BULLETIN: Utah Ponzi schemer Jeffrey Lane Mowen has been ordered by a federal judge to pay more than $18 million in a civil case that sparked a criminal probe and resulted in allegations that Mowen had hatched a murder-for-hire plot from a U.S. jail after he was extradited from Panama in 2009.
The FBI worked with officials in Panama to return Mowen, 50, to the United States.
The Mowen case destroyed Ponzi-forum myths that scammers are untouchable if they remain “offshore.” It also destroyed the myth that individuals who drive business to a Ponzi scheme cannot be charged. Indeed, the SEC sued at least six individuals who drove money to Mowen and also filed administrative actions against them.
Mowen ultimately pleaded guilty to wire fraud and is serving 10 years in federal prison. The case is fabled in Ponzi lore because Mowen had accumulated more than 200 vehicles with investors’ funds — so many that it created a storage problem for the U.S. Marshals Service.
Part of Jeffrey Lane Mowen's Ponzi haul.
Here is the breakdown of the civil judgment against Mowen: disgorgement of $8,041,779 in ill-gotten gains, a matching civil penalty of $8,041,779 and $1,964,203.67 in interest.
Mowen is scheduled to be released from prison in January 2018.
UPDATED 7:43 A.M. ET (MARCH 9, U.S.A.) If ever there has been a cautionary tale for HYIP pitchmen, it is Jeffrey Lane Mowen’s Utah Ponzi scheme.
Mowen and at least six promoters ended up inspiring litigation on multiple fronts, with Mowen charged criminally. At issue was Mowen’s Forex Ponzi scheme, which allegedly was funded in part through an alleged high-yield “promissory notes” offering fraud.
Tonight, Mowen, 49, is listed as “in transit” to an unspecified federal prison. He has been jailed in the United States since he was extradited from Panama in 2009. He pleaded guilty to U.S. charges of wire fraud last year and was sentenced to 10 years.
Mowen received a merciful plea agreement in which other serious criminal charges were dropped, including solicitation to commit a crime of violence, witness tampering and retaliating against a witness.
The sidebars in the Mowen story have been every bit as compelling as the story-in-chief. Indeed, Mowen sought to shield himself in Panama when his scheme collapsed.
It didn’t work. Panamanian authorities and the FBI got him quickly.
Jeffrey Lane Mowen
After his return to the United States, Mowen allegedly solicited the murder of four witnesses “with the intent of preventing their attendance and testimony at his federal fraud trial” in the Ponzi scheme case.
That didn’t work. The cellmate through whom he allegedly solicited the murders was a snitch.
But the cautionary tale doesn’t end there. Jeffrey Lane Mowen was a felon and a recidivist securities huckster. Thomas Fry, an unregistered promoter, used at least five other unregistered promoters to raise funds for “opportunities” that purported to pay a return of between 2 percent and 3 percent a month, according to the SEC.
Fry and the pitchmen were sued by the SEC in 2009. All six also now face administration sanctions from the SEC — this after the agency targeted their ill-gotten gains in the earlier lawsuit.
Failure to conduct due diligence and engaging in willful blindness were elements in the SEC’s lawsuit 2009 against the promoters, according to court filings.
“Because the Promoters not only conducted virtually no due diligence in connection with Fry’s purported investment opportunities, but transferred investor money to Fry without any documentation or limitation on his use of the funds, the Promoters were reckless in failing to discover Fry’s association with Mowen and that their funds were being placed into a Ponzi scheme or used for other undisclosed purposes,” the SEC charged at the time.
All of the pitchman now have been barred from the securities business under the terms of the administrative action. In a settlement, none of the pitchmen acknowledged wrongdoing. But the various Ponzi- and fraud-related actions were front-and-center in their lives for the better part of three years.
This common paragraph appears in each of the administrative actions against the five Fry pitchmen (italics added):
“The Commission’s complaint alleged that, from at least January 2007 through July 2008, [Pitchman’s Name] offered and sold purported high-yield promissory notes to investors that he claimed would pay 2% to 3% interest monthly. The funds raised by [Pitchman’s Name] were given to Thomas R. Fry who funneled those funds into a Ponzi scheme run by Jeffrey L. Mowen, a convicted felon and securities law recidivist. The Commission alleged that [Pitchman’s Name] distributed private placement memoranda to investors that falsely stated that all the investors’ funds were being used to make collateralized domestic real estate loans and domestic small business loans and that misrepresented the level of his due diligence as to the investment scheme. The Commission alleged that [Pitchman’s Name] conducted virtually no due diligence in connection with the purported investment opportunities and transferred investor money without any documentation or limitation on the use of the funds.”
Fry knew Mowen was a scammer, but still continued to solicit funds, the SEC said. All in all, he and the other five pitchmen raised more than $18 million for Mowen.
But the FBI said Mowen wasn’t operating a legitimate investment opportunity. What he was doing was buying exotic cars, taking personal vacations, supporting a luxurious lifestyle and making Ponzi payouts that ultimately defrauded more than 200 investors out of between $9 million and $10 million.
The purported monthly returns offered by JSS Tripler/JustBeenPaid — an “opportunity” now making its way around the web — are roughly TWENTY times higher than the scheme pitched by Fry and his promoters, according to records.
As noted above, the alleged offering fraud involving Fry and the other pitchmen was promoted on the purported basis of returns of 2 percent to 3 percent a month. JSS Tripler/JustBeenPaid advertises 60 percent a month.
Also on a monthly basis, the purported payout of JSS Tripler/JustBeenPaid is roughly between TWO and SEVEN times higher than the payout of the Ponzi scheme that put Mowen in prison for 10 years, according to records.
Mowen’s Forex Ponzi scheme scheme offered between 8 percent and 33 percent a month, federal prosecutors said last year.
It is somewhat common for HYIP purveyors who populate Ponzi boards such as TalkGold and MoneyMakerGroup to assert they have conducted “due diligence” on an “opportunity” or to assert that a “program’s” operator and/or management “team” have done so and that prospects don’t have to concern themselves with doing any legwork.
It often proves to be the case that the “due diligence” consists of GIGO — garbage in, garbage out. The promoters simply repeat the company line, rather than doing any sort of critical assessment such as questioning how an HYIP “program” operator could provide returns that may dwarf the returns of Bernard Madoff and other Ponzi schemers such as Mowen.
EDITOR’S NOTE: The PP Blog has covered a number of stories in which U.S. residents living overseas were extradited to the United States to face Ponzi charges. The case against Ronald Paul Shade is another one — and it’s one that demonstrates that an extradition can occur even if a defendant is not charged with a federal offense.
Indeed, the warrant for Shade’s arrest was issued by a state-level Superior Court judge in California, according to Interpol. Shade’s case is instructive because it defeats some of the myths propagated on Ponzi boards such as MoneyMakerGroup, ASAMonitor, TalkGold and MyCashForums. Among the myths is that “offshore” equals “safe” for both investors and Ponzi perpetrators.
Don’t tell that to Shade, now jailed in California after being extradited from Bangkok by local — as opposed to federal — prosecutors in California. His bail was set at $3.9 million.
And don’t tell it to Jeffrey Lane Mowen, extradited from Panama to face federal Ponzi charges in Utah and later indicted in an alleged murder-for-hire plot. Here’s a quick side note on the Mowen case: If you like the recruitment fees paid by HYIP, autosurf and corrupt MLM or commission-based investment programs and make claims about the “due diligence” you’ve performed and try to impress prospects with your insider knowledge, your willful blindness may put you at great risk.
Mowen had three prior convictions in Utah for securities fraud and two for theft, according to records. Despite Mowen’s criminal record and history as a fraudster, promoters still did business with him. Their faith drained millions of dollars from investors, the SEC said. Using language apt to cause unease in the Ponzi-promoting world, the SEC said at least one promoter “either knew or was reckless in not knowing that Mowen had multiple recent felony convictions involving crimes of dishonesty.â€
Indeed, the SEC said, the promoter learned in approximately late June 2007 that Mowen had been convicted of securities fraud . . . [but] “continued to solicit new investor funds for several months while failing to disclose Mowen’s criminal history to any of the Promoters or their investors.†Downstream promoters who entrusted the promoter “conducted virtually no due diligence in connection with [his] purported investment opportunities, but transferred investor money to [him] without any documentation or limitation on his use of the funds,†the SEC said.
Perhaps the biggest myth exposed by the Ronald Paul Shade case is that going offshore takes state attorneys general and local prosecutors totally out of play. Longtime PP Blog readers will remember that the “offshore” pitch was pivotal in promotions for AdViewGlobal, AdGateWorld, MegaLido and other autosurfs that surfaced in the aftermath of the seizure of tens of millions of dollars by the U.S. Secret Service in the AdSurfDaily Ponzi scheme case. Some ads claimed that the “offshore” surfs neutralized state-level investigators.
Shade, however, was brought back to the United States at the request of the San Bernardino County District Attorney’s Office in California to face state charges filed by local investigators.
Still promoting investment-fraud schemes on the Ponzi boards and supplementing your pitches with myths about “safety” and how the overseas schemes are insulated from prosecution? Perhaps this story on the dramatic extradition of Colombian national David Murcia to the United States will help you snap out of your delusion that Ponzi and pyramid businesses cause no harm and represent “freedom” of choice. Perhaps this story on Robert Hodgins, who goes to bed at night knowing he’s wanted by Interpol, will help you shape your thinking.
The cases of John and Marian Morgan, U.S. residents extradited from Sri Lanka, also are instructive.
Finally, it’s worth noting that, after the United States charged Canadian national Nicholas Smirnow in May with operating an HYIP Ponzi scheme, a MyCashForums poster was quick to claim that “the USA has no extridition (sic) agreement ion (sic) place with the Phillipines (sic) . . . “
The claim was false. Federal prosecutors said they are seeking Smirnow’s extradition. He was accused of operating a $70 million, international fraud known as Pathway to Prosperity (P2P).
Here, now, the story of Ronald Paul Shade’s extradition . . .
A California man living in Thailand was extradited to the United States to face charges he ripped off senior citizens in a real-estate Ponzi scheme, authorities said.
Ronald Paul Shade, 39, formerly of Riverside, was arrested by local detectives Friday at Los Angeles International Airport. He was charged by investigators from the San Bernardino District Attorney’s Office with 29 felonies, including financial elder abuse, filing forged documents with the County Recorder’s Office and grand theft.
San Bernardino County District Attorney Michael A. Ramos, who also is the president of the California District Attorneys’ Association, led the probe.
Among the detectives involved in the Shade probe was Michael Leibrich, a senior investigator with the DA’s office.
“From 2006 to 2008, Shade solicited money from numerous investors for his company, Orange Crest Realty,” investigators said. “Investors were promised a high rate of return for a short-term investment. Elderly victims later discovered that their life’s savings were being used to further a Ponzi scheme.”
Shade had been living in Thailand for about two years, investigators said.
In 2008, the California Department of Corporations issued a “desist and refrain” order against Shade and his company after alleging that they were selling unregistered securities and recruiting prospects by urging them to “Get 18% APR Today†through the company’s “wonderful†investment.
Shade and the company used a now-defunct website known as OCRFunding.com to pitch the purported program, authorities said.
Among the misleading claims made to investors, according to authorities, were these:
That Orange Crest Realty was founded in 1993. (Authorities said Orange Crest Realty was not incorporated until June 2004.)
That Orange Crest Realty is a “registered investment advisor.†(Authorities said neither Shade nor the company and its associates were registered.)
That each investment was secured by actual title to specific existing real property. (Authorities said that “each investment was not secured by real property.”)
That a Deed of Trust And Assignment of Rents in the Property would be recorded with the Office of the County Assessor/Recorder and the investor would be provided with the recorded deed. (Authorities said a deed promised an investor who sent in $50,000 was not recorded and the “investor never received a recorded deed.”)
That the investor would receive regular monthly interest payments. (Authorities said “payments ceased shortly after the investment was purchased.”)
San Bernardino County investigators were assisted in the extradition by the Southwest Regional Fugitive Taskforce of the U.S. Marshals Service.
The scheme, which allegedly gathered $14 million, also fleeced investors who responded to newspaper ads, investigators said.
A taxidermy of a full-body African lion is part of the proceeds of the alleged Waterford Funding LLC Ponzi in Utah.
America’s Ponzi culture now has spawned a taxidermy auction from “assets recovered in one of the largest alleged Ponzi fraud cases in Utah,” according to website of the auctioneer.
Among the items up for bid are a “full body African lion,” Cape Horn buffalo, African antelope and hyena, wildebeest and other exotic animals. Forty-three firearms also will be sold, along with “beautiful, top-quality office furniture,” paintings, Persian and Oriental rugs, “fine home furnishings, antiques and more.”
Statewide Auction Co. of Salt Lake City will conduct the auction at its Utah State Fair Park facility tomorrow beginning at 6 p.m. A preview begins at 10 a.m. The event is part of the bankruptcy of Waterford Funding LLC. Waterford was owned by Travis Wright.
The company was placed in bankruptcy last year, and Ponzi allegations emerged.
A separate, Ponzi-related auction involving more than 200 vehicles tied to the alleged Jeffrey Lane Mowen Ponzi was held in Utah earlier this year. Mowen was jailed after his extradition from Panama, and later charged in an alleged murder-for-hire plot to kill witnesses in his Ponzi case.
Visit the website of Statewide Auction Co. to get details of the Waterford Funding LLC auction. (Got to the bottom of the page to find a link that leads to images of other assets of the alleged Ponzi that will be sold at a later date. One of the items is a “British ‘Tele’ Booth”; another is a “Child’s ‘Baby’ Grand Piano.”)
A grand jury has returned an indictment against a suburban Philadelphia man, accusing him of operating a Ponzi scheme that gathered at least $95 million and fleeced investors of more than $25 million.
Charged criminally with mail fraud and money-laundering was Donald Anthony Young, who also has been sued by the SEC.
Meanwhile, Matthew Pizzolato has pleaded guilty in a separate Ponzi case targeting senior citizens in Louisiana, prosecutors said.
Pizzolato, 26, of Tickfaw, pleaded guilty to 21 counts of mail fraud, three counts of money-laundering, and single counts of wire fraud, securities fraud and witness tampering. In all, Pizzolato pleaded guilty to 27 felonies. He also was sued by the CFTC.
At the same time, accused Ponzi schemer Jeffrey Lane Mowen has lost his monstrous collection of vehicles in Utah. The U.S. Marshals Service began selling the 210-vehicle collection at auction yesterday — April Fool’s Day.
Marshals were authorized to sell the cars because the bill to store them cost $21,000 a month. Mowen, 47, was arrested in Panama in 2009, extradited to the United States and jailed in Utah on Ponzi charges. He later was charged in an alleged murder-for-hire plot in which he was accused of trying to recruit a fellow prisoner to kill witnesses in the Ponzi case.
The auction had been delayed twice, but proceeded yesterday. It was billed by Erkelens & Olson Auctioneers as the “Largest collection of Muscle, Collector & Exotic vehicles ever [offered] in Utah!”
Elsewhere, NBC’s “Today” show this morning featured a daughter who turned in her mother in a Ponzi scheme. The mother ultimately was not charged because authorities came to view her as a victim who had been recruited to sell the scheme.
Authorities busted the California scheme, operated by Pastor Robert Jennings and Henry Uliomereyon Jones, a magnetic figure. The affinity-fraud scheme involved investments in coal and a bogus international gold deal.
Jones was arrested in Hong Kong and extradited to the United States. He and Jennings were convicted last year.
Kim Flanigan told Today that she reached her limit when she observed her mother, a widow, trying to recruit a widow with nine children into the Ponzi scheme. Both widows attended the same church.
“That was my breaking point,†Flanigan told Today. (See link to story below. NBC’s “Dateline” program will feature Flanigan tonight 9 EDT.)
In the Donald Anthony Young case in Pennsylvania, prosecutors said Young stole from investors so he could live in the lap of luxury.
“Ponzi schemes are usually a vehicle for an unscrupulous person to live high off of someone else’s wealth,†said U.S. Attorney Michael L. Levy. “According to the indictment, this defendant helped himself to others’ fortunes, living a life of luxury, with little or no regard for the damage to our financial markets, our economy, and the reputation of the investment advisors who follow the rules.â€
A veteran FBI agent said the agency was committed to destroying Ponzi fraud.
“The FBI views these types of financial investment Ponzi fraud schemes as significant criminal problems, because of the devastating effect they have not only on the individual victims who are preyed upon but also the effect they have on financial markets and on the overall economy,†said Janice K. Fedarcyk, special agent-in-charge of the Philadelphia Division of the FBI.
Prosecutors and agents involved in the Pizzolato case, meanwhile, also said Ponzi fraud will not stand in the United States.
“[Pizzolato’s] plea demonstrates our resolve, along with our partners in federal law enforcement, including the FBI, IRS and U.S. Postal Inspection Service, to aggressively investigate and pursue those economic predators who seek to take advantage and prey upon the most vulnerable among us, including our senior citizens who most desperately need our protection,” said U.S. Attorney Jim Letten.
Letten thanked the Office of the Louisiana Commissioner of Securities for its assistance in the Pizzolato case.
An FBI agent said the case sends a signal.
“This guilty plea represents once again, the FBI’s resolve to aggressively investigate financial crimes which victimize our most vulnerable citizens,” said David Welker, special agent in-charge. “It is reprehensible that Mr. Pizzalotto would target senior citizens and defraud them of their life’s savings. The FBI, along with our law enforcement partners, will continue to identify and investigate frauds such as this.â€
An IRS investigator said authorities would leave no stone unturned to expose financial fraudsters.
“This investigation shows that the appearance of success can be a mask for a tangled financial web of lies,” said Michael J. DePalma, special agent in-charge of the IRS New Orleans’ office.
“No matter what we call this type of crime, the bottom line is that Mr. Pizzolato robbed over a hundred investors of more than $19 million and spent just about all of it,” DePalma said. “Special Agents of IRS Criminal Investigation will continue to work with our federal and state law enforcement partners and the United States Attorney’s Office to pursue evidence of criminal activity wherever it leads, leaving no financial stone unturned.”
Visit the Today show site to read about Flanigan’s experience.
UPDATED 5:23 P.M. ET (U.S.A.) A California man has been arrested by the FBI and IRS criminal investigators in an alleged Ponzi scheme involving $12 million.
Peter Jerald Frommer was taken into custody this morning, after a federal grand jury returned a 17-count indictment yesterday.
Frommer, 34, formerly of Malibu, was charged with two counts of mail fraud, seven counts of wire fraud, five counts of money laundering and three counts of failing to file federal income-tax returns.
Prosecutors said he faced a maximum sentence of up to 233 years in prison if convicted on all counts.
“Frommer operated a bogus investment scheme under the names ‘Cap Exchange’ and ‘Cap X’ that purported to trade in surplus property of defunct companies,” prosecutors said. “[He] told numerous victims throughout the United States that he used commercial auction websites to purchase large lots of equipment for resale at higher prices.”
Between January 2004 and August 2006, prosecutors said, Frommer allegedly solicited “at least $12 million from victims by promising ‘guaranteed’ returns of 8 percent to 15 percent during cycles as short as six weeks.”
Investors were told Frommer would use their money “to buy the distressed assets for Cap X, and then would share profits from the subsequent sales,” prosecutors said.
“In addition to personal promissory notes, Frommer issued account statements that purported to show returns in the Cap X investment,” prosecutors said.
More than 50 investors were targeted in the scheme, including residents of California, Oregon, Virginia, Illinois and Massachusetts, prosecutors said.
Frommer did not purchase distressed assets with the victims’ money, prosecutors said.
“Instead, [he] allegedly misappropriated this money to maintain his lavish personal lifestyle and to make Ponzi payments to victims, while falsifying Cap X account statements to lull victims into believing that their money was safe and earning high returns,” prosecutors said.
It has been a busy week for Ponzi prosecutors in California.
Miguel Salazar, 36, of West Covina, pleaded guilty to mail fraud Tuesday. Prosecutors said Salazar ran a Ponzi scheme “that took nearly $700,000 from victims who thought they were investing in latex gloves, which were portrayed as being in high demand following the 9/11 terrorist attacks.”
Salazar’s former partner, Carlos Flores, 43, of Lakewood, pleaded guilty to mail fraud in December.
In other Ponzi news, an auction company is preparing to sell six vehicles linked to the alleged Trevor Cook/Pat Kiley Ponzi and financial-fraud scheme in Minnesota.
Among the items set to go up for bid Feb. 13 is a 1989 Rolls Royce Silver Spur linked to Cook. The Cook/Kiley scheme is alleged to be a fraud of at least $190 million.
In Utah, meanwhile, prosecutors said that Jeffrey Lane Mowen — accused in both a Ponzi scheme and a murder-for-hire plot in which potential Ponzi witnesses were to be killed — used Morse code as part of the murder plot.
Just how far will people go to avoid getting caught or convicted of operating a Ponzi scheme or to reclaim funds lost in a Ponzi scheme — or to send a message that designed to rattle nerves?
There have been several recent Ponzi or financial-fraud cases with more than just a hint of violent intent.
Implicated in a massive Ponzi scheme, disbarred Florida attorney surrounded himself with body guards prior to getting charged with racketeering, authorities said. Guns were pulled on multiple occasions, according to media accounts.
Last month, fleeced Texas investor Christine Cayton was arrested in Texas on charges that she brought a gun to the headquarters of Triton Financial LLC — implicated in an investment-fraud scheme by the SEC — and demanded a refund from Triton principal Kurt B. Barton
Now comes word that bullets were fired in Canada at the home of family members of Tzvi Erez, accused of operating a “printing” Ponzi scheme that gathered $27 million. A school that youngsters in the Erez family attend added security after it received a threatening letter.
A Utah man arrested in Panama on Ponzi charges, brought back to the United States to stand trial and later implicated in a murder-for-hire plot owned so many cars and motorcycles that the U.S. Marshal’s Service has been given permission to sell them prior to the trial.
Jeffrey Lane Mowen had acquired more than 200 vehicles through his Ponzi, real-estate and forex scheme, federal prosecutors said. The Salt Lake Tribune reported that the U.S. Marshal’s Service had been paying $20,000 a month just to store the seized assets and that a judge agreed that the storage costs were depleting the amount of money victims would receive.
Mowen was indicted under seal in February 2009. When the indictment was unsealed April 21, authorities said Mowen was “living outside of the United States.â€
That changed quickly. He was arrested just three days later in Panama “by Panamanian authorities in conjunction with the FBI Legal Attache office,†the FBI said.
Mowen was jailed in Davis County, Utah. In November, a new indictment was issued, charging him
Jeffrey Lane Mowen
with wire fraud, solicitation to commit a crime of violence, witness tampering and retaliating against a witness.
Prosecutors said Mowen, 47, of Lindon, Utah, hatched a plot while jailed to hire a fellow prisoner to kill four witnesses in the Ponzi scheme case upon the inmate’s release from prison.
The Utah vehicle auction is billed by Erkelens & Olson Auctioneers as the “Largest collection of Muscle, Collector & Exotic vehicles ever [offered] in Utah! Over 240 Units to be sold in 2 auctions.”
You’ve seen the ads or heard the pitches trying to persuade you to put money in “offshore” ventures such as the AdViewGlobal, AdGateWorld and MegaLido autosurfs. You’ve been told they were safe. You’ve been told the people who run them are out of the reach of U.S. securities regulators and law-enforcement agencies.
And you’ve been told your investment, which the surf purveyors call an “advertising” purchase, provides shelter from the FTC, the SEC and state attorneys general.
Don’t tell John and Marian Morgan of Florida that “offshore” means “safe” and that “offshore” provides a blanket of protection from law enforcement.
And don’t tell it to Jeffrey Lane Mowen, either.
John and Marian Morgan were charged by the SEC in June with running a prime-bank scheme. They skipped the country rather than appear for a hearing in July, first going to Europe and later to Sri Lanka.
Guess where they are now?
John and Marian Morgan are in separate cells in a U.S. jail. In addition to the SEC’s civil charges, they now face criminal charges after being indicted by a federal grand jury. They did not outmaneuver the SEC. They did not outmaneuver the U.S. Marshals Service. They did not outmaneuver the FBI. They did not outmaneuver the IRS. They did not outmaneuver Interpol.
Nor did John and Marian Morgan outmaneuver the government of Sri Lanka. They were arrested and jailed on the island, which is situated about 20 miles off the southern coast of India, in August. Sri Lanka deported them, and the United States brought them home earlier this month.
It’s big news in Sarasota — and it should be big news among the autosurf or forex/HYIP schemers who are telling you the United States is powerless to act against “offshore” enterprises or people inclined to start a get-rich-quick program and then scurry offshore one step ahead of what surf promoters derisively describe as the “sheriff” or “Big Brother.”
Do yourself a favor and read this story in the Sarasota Herald Tribune. Longtime opponents of the autosurf “industry” — in this upside-down world, the opponents are called “naysayers” and the Ponzi advocates are called “leaders” — will recognize the utter absurdity.
Sadly, though, most of the “leaders” likely will be too busy “leading ” the troops to even bigger and better catastrophes to take the time to read it.
Or they simply won’t care because leading people into catastrophes pays too well.
UPDATED 9:44 P.M. ET (U.S.A.) A Louisiana man has been charged in a 64-count indictment with operating a $20 million Ponzi scheme that fleeced retirees, federal prosecutors said today.
So many fraud counts were filed against Matthew B. Pizzolato that he faces more than 1,100 years in prison if convicted of all of them. As many as 160 people were duped, prosecutors said.
Pizzolato, 26, of Tickfaw, was charged with 52 counts of mail fraud, two counts of wire fraud, seven counts of money laundering, and single counts of securities fraud, obstruction of justice and witness tampering.
It was the second time this week prosecutors alleged witness tampering in a major Ponzi scheme case. Jeffrey Lane Mowen was charged in Utah Nov. 18 with attempting to hire a man to kill four witnesses in a case against him.
In the Pizzolato case, prosecutors said he attempted to silence employees with bribes of $20,000 and get them to destroy records to cover up the scheme. Meanwhile, prosecutors said Pizzolato obstructed justice by stealing documents that could incriminate him from the home of a client.
When the client called authorities, Pizzolato returned documents that he altered after stealing them, prosecutors said.
A veteran FBI agent called the crimes beyond the pale.
“It is unconscionable that in this stressful economy senior citizens would be targeted and defrauded of their life savings, said Special Agent in Charge David Welker. “We have an obligation to aggressively investigate crimes against those citizens who are most vulnerable. The FBI and our law enforcement partners will continue to aggressively pursue those who target our most vulnerable citizens.â€
Federal agencies are working together to put an end to the Ponzi plague in the United States, said U. S. Attorney Jim Letten of the Eastern District of Lousiana
“Today’s indictment demonstrates our resolve, along with our partners in federal law enforcement, including the FBI, IRS and U.S. Postal Inspection Service, to aggressively investigate and pursue those who seek to take advantage and prey upon those among us, including our senior citizens,” Letten said.
The Office of the Louisiana Commissioner of Securities assisted in the probe, Letten said.
Pizzolato had offices in Hammond, Covington, Lake Charles, Baton Rouge, and also conducted business in Greater New Orleans.
He “lured his potential victims through advertisements in the local daily newspapers in New Orleans, Baton Rouge and Hammond by promising rates of returns that were higher than market rates for CDs or U.S. Treasury Bills, prosecutors said.
Among the words Pizzolato used to lure investors into a false sense of security were “guaranteedâ€, “safeâ€, “conservativeâ€, “insuredâ€, and “no-risk,†prosecutors said.
Despite his assurances that clients’ money had been placed in U.S. Treasury Bills, CDs and other government-backed securities, Pizzolato “used the investors’ money to purchase luxury items, to make payments totaling millions of dollars to friends and family, to invest in high-risk futures trading and/or commercial real estate, and to provide lulling payments to investors in an effort to conceal the true nature of the Ponzi scheme,” prosecutors said.
Among the luxury items he purchased with investors’ money were a BMW 750LI, a Mercedes Benz S430V, a Range Rover Sport and a Chevrolet Corvette, prosecutors said. He also bought sports tickets, a $35,000 engagement ring, a $500,000 home in Ponchatoula, La., and spent $35,000 on Carnival cruises.
All in all, Pizzolato took about $19.5 million from clients and spent “nearly all” of it, prosecutors said.
Since 2005, prosecutors said, Pizzolato either operated, owned or was affiliated with several companies: Gulf Region Guaranty Inc. (Gulf Region Guaranty); Acadian Guaranty Group LLC; Allegiance Financial LLC; Annuity Presets LLC; Annuity Recovery Services LLC; Anova Marketing Systems LLC; Anytime Fitness of Sulphur LLC; Cornerstone Wealth Management LLC; Global Assured Financial Inc.; Green Pelican Group Inc.; Gulf South Guaranty Inc.; Gulf States Guaranty LLC; GRG Holdings LLC; GRG I LLC; GRG II LLC; Matt P LLC; National Insurance Advisors LLC; Pelican Guaranty Group Inc. (Pelican Guaranty); and Spectrum Lending Group LLC.
If convicted, he faces up to 20 years in prison for each count of mail fraud, wire fraud, securities fraud and witness tampering, and up to 10 years for each of the money laundering and obstruction of justice charges. Meanwhile, Pizzolato faces fines of up to $16 million.
Pizzolato was hit with 56 counts that could result in a maximum sentence of 20 years each if convicted of all of them, meaning he potentially faces more than 1,100 years in prison — even more if convicted of the less serious crimes.
Michael J. De Palma, Special Agent in Charge of the Internal Revenue Service Criminal Investigation Division, said law enforcement is prepared to “follow the money” to reverse-engineer Ponzi schemes.
“Financial Fraud and money laundering are not victimless crimes,” De Palma said. “IRS-Criminal Investigation is united with the rest of the law enforcement community in our resolve to disrupt those who commit crimes against our local citizens. Special Agents of IRS Criminal Investigations are expert financial investigators who ‘follow the money’ trail to identify potential offenders.”
EDITOR’S NOTE: In August, a poster here who defended autosurf Ponzi schemes demanded readers to “show me one time where the [U.S. government] has even started a lawsuit or ‘gone after’ a company off shore.” The post concerned the AdVentures4U (ADV4U) autosurf, which, like a number of autosurfs, claimed legal ties to Panama. Promoters said the purported ties insulated the surf from prosecution. Readers responded by providing several examples of prosecutors extending their reach beyond U.S. domestic soil to pierce the illusion of corporate veils and bring schemers to justice.
The story below is about an alleged Utah Ponzi, real-estate leveraging and forex-trading scheme in which the operator was arrested in Panama, brought back to the United States and jailed.
While Jeffrey Lane Mowen was in jail awaiting trial, the FBI said yesterday, he solicited a fellow inmate scheduled to be released in October to murder four witnesses “with the intent of preventing their attendance and testimony at his federal fraud trial” in the Ponzi scheme case.
UPDATED 4:14 P.M. ET (U.S.A.) In a case that puts more than just the financial dangers of Ponzi schemes on full display, jailed Ponzi suspect Jeffrey Lane Mowen has been indicted in Utah on charges of hatching a plot to hire a fellow prisoner to kill four witnesses in the Ponzi scheme case upon the inmate’s release from prison.
Mowen was indicted yesterday on charges of wire fraud, solicitation to commit a crime of
violence, witness tampering and retaliating against a witness. Mowen, jailed in Davis County, Utah, earlier this year after being arrested by Panamanian authorities working proactively with U.S. officials, was extradited to the United States to face the original charges in the case.
Jeffrey Lane Mowen
Prosecutors indicted Mowen in February under seal for the alleged Ponzi, announcing when the indictment was unsealed April 21 that he was “living outside of the United States.” He was arrested just three days later in Panama “by Panamanian authorities in conjunction with the FBI Legal Attache office,” the FBI said.
U.S. authorities said Mowen used investor funds “to purchase more than 200 high-end antique, classic, and modern vehicles, including cars, trucks, trailers, motorcycles, three-wheelers, and other vehicles.”
Mowen, 47, of Lindon, Utah, used his material possessions “as symbols of his success to investors,” the FBI said. The agency added that Mowen also used investor funds to “pay for personal expenses, including payments to himself and his [former] wife, dining expenses, vehicle storage fees, travel, utilities, and credit card expenses.”
For its part in a separate civil case, the Securities and Exchange Commission alleged that Mowen had three prior convictions in Utah for securities fraud and two for theft. Despite Mowen’s criminal record and history as a fraudster, promoters still did business with him. Their faith drained millions of dollars from investors, the SEC said.
Using language apt to cause unease in the autosurf Ponzi world, the SEC said one promoter “either knew or was reckless in not knowing that Mowen had multiple recent felony convictions involving crimes of dishonesty.”
Indeed, the SEC said, the promoter learned in approximately late June 2007 that Mowen had been convicted of securities fraud . . . [but] continued to solicit new investor funds for several months while failing to disclose Mowen’s criminal history to any of the Promoters or their investors.”
Downstream promoters who entrusted the promoter “conducted virtually no due diligence in connection with [his] purported investment opportunities, but transferred investor money to [him] without any documentation or limitation on his use of the funds,” the SEC said.
“[T]he Promoters were reckless in failing to discover [his] association with Mowen and that their funds were being placed into a Ponzi scheme or used for other undisclosed purposes,” the SEC said.
Among the SEC’s civil allegations against Mowen were that he siphoned off $8 million in investor funds for his personal use and transferred $650,000 to his former wife, who is named a relief defendant in the case.
Authorities painted a picture yesterday of a scheme that had morphed from financial crimes that crossed international borders to murder-for-hire — all in the name of Ponzi profits.
