a limited basis, and part of the fraud is “presently uncategorizable,” the SEC said.

“No investor funds remain,” the SEC said. “Parrish and IV Capital’s known bank accounts are empty.”

Since the collapse of the scheme, “Parrish has virtually disappeared and refused to cooperate with the SEC during its investigation,” the agency said.