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Tag: IRS-Criminal Investigation

  • URGENT >> BULLETIN >> MOVING: Zeek Rewards Figures Dawn Wright-Olivares And Daniel Olivares Charged Criminally, Sued Civilly

    Dawn Wright-Olivares. Source: Cropped section of 2012 online promo for Zeek.
    Dawn Wright-Olivares. Source: Cropped section of 2012 online promo for Zeek.

    URGENT >> BULLETIN >> MOVING: (21st update 5:49 p.m.) Zeek Rewards figures Dawn Wright-Olivares and Daniel Olivares of Clarksville, Ark., have been charged criminally by federal prosecutors in the Western District of North Carolina and sued civilly by the SEC.

    Among the criminal allegations are tax-fraud conspiracy and investment-fraud conspiracy, according to a charging document. Wire fraud also is alleged. Zeek’s Zeekler arm is called a “sham internet based penny auction company” in the charging documents. Zeek’s Zeek Rewards arm is called a “purported advertising division.”

    Wright-Olivares has agreed to plead guilty to investment-fraud conspiracy and to tax-fraud conspiracy, federal prosecutors said this afternoon. Daniel Olivares has agreed to plead guilty to investment-fraud conspiracy.

    Daniel Olivares is the 31-year-old stepson of Wright-Olivares, 45. Zeek operated from Lexington, N.C., with Wright-Olivares at one time serving as its COO. The court docket in the criminal case notes a plea agreement.

    Information published by the government suggests Daniel Olivares had been in plea negotiations with prosecutors since at least July 29, 2013, before finalizing a deal yesterday. Wright-Olivares, meanwhile, appears to have finalized a deal on Nov. 22, 2013.

    The deals suggest that Wright-Olivares could be sentenced to a maximum of 10 years in federal prison and Olivares five years. Both deals contemplate cooperation from the defendants. Wright-Olivares, according to plea papers, is represented by Brian S. Cromwell and Sarah F. Hutchins. Olivares is represented by S. Frederick Winiker III. All three attorneys are specialists in white-collar defense.

    Zeek operated through Paul R. Burks and Rex Venture Group LLC. A “P.B.” is referenced in the Wright-Olivares/Olivares charging documents as an “Un-indicted co-conspirator.”

    Wright-Olivares allegedly received Zeek and Rex payouts through an entity known as Wandering Phoenix LLC, according to the charging documents.

    “Wright-Olivares was a marketing and operational mastermind behind the scheme and Olivares was the chief architect of the computer databases they used,” said Stephen Cohen, an associate director in the SEC’s Division of Enforcement.  “After they learned ZeekRewards was under investigation by law enforcement, they accepted substantial sums of money from the scheme while keeping investors in the dark about its imminent collapse.”

    Wright-Olivares has settled the civil action by agreeing to “pay at least $8,184,064.94,” the SEC said.

    Olivares settled by agreeing “to pay at least $3,272,934.58,” the SEC said.

    The settlement amounts, the SEC said, “represent the entirety of their ill-gotten gains plus prejudgment interest.”

    Meanwhile, the SEC said that the Zeek fraud “raised more than $850 million from approximately one million investors worldwide.”

    The dollar sum is about $250 million higher than the SEC’s original estimate in August 2012.

    From the SEC complaint (italics/bolding added):

    [Zeek operator Paul] Burks provided the daily dividend rate to Olivares, who then entered it into the ZeekRewards databases to establish each affiliate investor’s daily award (communicated to affiliates through the ZeekRewards website). Wright-Olivares and Olivares learned that the daily dividend rate was fabricated by Burks and not actually calculated based on “daily net profits” or any actual company earnings, as represented to investors. In fact, in several instances when Burks was unavailable, Wright-Olivares instructed Olivares to enter daily dividend rates to mimic the payout from a prior week, without any regard for the company’s actual earnings.

    Precisely when Wright-Olivares and Olivares allegedly learned that Burks had fabricated the daily payout rate is unclear. In a bizarre radio interview in June 2012, Wright-Olivares maintained that Burks “manages all that.”

    In the criminal charging document, prosecutors say that Zeek employed a so-called “80/20 VIP Bid Strategy” to keep adequate cash on hand to “make the daily Ponzi payments to victim-investors.” Under such 80/20 plans, investors are encouraged to keep 80 percent of their money in an enterprise and to withdraw no more than 20 percent in cash.

    Zeek’s 80/20 program, prosecutors said, caused liabilities to mushroom in August 2012 to approximately $2.8 billion. Zeek, however, had only about 11 percent of that sum on hand. The SEC said in an emergency enforcement action in August 2012 that Zeek was teetering on collapse because of ever-accumulating, unfunded liabilities.

    Meanwhile, according to the criminal charging documents, Rex, Zeek Rewards and Zeekler failed to file any corporate tax returns or any corporate tax payments to the IRS.

    And for the 2011 tax year, according to the charging documents, “P.B.,” Wright-Olivares and others reported to the IRS that Zeek investors had received more than $108 million from the scheme when Zeek had paid out only about $13 million.

    This caused Zeek victims to file “false tax returns with the IRS reporting phantom income that they never actually received,” according to the charging documents.

    Zeek used the “false tax notices to perpetuate the Ponzi scheme,” according to the charging document.

    “This case shows that the appearance of success can be a mask for a tangled financial web of lies” said Richard Weber, chief of IRS Criminal Investigation. “The underlying structure can fall apart at any time and leave many investors in financial ruin.”

    Added Paul Morrissey, assistant director of investigations for the U.S. Secret Service: “As today’s technology continues to evolve, cybercriminals use these advances and enhancements to perpetrate an expanding range of crimes. As we have seen with this case, even with the increasing complexity of online Ponzi schemes, it remains difficult for criminals to remain anonymous. The Secret Service continues to seek new and innovative ways to combat emerging cyber threats.”

    U.S. Attorney Anne M. Tompkins is supervising the criminal prosecution. The Zeek investigation is ongoing, her office said in a statement.

    As part of the criminal case, prosecutors are seeking the forfeiture of $850 million.

    NOTE: Our thanks to the ASD Updates Blog.

  • BULLETIN: James Timothy Turner, Purported ‘President’ Of Purported ‘Republic for the united States of America’ (RuSA), Sentenced To 18 Years In Federal Prison

    breakingnews72James Timothy “Tim” Turner, a purported “sovereign citizen” and the purported “President” of a shadow government known as the “Republic for the united States of America” (RuSA), has been sentenced to 18 years in federal prison in a bizarre tax scam in which he was convicted of conspiring to defraud the IRS and teaching others to do so.

    In a particularly bizarre display of magical thinking, Turner and three other purported “Guardian Elders” sent “demands to all 50 governors in the United States in March 2010 ordering each governor to resign within three days to be replaced by a ‘sovereign’ leader or be ‘removed,’” the Justice Department said.

    Investigations by the FBI and IRS soon began, the agency said.

    “This lengthy prison sentence shows that tax defiers like Turner who use bogus tax schemes and file retaliatory liens against government officials will be punished,” said Kathryn Keneally, assistant Attorney General for the Justice Department’s Tax Division.

    Added Acting U.S. Attorney Sandra J. Stewart of the Middle District of Alabama: “This sentence should send a message that if you attempt to use retaliatory tax liens and fraudulent tax schemes as weapons against the United States and its citizens you will be punished.”

    A top IRS official, meanwhile, said Turner espoused a “false ideology.”

    “Turner influenced others with his false ideology by aggressively promoting obstruction of the IRS,” said Richard Weber,  chief of IRS-Criminal Investigation. “In truth, Turner’s own defiance of IRS and his attempts to lead others through the same labyrinth of lies and distortions led to his downfall as shown by the significant sentence he must now serve.”

    From a statement by the Justice Department (italics added):

    In March 2013, following a five-day jury trial, Turner was convicted on 10 counts in the U.S. District Court for the Middle District of Alabama. Based on the evidence introduced at trial and in court filings, Turner, the self-proclaimed “president” of the sovereign citizen group Republic for the united States of America (RuSA), traveled the country in 2008 and 2009 conducting seminars teaching attendees how to defraud the IRS by preparing and submitting fictitious bonds to the U.S. government in payment of federal taxes, mortgages, and other debt. The evidence at trial revealed the bonds are fictitious and worthless but witnesses testified that Turner used special paper, financial terminology and elaborate borders in an effort to make them look authentic and more likely to succeed in defrauding the recipient. Turner was convicted of sending a $300 million fictitious bond in his own name and of aiding and abetting others in sending fifteen other fictitious bonds to the Treasury Department to pay taxes and other debts.

    The evidence at trial also established that Turner taught people how to file retaliatory liens against government officials who interfered with the processing of fictitious bonds. Turner filed a purported $17.6 billion maritime lien in Montgomery County, Ala., Probate Court against another individual. This investigation began after Turner and three other self-proclaimed “Guardian Elders” sent demands to all 50 governors in the United States in March 2010 ordering each governor to resign within three days to be replaced by a “sovereign” leader or be “removed.” The FBI immediately began investigating Turner and IRS- Criminal Investigation (IRS-CI) joined the investigation soon thereafter.

  • Judge Calls Ponzi Schemer Who Raised Conspiracy Theory His Attorney Was Working With The Government A Liar, Sentences Him To 16 Years In Federal Prison

    ponziblotterAnthony Vassallo pulled a page from Ponzi schemer Andy Bowdoin’s playbook when he advanced a conspiracy theory that his own defense counsel was working with the government to sell him down the river.

    It didn’t work for Bowdoin, the 78-year old recidivist securities fraudster now serving a 78-month prison term after claiming he’d been “hoodwinked” by his lawyer.

    Now, a similar claim hasn’t worked for Vassallo, 34. He is one of the purveyors of the Equity Investments Management & Trading (EIMT) Ponzi scheme in California, a crime that served up a heaping helping of the bizarre. Three individuals who led an alleged shakedown bid to recover money for investors were charged criminally in 2009, amid allegations they posed as federal agents.

    The Sacramento Bee reported that Vassallo pleaded guilty to wire fraud on Feb. 1. After that, he tried to change his plea, claiming that government prosecutors and agents and a defense attorney “ganged up on him to extract a guilty plea to a crime he didn’t commit.”

    But U.S. District Judge Garland E. Burrell Jr. called Vassallo a “liar” in court on Friday, sentencing him to 16 years in federal prison, prosecutors said.

    “This lengthy sentence is justice served, though it is small comfort to the victims of Vassallo’s crimes, many of whom lost their homes, health, and retirements to this fraud,” said U.S. Attorney Benjamin B. Wagner of the Eastern District of California. “This case was unusual in its scope, but not in the nature of the fraudulent conduct.”

    EIMT gathered more than $80 million before it began to unravel in late 2008, prosecutors said.

    With EIMT foundering, “Vassallo continued to recruit new investments,” prosecutors said. “One investor transferred $250,000 to Vassallo’s account less than two weeks before Vassallo admitted to a group of investors that he had ceased trading and their money had been lost.”

    “This was a classic Ponzi scheme, where you rob Peter to pay Paul,” said José M. Martínez, IRS-Criminal Investigation special agent in charge. “Eventually, you run out of Peters and Pauls.”

  • URGENT >> BULLETIN >> MOVING: KABOOM! 2 Connecticut Women Found Guilty In Cash-Gifting Pyramid Scheme

    breakingnews72URGENT >> BULLETIN >> MOVING: (2ND UPDATE 6:44 P.M. ET U.S.A.) Both of the defendants on trial in federal court in Connecticut in a cash-gifting pyramid scheme known as Women’s Gifting Tables have been found guilty of wire fraud and filing false tax returns.

    The jury returned the verdicts against Jill Platt, 65, and Donna Bello, 56, this afternoon. Both women live in Guilford. They were charged in May 2012. A third woman, Bettejane Hopkins, 66, of Essex, pleaded guilty.

    In returning the guilty verdicts in about two hours, the jury rejected defense contentions that the women believed their cash-gifting “program” that gathered $5,000 from each participant and used a food theme was legal.

    Prosecutors called it a fraud scheme designed to enrich some participants at the expense of others.

    “As the jury’s swift verdict of guilty on all counts makes clear, ‘Gifting Tables’ are pyramid schemes and illegal, plain and simple,” said U.S. Attorney David B. Fein. “These defendants enriched themselves while fraudulently misrepresenting material facts about the Gifting Tables and conspired to hide their income from the IRS. I commend the agents of IRS Criminal Investigation for their thorough investigation of this matter, which is ongoing.”

    Fein this afternoon threw down the gauntlet against cash-gifters.

    “During the trial, the jury heard evidence that other Gifting Tables continue to operate in Connecticut,” he said. “The jury’s verdict today is fair notice to anyone participating on Gifting Tables that any money received is taxable income and that they may be involved in an illegal pyramid scheme.”

    Included among the damning evidence against Platt and Bello was email correspondence, prosecutors said.

    “I’m pleased to see that the jury saw that the ultimate purpose was the enrichment of the defendants,” said William P. Offord, IRS Criminal Investigation Special Agent in Charge of New England.

    From a statement late this afternoon by prosecutors (italics added):

    Evidence at trial included several emails, including an email sent by Platt in March 2009 that told a participant: “It’s sort of a joke that I refer to our freezer as the ATM.”  Later in March 2009, Bello complained to Hopkins and another individual about two recruits, stating: “They have had enough parties. Its [sic] costing us a small fortune in their food and wine delights. No more parties until they commit with the cash.”

    In June 2009, Bello sent an email that said “I am not a . . . saint . . . . I’m teaching you all how to make an extra 80 grand a year . . . . Isn’t that enough?”

    Platt and Bello were found guilty of one count of conspiracy to commit wire fraud, one count of conspiracy to defraud the IRS and a combined total of 15 counts of wire fraud. (Eleven against Bello and four against Platt.) Meanwhile, the jury found Bello guilty of two counts of filing a false tax return. Platt was found guilty of one count of filing a false tax return.

    Sentencing is set for May 15 before Chief U.S. District Judge Alvin W. Thompson. The women potentially face years in prison.

    Cash-gifting schemes may surface as forms of affinity fraud. They often are targeted at people of faith, and purveyors may claim the “programs” are legal.

  • Man From Colorado Town Of Fairplay Ran ‘Gold Coin’ Fraud Scheme, Prosecutors Say

    ponziblotterJames P. Burg, formerly of Fairplay, Colo., ripped off his customers for gold coins and, in at least one instance, “used one customer’s payment for coins to refund funds to another customer,” federal prosecutors said.

    The scam fetched more than $2.4 million and operated through three websites, prosecutors said.

    Burg, 61, became the subject of an investigation carried out by the FBI, the IRS and the U.S. Postal Inspection Service, the office of U.S. Attorney John Walsh of the District of Colorado said.

    He has been charged with six counts of wire fraud, four counts of money laundering, four counts of willful failure to file tax returns and nine counts of mail fraud.

    “The U.S. Postal Inspection Service has no shortage of investment investigations and this is another example of greed overcoming honest business practices,” said Adam Behnen, inspector in charge of the U.S. Postal Inspection Service.

    From a statement by prosecutors (italics added):

    As part of the scheme, Burg represented that he was the chief executive officer of a company known as Superior Discount Coins (SDC) and that SDC was in the business of selling coins. Burg also conducted business using a company known as Gold Run Investments (GRI) and represented that GRI was in the business of selling coins. At times, Burg operated GRI using the alias “Tim Burke.” Burg advertised and solicited customers through radio advertisements and over the Internet using websites he controlled, including; www.superiordiscountcoins.com, www.yourcoinbroker.com, and www.goldruninvestments.net.

    Burg misrepresented and promised customers that if they ordered coins from SDC or GRI and paid him for those coins, he would deliver the coins to them or to accounts designated by them. He sent and caused to be sent to customers that ordered coins from SDC or GRI invoices stating amounts of money owed for the coins and, in some cases, providing information about a bank account to which the customers should transfer their money to purchase the coins.

    The money Burg received from customers was not used to purchase coins for such customers, but instead he converted the money to his own use and benefit. Burg refused to refund money to customers in several instances where the customers requested a return of their money after he failed to deliver coins as originally promised. To prevent the scheme’s detection, Burg sometimes filled customers’ orders for coins only after such customers threatened to take legal action or report him to law enforcement authorities. Burg used one customer’s payment for coins to refund funds to another customer.

    “Fraud schemes are often described as a house of cards and will eventually fall apart exposing the individuals responsible,” said Stephen Boyd, special agent in charge, IRS-Criminal Investigation, Denver Field Office

    See 9News.com report from 2011:

  • ‘Before, During And After The Aforesaid Seizure’: Feds Charge Ponzi Schemer Scott Rothstein’s Wife, Her Attorney And Friend With Conspiracy To Obstruct Justice, Launder Money And Tamper With Witness In Alleged Plot To Conceal Assets

    “Those who assist others to conceal assets subject to forfeiture will be fully investigated and prosecuted. Together with the U.S. Attorney’s Office, we will continue to pursue forfeiture of all assets acquired with funds derived from Rothstein’s Ponzi scheme.” — José A. Gonzalez, special agent in charge of the IRS-Criminal Investigations Division, Sept. 6, 2012

    Saying criminal conduct occurred “before, during and after” the seizure of assets linked to Florida Ponzi schemer Scott Rothstein, federal prosecutors today announced that Rothstein’s wife, her attorney and friend have been charged in an alleged bid to conceal more than $1 million in jewelry.

    Two others also were charged.

    “The integrity of our system of justice is based on the truthfulness of every witness that participates in the process,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida. “When a witness lies under oath or conspires to obstruct justice, the integrity of our system of justice is undermined. The charges filed against these five individuals are proof of our office’s commitment to safeguard and protect the integrity of our legal system. Thanks to the continued dedication and commitment of our law enforcement partners and our prosecutors, these individuals will be brought to justice and the integrity in our system of justice restored.”

    Kimberly Wendell Rothstein, 38; Stacie Weisman, 49; and attorney Scott F. Saidel were charged with with conspiracy to commit money laundering, to obstruct justice and to tamper with a witness, prosecutors said.

    Among the allegations against Kim Rothstein, Weisman and Saidel is that they “sought to have Scott W. Rothstein testify falsely” in a civil proceeding after Scott Rothstein’s corrupt law firm imploded in 2009.

    Meanwhile, Eddy Marin, 50, and Patrick Daoud, 54, were indicted on charges of obstruction of justice and perjury, prosecutors said.

    The Sun Sentinel is reporting that Daoud is a jeweler in Fort Lauderdale, the city in which Scott Rothstein’s epic, $1.4 billion Ponzi fraud collapsed in 2009 and took the Rothstein Rosenfeldt Adler law firm with it. Scott Rothstein was sentenced to 50 years in federal prison.

    From a statement by prosecutors today (italics added):

    According to the charging documents, former Ft. Lauderdale attorney Scott W. Rothstein, who was the Chief Executive Officer and Chairman of the law firm of Rothstein, Rosenfeldt and Adler, P.A. (RRA), used the funds obtained from the operation of a Ponzi scheme to purchase tens of millions of dollars of real estate, vehicles, vessels, business interests, luxury watches, jewelry and sports memorabilia for himself, his wife, Kimberly Rothstein, and others.

    As part of his plea agreement, Scott W. Rothstein agreed to forfeit to the government all assets acquired with funds derived through the aforesaid Ponzi scheme. On November 9, 2009, agents of the Internal Revenue Service, Criminal Investigations, went to the Rothstein residence, where Kimberly Rothstein assisted the agents in retrieving what was believed to be all of the available cash, jewelry and luxury watches which had previously been purchased by Scott W. Rothstein with proceeds derived from the Ponzi scheme.

    In fact, before, during and after the aforesaid seizure by federal agents on November 9, 2009, Kimberly Rothstein, Stacie Weisman, and Scott F. Saidel knowingly took action to conceal certain items of jewelry, valued in excess of one million dollars for the purpose of preventing the government from exercising its authority to take such property into its lawful custody and control. Thereafter, Kimberly Rothstein and Stacie Weisman sold and attempted to sell a portion of this jewelry to and through various persons, including Eddy Marin and Patrick Daoud.

    The charging documents further allege that, in connection with civil proceedings instituted by the Trustee in bankruptcy for RRA, all of the defendants took steps to obstruct justice by concealing the true location of certain items of jewelry in order to prevent its availability for use in those proceedings. It is further alleged that Marin and Daoud committed perjury during depositions in connection with those proceedings, and that Kimberly Rothstein, Stacie Weisman and Scott F. Saidel sought to have Scott W. Rothstein testify falsely in connection with those proceedings.

  • BULLETIN: Arthur Ferdig, Operator Of Collapsed Tradex Ponzi Scheme, Sentenced To Federal Prison For Tax Evasion; IRS Says Money Diverted To Offshore Accounts And Shell Companies

    Arthur A. Ferdig

    BULLETIN: Arthur Allen Ferdig, a California man who owned a collapsed Forex Ponzi scheme known as Tradex and claimed to have conversed with angels and the “Christ Energy,” has been sentenced to 18 months in federal prison for tax evasion.

    Ferdig, 71, admitted he practiced “sophisticated concealment” and stashed Tradex cash in offshore accounts and various ventures, including a Las Vegas firm known as Industrial Metals and Mining, according to court documents.

    And Ferdig also admitted he hid $529,000 in income for the 2002 tax year and did not file a tax return. A plea agreement requires him to pay taxes on the money, and Ferdig will be placed on probation for three years after his prison release.

    “Individuals who intentionally use foreign bank accounts and shell companies to conceal income and assets offshore from the IRS risk criminal prosecution,” said Leslie P. DeMarco, IRS Criminal Investigation special agent in charge of the Los Angeles Field Office.

    The prosecution of Ferdig destroyed a common myth in the  HYIP and autosurf worlds that “offshore” venues insulate the ventures and participants from prosecution. Tradex operated from the Caribbean island of Dominica, and Ferdig, a U.S. citizen, lived in Jamaica and the Bahamas.

    Ferdig claimed to have met his first angel, Metatron, on Sept. 22, 2002, while Ferdig was peering over rocky sea cliffs in Negril, Jamaica. He later met Gabriel, Michael, Uriel, Ezrael, Ariel, Raphael, Muriel, Bethany “and other wonderful and loving angels and spirits of light,” according to his website.

    People who followed Ferdig were called “Truth-Seekers,” according to records.

    His non-Forex product lineup included “Angel Tears,” defined as “an all-natural, bio-trace mineral tincture developed to enhance human health and vitality.”

    Although Tradex purported to have millions of dollars under management, missives to investors were signed “The TRADEX Management and Staff” or “The Tradex Management.”

  • BULLETIN: National Investment-Fraud Sweep Dubbed ‘Operation Broken Trust’ Nets 532 Defendants; AG Holder Says Capers Caused More Than $10 Billion In Losses; ‘Undercover Operations’ Part of Task Force Arsenal

    U.S. Attorney General Eric Holder and members of President Obama’s Financial Fraud Enforcement Task Force said this morning that a nationwide sweep known as “Operation Broken Trust” has netted 343 criminal defendants and 189 civil defendants.

    Among the targets of the sweep were purveyors of Ponzi schemes, affinity fraud, prime bank/high-yield investment scams, foreign exchange (FOREX) frauds, business-opportunity fraud and other similar schemes, investigators said.

    Some of the defendants “filed for bankruptcy in an attempt to avoid claims by victim-investors,” investigators said.

    The combined losses in the schemes, which affected 120,000 investors, were estimated at $10.4 billion, Holder said. He was joined in the announcement by FBI Executive Assistant Director Shawn Henry; U.S. Securities and Exchange Commission (SEC) Director of Enforcement Robert Khuzami; U.S. Postal Inspection Service (USPIS) Chief Postal Inspector Guy Cottrell;  Deputy Chief Rick Raven of the Internal Revenue Service Criminal Investigation (IRS-CI); Acting Director of Enforcement Vince McGonagle of the U.S. Commodity Futures Trading Commission (CFTC); and other members of the Financial Fraud Enforcement Task Force.

    “With this operation, the Financial Fraud Enforcement Task Force is sending a strong message,” said Holder.  “To the public: be alert for these frauds, take appropriate measures to protect yourself, and report such schemes to proper authorities when they occur. And to anyone operating or attempting to operate an investment scam: cheating investors out of their earnings and savings is no longer a safe business plan — we will use every tool at our disposal to find you, to stop you, and to bring you to justice.”

    The calling card of the schemes was greed, Henry said, adding that undercover probes are part of the Task Force’s arsenal.

    “This operation highlights the scope of this problem, and its impact on individuals from all walks of life,” said Henry.  “This one sweep alone involves fraud schemes that harmed more than 120,000 victims. The schemes may change, but the underlying greed does not. Working with our partners, we in the FBI will use all the investigative techniques in our arsenal, including undercover operations, to bring those responsible to justice.”

    Khuzami, meanwhile, said the law-enforcement community was pursuing multiple forms of fraud.

    “Fraud by well-known companies or high-profile executives gets the biggest headlines, but other scams are equally devastating to hard working families and retirees,” said Khuzami. “Victims want justice and don’t much care who the fraudster is or how unique the fraud. Today’s actions underscore that law enforcement agrees and will pursue fraud in whatever form.”

    Read Holder’s announcement, made this morning in Washington.

    President Obama authorized the Financial Fraud Enforcement Task Force in November 2009. In January 2010, Holder ventured to Florida to speak about the aims of the Task Force and to warn scammers that the government was serious about putting them in jail.

  • Long Prison Terms Ordered In California Ponzi Scheme Cases In Which Operators Threatened Or Attempted Suicide; Roberto Heckscher Gets 20 Years; Patricia Morgen Gets Nearly 16 Years

    EDITOR’S NOTE: This is a brief on two Ponzi cases in California that led to suicide attempts or threats. Among other things, the case of Roberto Heckscher demonstrates both the danger to life that collapsing Ponzi schemes pose and the fallacy that no Ponzi scheme exists as long as people are getting “paid.” The fallacy routinely is perpetuated on Internet Ponzi boards such as MoneyMakerGroup, TalkGold, ASAMonitor and MyCashForums. Indeed, the Heckscher investment-fraud and Ponzi scheme dates back to at least 1979, perhaps making it the longest-running scheme on the Feds’ radar screens. Meanwhile, the Ponzi case against Patricia Morgen and Chicago Development and Planning also mixes in elements of mortgage fraud. Among other things, the Morgen case demonstrates that Ponzi = Pain. Indeed, Morgen initially fled to Mexico when she came under investigation. She later returned — and threatened to jump from the top of a multistory building in Chicago.

    Two Ponzi schemers whose cases were brought in federal court in Northern California have been sentenced to long prison terms. The unrelated cases of Roberto Heckscher and Patricia Morgen destroy myths, expose secret lives and demonstrate that Ponzi schemes can separate purveyors from their senses.

    Roberto Heckscher, 55, projected himself during the business week as a mild-mannered accountant and strategist who served elderly and middle class clients in the San Francisco area. On weekends, however, he morphed into a Las Vegas gambling “whale” treated to the best amenities by the casinos.

    Heckscher conned family, friends and clients into providing money that purportedly would be used to provide short-term commercial loans to clients. Investors were told they’d earn interest on the loans.

    The scheme, which gathered up to $100 million, dated back to 1979, prosecutors said. At least 292 investors lost a total of at least $52 million in the scheme.

    “For nearly three decades, Roberto Heckscher made his livelihood by stealing the hopes and dreams of the people he knew,” said U.S. Attorney Joseph P. Russoniello.

    Heckscher’s sentence of 20 years for mail fraud “should send a strong message to everyone” that “preying on the trust of hardworking people for personal gain will land you in prison,” Russoniello said.

    But Heckscher almost did not live to see the long-running scheme exposed in the plain light of day. That’s because he tried unsuccessfully to kill himself in June 2009 by overdosing on sleeping pills.

    U.S. District Court Judge Susan Illston handed down the sentence. Heckscher, who owned Irving Bookkeeping & Taxes, was charged criminally and pleaded guilty in October 2009, about four months after he tried to take his own life.

    Patricia Morgen, meanwhile, was sentenced to 15 years and eight months in prison after admitting she created a real-estate Ponzi scheme that solicited investors for Chicago Development and Planning. She also was ordered to pay more than $9 million in restitution. The case has more than 400 victims.

    Investors were promised “substantial, guaranteed return profit payments,” prosecutors said.

    In addition to the real-estate Ponzi scheme, Morgen also engaged in mortgage fraud, prosecutors said.

    “Morgen and a co-defendant submitted fraudulent loan applications to acquire more than 20 properties, most of which were occupied, rent-free, by Chicago Development and Planning employees, including Morgen herself,” prosecutors said.

    Morgen, 63, initially fled to Mexico. She was indicted in November 2008. Although she later returned to the United States, Morgen hid from authorities.

    She was arrested in Chicago in June 2009, after threatening to jump off a multistory building, prosecutors said. Her son, Shalom Gibson, was indicted in Nevada for destroying evidence in the case, and remains at large.

    U.S. District Judge Charles R. Breyer sentenced Morgen, who pleaded guilty in December 2009 to wire fraud, mail fraud, and money-laundering.  Breyer described Morgen as “a very dangerous person,” prosecutors said.

    The sentence “underscores the severity and impact of this sort of crime on our entire community,” said Stephanie Douglas, FBI special agent in charge.

    “Ms. Morgen betrayed the trust of hundreds of investors, injected bad debt into the economy, and fled the country when faced with the prospect of being held accountable for her actions,” Douglas said.

    Greedsters running investment-fraud schemes have plenty to worry about, said an IRS criminal investigator.

    “Your greed will not go undetected and unpunished,” said Scott O’Briant, special agent in charge of the IRS-Criminal Investigation unit.

    In recent weeks, at least three suicide attempts by Ponzi schemers have been outlined in federal cases.