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Tag: Jack Cranney

  • SENIOR FRAUD CAVALCADE CONTINUES: Ponzi Schemer, 86, Pleads Guilty; Stephen J. Klos Ripped Off Fellow Senior Citizens, Prosecutors Say

    Stephen J. Klos, an 86-year-old church usher who sold elderly congregants in the Seattle area into a $3 million Ponzi scheme that began in 2004, has pleaded guilty to 10 counts of securities fraud, the office of King County Prosecuting Attorney Daniel T. Satterberg said.

    Klos “met several of victims at his church and told them that he would invest their money but used most of it to repay prior investors and for his personal benefit,” Satterberg’s office said. He faces between 51 and 68 months in prison when sentenced Dec. 28 by Judge Bruce Heller.

    Only four years short of his 90th birthday, Klos now joins a curiously long list of convicted or alleged Ponzi schemers and/or swindlers who were detected or charged after their 65th birthdays.

    Others on the list include Bernard Madoff (New York/Florida); Andy Bowdoin (Florida); Arthur Nadel (Florida/now deceased); Martin B. Feibish (Rhode Island); Richard Piccoli (New York); Anthony Lupas (Pennsylvania); John William “Jack” Cranney (Massachusetts); Pat Kiley (Minnesota); Richard Elkinson (Massachusetts); Edward May (Michigan); John F. Langford (Texas); Hans P. Seibt (Nevada); Louis J. Borstelmann (California); Gerald J. “Jerry” Berke (California/Canada); Richard Horace Mayfield (Colorado); Richard M. Hersch (California); Richard Taft Johnson (Michigan); Julia Ann Schmidt (Texas); Ronald Keith Owens (Texas); James Blackman Roberts (Arkansas); Larry Atkins (North Dakota); Maxwell B. Smith (New Jersey); Judith Zabalaoui (Louisiana); Arthur Ferdig (California).

    NOTE: The list above is incomplete.

  • BULLETIN: Massachusetts Charges Purported Top 20 Shaklee MLM Distributor, Amid Allegations He Drafted Downline Members Into $10.4 Million Ponzi Scheme He Ran Through His Private Companies

    John William "Jack" Cranney

    BULLETIN: (UPDATED 5:03 P.M. EDT (U.S.A.) The office of Massachusetts Secretary of State William Galvin has alleged that a man who described himself as a Top 20 distributor for Shaklee Corp. — a multilevel marketing firm — drafted members of his 50,000-strong downline into a $10.4 million Ponzi scheme and promissory-notes scam that he was operating through his private companies.

    John William “Jack” Cranney, 70, of Belmont, Mass., has been named in a cease-and-desist order that alleges the sale of unregistered securities and a fraud scheme affecting at least 36 people in 14 states through at least five businesses he created. The scheme was targeted at people Cranney got to know through Shaklee — and senior citizens were among the victims, Galvin’s office said in a complaint.

    Cranney had been a Shaklee rep for 45 years, and the “Cranney family brought the Shaklee business to New England,” investigators said.

    Investigators identified the businesses as Cranney Capital I LLC, Cranney Capital I Employee Stock Ownership Trust, Cranney Capital II LLC, Cranney Capital III Inc., and Cranney Industries, d/b/a Belmont Industries.

    “Cranney used his affiliation with family, friends and colleagues at Shaklee Corporation . . . many of whom he has known for fifteen (15) to twenty (20) years . . . to gain their trust and solicit investments,” investigators charged. “The majority of Cranney’s victims are affiliated with Shaklee and many are senior citizens.”

    And Cranney, according to investigators, falsely told his Shaklee victims that he was a “financial advisor and/or investment fund manager.”

    In reality, investigators said, Cranney was at the helm of a scam that began in 2002 and “enticed unsuspecting victims with promises of high returns on safe investments.”

    Some victims believed they were investing in a retirement plan, investigators said.

    Named in the complaint as a “related party” but not charged was Howard Musin, whom investigators said was the registered agent of three of the Cranney companies.

    “Musin has prepared tax returns for Cranney and his related corporate entities and other distributors for Shaklee up until 2011. In July of 2011, a federal court permanently barred Musin, his wife Jill Schwartz-Musin, and their three companies (SSC Services Inc., M-S Services Inc. and Schwartz’s Systems Corporation) from preparing tax returns for others after engaging in misconduct and fraud in preparing tax returns,” investigators said.

    That fraud, according to investigators, involved the fabrication of “deductible business expenses” for clients, including Shaklee distributors.

    Musin was in Cranney’s Shaklee downline, investigators said.

    Read the complaint.