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Tag: Illinois Ponzi schemes

  • Now, A ‘Turkish Bonds’ Ponzi Scheme Aimed At Retirees, Feds Say; 2 Men Charged In Illinois — And 1 Man Is ‘Fugitive’

    EDITOR’S NOTE: This may be one for your “Bubba Blue” notebook on how to have your Ponzi scheme.

    A principal of USA Retirement Management Services and a pitchman have been charged in an alleged $28 million fraud scheme involving nonexistent “Turkish bonds” and targeted at senior citizens and “individuals with substantial savings,” federal prosecutors in the Northern District of Illinois said.

    Facing arraignment in Chicago today are Robert C. Pribilski, 54, of Lisle, and John T. Burns III, 53, of Naperville.

    Pribilski, a USA Retirement principal, was charged with five counts of wire fraud and four counts of mail fraud. Seminar pitchman Burns, meanwhile, was charged with three counts of wire fraud and three counts of mail fraud, prosecutors said.

    Mahmut Erhan Durmaz, 42, also was charged with five counts of wire fraud and four counts of mail fraud, but is a “fugitive believed to be residing in Turkey,” prosecutors said.

    While in the United States, Durmaz resided in the Chicago suburb of Streamwood. He also lived in Los Angeles and has used the name Francois E. Durmaz, prosecutors said.

    Durmaz fled the United States on “the same day that a judge froze” his personal and business assets after an SEC civil action against Durmazin and against Pribilski in 2010, prosecutors said.

    The scheme operated between 2005 and 2010 and featured the sale of promissory notes “that falsely represented USA Retirement ‘absolutely and unconditionally’ promised to pay investors between 4.75 and 11 percent annually, prosecutors said.

    From a statement by the office of Acting U.S. Attorney Gary S. Shapiro:

    Pribilski and Durmaz falsely claimed that the interest would be generated from investments in Turkish bonds. Instead, Pribilski and Durmaz operated a Ponzi-type scheme, using funds from the sale of promissory notes to make payments to other investors without disclosing that there were no Turkish bond investments. In offering and selling USA Retirement promissory notes, all three defendants falsely told investors that they had many years of investment banking experience in the purchase and sale of Turkish bonds, and that they had personally profited from such investments through USA Retirement. In fact, the defendants had no such banking experience and did not make any investments in Turkish bonds.

  • Illinois Ponzi Fugitive Couple On Lam For 12 Years Captured In Arizona By U.S. Marshals Service; Arrests Occurred Day After ‘America’s Most Wanted’ Aired Broadcast

    The “America’s Most Wanted” TV show and AZCentral.com are reporting that fugitive Illinois Ponzi couple Nelson Grant Hallahan, 65, and Janet Hallahan, 54, were captured Saturday by the U.S. Marshals Service in Arizona after 12 years on the lam.

    “America’s Most Wanted” aired the couple’s story on Friday. The Hallahans were captured the next day.

    Read the story on the website of “America’s Most Wanted.”

    Read the story on AZCentral.com.

  • Illinois Forex Ponzi Schemers Get Combined Prison Sentences Of Nearly 30 Years; Feds Identify More Than 1,000 Victims Of $17 Million Swindle In Which $1 Million Went To ‘Strip Club And Restaurants’

    Charles G. Martin has been sentenced to 17 years in federal prison — and fellow Forex Ponzi schemer John E. Walsh has been sentenced to more than 12 years — in a case in which investors’ money went to pay for strippers, fine meals, fine hotels, a piano, high-end electronics, artwork, jewelry, flashy cars and private jets, prosecutors said.

    Martin, 46, formerly resided in Glencoe, Ill., and Malibu, Calif. Walsh, 63, lived in Lake Forest, Ill.

    More than 1,000 investors “worldwide” got sucked into the scheme, which gathered more than $17 million. The fraud gained a head of steam even though Martin previously had been in trouble with the National Futures Association and had been barred from being a principal in a commodities firm, prosecutors said.

    Martin and Walsh were principals of an entity known as One World Capital Group LLC.

    “One World’s trading platform operated as a front to placate customers whose margin funds were being systematically misappropriated by them,” the office of U.S. Attorney Patrick J. Fitzgerald of the Northern District of Illinois said.

    After investigators peeled back layers of the One World onion, they found that tax evasion had occurred, in addition to wire fraud and securities fraud, prosecutors said.

    U.S. District Judge Virginia Kendall ordered restitution of more than $16.9 million.

    Customers who provided money did not realize they were getting scammed out of the gate, prosecutors said. New money went to cover existing shortfalls in One World’s trading account, and tremendous sums were diverted to fuel extravagant lifestyles.

    “Credit card and bank records show that Martin spent more than $1 million at a strip club and restaurants, nearly $1 million at elite hotels and another $1 million renting flight time on private jets,” prosecutors said.  “He purchased a fleet of luxury vehicles, donated hundreds of thousands of dollars to celebrity charity events, and hired personal security guards to accompany him in public.”

    Walsh also frittered away investors’ funds to live the high life, using his One World “credit card to charge personal expenses, including more than $140,000 of jewelry,” prosecutors said.  “He also used $70,000 in One World funds for country club expenses and $1,425,000 to purchase a second home in Lake Forest.”

    About $500,000 from investors was diverted to finance a movie “that had listed Martin as a contributing producer,” prosecutors said.

    The FBI and the IRS handled the criminal probe, and the CFTC and NFA assisted, prosecutors said.

    In December 2007, the CFTC obtained a trading halt and asset freeze. At the time of the freeze, One World had only $677,932 in assets and unpaid customer liabilities of more than $17.6 million, prosecutors said.

    U.S. law enforcement has been counting victims of some individual fraud schemes in the thousands — or even the tens of thousands. The cases present unique logistical challenges because of their size and international reach.

    In some scams, criminals have used dozens of shell companies and bank accounts to funnel money, hide it or spirit it away. Reverse-engineering a single scheme can take years.

  • BULLETIN: Steven Salutric, Illinois Man Accused By SEC Last Year Of Stealing From 96-Year-Old Nursing Home Patient With Dementia, Now Charged Criminally

    BULLETIN: Federal prosecutors in the Northern District of Illinois have charged Steven W. Salutric with wire fraud, the office of U.S. Attorney Patrick J. Fitzgerald said.

    Salutric, 53, of Carol Stream, initially was charged civilly by the SEC in January 2010, amid shocking allegations that, to keep his Ponzi and fraud scheme afloat, he stole $400,000 from a 96-year-old woman with dementia who resided in a nursing home.

    The U.S. Department of Labor later sued Salutric, alleging that he illegally withdrew “more than $1 million from five pension plan client accounts from 2005 through 2009” and “jeopardized the retirement security of many workers.”

    Fitzgerald’s office now says Salutric, who co-founded an investment-advisory firm known as Results One Financial LLC, “caused about 10 clients to lose more than $4.26 million.”

    Salutric’s scheme, which in part involved dipping into client’ custodial funds at Charles Schwab & Co Inc., operated between December 2002 and January 2010, prosecutors said.

    “Salutric allegedly fraudulently obtained more than $3 million from clients by preparing, forging clients’ signatures on, and faxing documents that falsely represented to Schwab that the clients wished to transfer funds from their Schwab accounts to bank accounts held by Salutric’s personal business associates and entities in which he had a financial interest,” prosecutors said. “Salutric allegedly used at least a portion of the clients’ funds to make Ponzi-type deposits to other clients’ accounts to conceal and prolong the scheme.”

  • Alfred Gerebizza Arrested In $105 Million Ponzi Case; PP Blog Received Threatening Communication About Alleged Fraud Caper Last Year

    UPDATED 5:25 P.M. EDT (U.S.A.) Alfred Gerebizza has been charged with mail fraud and tax crimes in a superseding indictment in the Daniel Spitzer Ponzi case, which alleged both domestic and offshore fraud. The SEC initially charged Spitzer civilly in June 2010, accusing him of “moving investor money through a complex network of foreign bank and brokerage accounts” and spending more than $900,000 “in cash at the Wynn Las Vegas Casino.”

    Spitzer later was charged criminally after investigations by the FBI, the U.S. Postal Inspection Service and the IRS.

    Gerebizza, 56, formerly resided in the Chicago suburb of Crystal Lake. A criminal indictment against him was unsealed last month, and Gerebizza surrendered in Atlanta, federal prosecutors in the Northern District of Illinois said yesterday. He is in federal custody at a prison facility in Chicago, according to records.

    The superseding indictment naming Gerebizza as a new criminal defendant with Spitzer alleges that Gerebizza was a pitchman who “held himself out as a trader for a dozen investment funds, known collectively as the ‘Kenzie Funds,’ purportedly operated by Kenzie Financial Management in the U.S. Virgin Islands.”

    Spitzer was a Kenzie principal, prosecutors said. He has been charged with 10 counts of mail fraud.

    Gerebizza faces 10 counts of mail fraud and six counts of filing bogus tax returns. Both men were named in forfeiture allegations that seek $34 million.

    “Through sales agents and various marketing materials, they informed investors and potential investors that their investments would be used primarily in foreign currency trading, that the Kenzie Funds had never lost money, and had achieved profitable historical returns,” federal prosecutors said of Spitzer and  Gerebizza. “The defendants had to continually raise funds through the solicitation of new investors in the Kenzie Funds to make payments on investments made by earlier investors, all of which they concealed and intentionally failed to disclose to both new and earlier investors. Ultimately, between 2004 and July 2010, the defendants allegedly raised approximately $105 million from investors, misappropriated a significant portion of those funds, and caused losses totaling approximately $34 million.”

    On Sept. 12, 2010, the PP Blog received a communication purportedly from Gerebizza that threatened a lawsuit if the Blog did not remove Gerebizza’s name and/or alter or delete comments from readers.

    “I will sue you personally as well as your web site for slander as well as other charges,” the communication read in part.

    The Blog did not submit to the threat. Instead, the Blog reported on the threat.

    It is somewhat common for the PP Blog to receive threatening communications related to its coverage of Ponzi probes.