PatrickPretty.com

Tag: Keith Slotter

  • California Man, 72, Sentenced To 110 Months For HYIP Rip-Off; Richard M. Hersch Also Ordered To Pay ‘At Least’ $9.2 Million In Restitution

    First, Richard M. Hersch, 72, told investors they’d earn up to 6 percent a week by plowing money into his company, All States ATM Inc.

    He then explained the company had “contracts” with major horse-racing tracks in California and elsewhere to operate Automated Teller Machines (ATMs) on the “back side” of the tracks.

    Ordinary horse-racing fans could not use the ATMs, according to Hersch, because the “backside” was off-limits to the general public and situated for the convenience of racetrack employees, horse owners, horse trainers and others — his own, highly profitable niche.

    Hersch then made the investments appear to be even more lucrative by explaining “the racetracks allowed him to operate a check-cashing or loan service on the back side of the track for the exclusive use of those with access to that area,” prosecutors said.

    To further disarm skeptical prospects, “Hersch claimed that he had 160 employees and hundreds of ATMs and that his company was in its eighth year of business,” prosecutors said.

    But the tracks Hersch said used his ATM and check-cashing business “reported having no contracts with him or All States ATM to provide financial services of any sort,” prosecutors said.

    Hersch was charged with mail fraud and structuring, and was arrested last year by the FBI and IRS. Investigators determined he had coaxed more than 150 people to invest about $25 million in his company.

    He pleaded guilty in November and was sentenced yesterday, acknowledging he operated an HYIP fraud and conspired with others to structure 15 transactions totaling $141,500 to evade currency-reporting requirements. Prosecutors said he and co-conspirators withdrew cash from a bank account in amounts between $9,000 and $9,500 because they knew that withdrawals of cash over $10,000 triggered the reporting requirements.

    U.S. District Judge John A. Houston sentenced Hersch to 110 months in federal prison and to pay “at least” $9.2 million in restitution.

    “[Hersch’s] sentencing should remind the public of the financial perils associated with high yield investment fraud scams,” said Keith Slotter, FBI special agent in charge.

    HYIP schemers will get caught, a veteran IRS investigators warned.

    “Currency-report information filed by banks and financial institutions provides a paper trail, or roadmap, for investigations of financial crimes and illegal activities, including tax evasion, embezzlement, and money laundering,” said Leslie P. DeMarco, special agent in charge of the IRS Criminal Investigation unit in the agency’s Los Angeles Field Office.

    “Individuals who deliberately break down cash withdrawals into amounts less that $10,000, so as not to trigger a bank’s reporting requirement, are committing a financial crime,” said DeMarco. “In this investigation, IRS special agents used their financial expertise to uncover Mr. Hersch’s intentionally structured cash withdrawals, designed to hide his investment fraud scheme.”

    U.S. Attorney Laura E. Duffy of the Southern District of California said Hersch’s sentence sent a message to financial fraudsters who are duping investors.

    “[The] sentence demonstrates our commitment to investigating and prosecuting those individuals who prey upon innocent victims in our community through fraudulent investment schemes,” Duffy said.

    Hersch now joins the ranks of Bernard Madoff, 71, (New York/Florida); Richard Piccoli, 83, (New York); Andy Bowdoin, 75, (Florida); Julia Ann Schmidt, 68, (Texas); Judith Zabalaoui, 71, (Louisiana); Arthur Nadel, 77, (Florida/NewYork); Ronald Keith Owens, 73, (Texas); James Blackman Roberts, 71, (Arkansas); Larry Atkins, 65, (North Dakota), Richard Taft Johnson, 67, (Michigan), Maxwell B. Smith, 69, (New Jersey) and others as senior citizens implicated in large financial frauds.

  • SAN DIEGO COUNTY: Man On Probation For Ponzi Scheme Starts New Scheme, Prosecutors Say; Edmundo Rubi Targets Filipino Community For Second Time

    Four California residents have been indicted on charges they targeted the Filipino Community of Greater San Diego in a foreclosure-rescue investment scam prosecutors have dubbed the “Apocalypse Trust” and “Amerisian Trust” scheme.

    Edmundo Rubi, one of the defendants, was on federal probation for the infamous “Knights Express” Ponzi scheme that fleeced Filipino investors out of $24 million when he started the new scheme, said San Diego County District Attorney Bonnie M. Dumanis.

    “Rubi brazenly ignored the conditions of his parole and went right back to committing the same types of crimes,” said Dumanis.

    Planning for the new scheme reportedly got under way while Rubi was serving a 70-month-sentence in federal prison for the “Knights Express” Ponzi, which affected at least 425 investors.

    Rubi, 52, was on supervised release when arrested in the new scheme.

    Also indicted were Joseph Encarnacion, 59, Benjamin Hebron, 51, and Gloria Hebron, 53. The defendants were charged with 54 felony counts, including Conspiracy to Commit Securities Fraud, Securities Fraud, Sale of Unqualified Securities, Grand Theft, Perjury, Foreclosure Consultant Fraud and Rent Skimming.

    “Mr. Rubi’s recidivism into this type of crime demonstrates his disregard for engaging in legitimate business practices,” said Keith Slotter, FBI Special Agent-in-Charge.

    Investigators said 22 “Apocalypse Trust” and “Amerisian Trust” participants quit-claimed 34 properties into various fraudulent trusts, owned by Rubi and administered by Ben and Gloria Hebron.

    Instead of assisting homeowners in foreclosure, the defendants stole their money or did not apply money as advertised, according to the indictment. Rubi lied about his criminal history.

    “Rubi and Encarnacion recruited former victims of the ‘Knight Expresss’ Ponzi scheme” into the quit-claim scheme, prosecutors said. The terms of his probation prohibited him from “from having any contact with investors or financial accounts.”

    In the Knights Express scheme, investors were told they were investing in a “secret international trading program” in which Federal Reserve notes were purchased and sold at discounted rates, prosecutors said in 2003.

    In the “Apocalypse Trust” and “Amerisian Trust” scheme, investors were coerced into signing a “Non-Disclosure & Confidentiality Agreement,” according to the indictment.