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Tag: Michael McGee

  • BULLETIN: Alberta Securities Commission Orders $2 Million Penalty Against ‘Lord’ David Greene And John Jenkins In Gold Quest International Ponzi Case

    After determining in January that Gold Quest International (GQI) was a “sham” operating as both a Ponzi and a pyramid scheme, the Alberta Securities Commission (ASC) now has doled out the penalties.

    David Michael Greene, also known as “Lord” David Greene, and John Jenkins were ordered to pay an “administrative penalty” of $2 million, ASC said today. Greene and Jenkins were GQI’s operators, according to the agency.

    Michael McGee, described by ASC as having played “a lesser but still considerable role” in the scheme, was ordered to pay an administrative penalty of $100,000. ASC further determined that McGee claimed that a case against him filed by the U.S. Securities and Exchange Commission had been “dismissed” when it had not.

    In fact, ASC said, the SEC case had resulted in a judgment of more than $8.5 million against McGee, but that the judgment is not being enforced because of McGee’s professed inability to pay.

    If the case involving GQI was not one of the strangest in Canadian history, it almost certainly is one of the strangest in U.S. history.

    Part of the money in the case is tied up in a California homicide investigation in which the operator of the E-Bullion payment processor was charged with murdering his wife.

    During the SEC litigation, the purported “attorney general” of a purported “sovereign” Indian tribe tried unsuccessfully to sue the SEC for the spectacular sum $1.7 trillion, claiming GQI was immune from U.S. securities laws.

    Read this story for more background on GQI.

    Penalties doled out by ASC were less severe on GQI President Delroy Atwood. He was not assessed a financial penalty other than a share of litigation costs of $49,700, but was “prohibited from acting as a director or officer of any issuer for five years,” ASC said.

    Greene and Jenkins were banned from the Alberta capital markets for life.  McGee was banned for 10 years.

    “In the Merits Decision, we found that Greene created Gold-Quest and the Gold-Quest Offering,” ASC said. “Greene and Jenkins ran Gold-Quest’s operations, with some assistance from McGee.

    “Gold-Quest and Greene lured investors by touting investments in the Gold-Quest Offering as safe and secure or guaranteed and by promising 87.5% annual returns,” ASC continued. “These statements about the investments were misrepresentations. The Gold-Quest Offering, purportedly involving investment in foreign currency trading, was in fact a sham.

    “On the evidence, we were satisfied that, during the relevant period, Gold-Quest itself did not open any foreign currency trading account, receive income from any currency trading, have an active currency trading program or any actual currency traders in its employ, or place investors’ money with external foreign currency traders,” ASC said.  “Rather, the evidence was that any foreign currency trading had been done through foreign currency trading accounts opened in the names of Greene and Jenkins, had been minimal and had resulted in heavy losses.”

    The scheme gathered $29 million, ASC said.

  • BULLETIN: Alberta Securities Commission Rules Gold Quest International A Ponzi Scheme AND A Pyramid Scheme; Panel Concludes GQI Was A ‘Sham’

    UPDATED 7:03 P.M. ET (U.S.A.) The Alberta Securities Commission (ASC) has ruled Gold Quest International (GQI) a Ponzi and a Pyramid scheme.

    An ASC panel determined that GQI met the conditions for a Ponzi scheme because it had no viable product and paid earlier investors with money from new investors. It also was a pyramid scheme, ASC ruled, because of a commission structure that rewarded earlier entrants and left later entrants holding the bag.

    “The Gold-Quest Offering was a sham investment,” ASC ruled. “On the evidence before us, we are satisfied that, during the relevant period, Gold-Quest itself did not receive income from any currency trading, have an active currency trading program or indeed any actual currency traders in its employ, or place investors’ money with external foreign currency traders.

    “Rather,” ASC continued, “Gold-Quest depended on the influx of new investors’ money to make its payments to existing investors.”

    In its ruling, ASC cited the SEC’s probe into GQI, and also referenced GQI’s claim that, although it was registered in Panama and operated from Las Vegas, it was immune from U.S. and Canadian law because of supposed ties to a “sovereign” Indian tribe in North Dakota.

    “[W]hen securities regulatory authorities had begun investigating Gold-Quest, Gold-Quest claimed that it was subject only to the jurisdiction of the sovereign Little Shell Nation of the Anishinabe Culture . . . purportedly headquartered in North Dakota, and that it was not subject to the jurisdiction of Canada or the United States,” ASC said.

    “In a 16 March 2008 e-mail to ‘Gold-Quest Members,’ the ‘Board of Directors’ of Gold-Quest asserted (emphasis added):

    Note that while we have or have had offices in Panama and Costa Rica we operate under the legal Authority, venue, and Jurisdiction, of The Little Shell Nation.

    But GQI had no authority to operate outside of either U.S. or Canadian law, investigators said. For its part, the SEC said the tribe had no federal recognition.

    After regulators in Canada and the United States began to probe GQI, the firm blamed its predicament on the governments of both countries, according to ASC’s findings.

    In late 2008, according to ASC’s findings, GQI told members it was under “attack.” (Emphasis added):

    The recent attack on Little Shell Gold-Quest International and its members by the Securities Commissions of Canada and the United States has caused a severe breakdown of trust in these governments [sic] promise to protect the rights of private men and women to conduct business without governmental interference.

    At the same time, GQI told investors they could get their money back if they paid $40 for a debit card, ASC said. (Emphasis added):

    The use of this debit card Pay card through USA Global Trust is the safest way we can devise to return your investments. Let us pray our governments do not interfere any more.

    GQI, which claimed it would pay back members for the debit card and also pay them 10 percent on their existing investment after they purchased the debit card,  also instructed investors through its website FAQ that they could retrieve their lost profits from the SEC, according to ASC’s findings. (Emphasis added):

    Q: What about the 87½% profit I was supposed to make?
    A: All profits up to the May 6th 2008 seizure of Little [sic] Gold-Quest International by the receiver for the SEC will be paid in full. All other profits after that date were assumed by the receiver for the SEC. We will endeavor to work on your behalf concerning that matter in the near future.

    “Investor witness GD said that he applied for such a debit card but did not pay the administrative sign-up fee and received no response to his application,” ASC said.

    Another witness — “SB” — believed that  “none of the investors she brought into the Gold-Quest Offering received a refund of, or a return on, their investments,” ASC said.

    GQI, which promised an 87.5 percent annual return, misled investors, ASC ruled.

    “The statements that investors would receive an 87.5% annual return were misleading and untrue,” ASC ruled. “The evidence does not disclose that Gold-Quest had produced any trading profits which could generate the promised return. Specifically, on the evidence, we are satisfied that, during the relevant period, Gold-Quest itself did not open any foreign currency trading account, receive income from any currency trading, have an active currency trading program or any actual currency traders in its employ, or place investors’ money with external foreign currency traders.

    “Further,” ASC continued, “the evidence is that any foreign currency trading had been done through foreign currency trading accounts opened in the names of [David] Greene and [John] Jenkins, had been minimal and had resulted in heavy losses. The evidence does not disclose that this foreign currency trading was done for the benefit of Gold-Quest or its investors. Thus, there was simply no possibility that Gold-Quest could pay the promised return to its investors.”

    Both Jenkins and Green — also known as “Lord David Green” — were named in complaints in the United States and Canada. Other named GQI figures included Michael McGee and Delroy Atwood.

    “The evidence shows that millions of dollars of Gold-Quest investors’ money, in total, were transferred to Greene’s, Jenkins’ and McGee’s personal and trading accounts,” ASC ruled. “This money was apparently used to pay for their personal expenses, including purchases at stores, hotels, restaurants, golf clubs and an automobile dealership.

    “It seems that a few investors — those who invested in the early days of the Gold-Quest Offering — received all the payments they expected, but that beginning in February 2008 Gold-Quest began to experience difficulties in making payments to its investors,” ASC ruled.

    “Some investors received their monthly commissions for a time until these payments ceased in early 2008,” ASC said. “Many, if not most, investors received nothing back in principal or interest. In sum, Gold-Quest failed to make the payments promised to its investors, other than from other investors’ money.”

    GQI was doubly bogus, meeting the conditions of both a Ponzi scheme and a pyramid scheme. ASC ruled.

    “The Gold-Quest Offering, which extracted more than US$2 million from approximately 412 Alberta investors (approximately US$29 million from approximately 2940 investors in total), was a sham investment scheme,” ASC ruled. “The Gold-Quest Offering was both a classic Ponzi scheme and a classic pyramid scheme which denied Gold-Quest investors the very protections mandated by the fundamental registration and prospectus requirements of the Act.”

    See related story.

  • Receiver In Gold Quest International Ponzi Scheme Case Settles With Charles Capps Ministries For $100,000; Other GQI Money Is Part Of California Homicide Investigation

    breakingnewsAll that glitters was not gold in the seedy world of Gold Quest International (GQI), according to the receiver in the GQI Ponzi scheme case.

    Corrupt money was given to a ministry in the form of a gift, and other corrupt money is part of a homicide investigation in Los Angeles, according to court filings.

    Receiver Larry Cook has informed a federal judge that he has accepted a settlement of $100,000 from Charles Capp Ministries, saying the Oklahoma-based Christian organization unwittingly received fraudulent transfers of “at least” of $201,517 between January 2006 and August 2008 from the Ponzi scheme, according to court filings.

    “No allegations of fraud or securities violations were alleged against Charles Capps Ministries in the complaint filed by the SEC in this action,” Cook said. “Based on the information and belief of the receiver, Charles Capps Ministries was the unwitting recipient of investor funds from Defendant David Greene. Upon learning of the source of the funds it received from Greene, Charles Capps Ministries agreed to return the $100,000 settlement amount.”

    David Greene also is known as “Lord David Greene.” He is one of four named defendants in the SEC case. The others are GQI, John Jenkins and Michael McGee. The SEC filed the action in May 2008, and was hit almost immediately with a bizarre effort to undermine the prosecution.

    A litigant purporting to be the “attorney general” of a purported “sovereign” Indian tribe attempted unsuccessfully to file a lawsuit against the SEC for $1.7 trillion for enforcing securities laws. The GQI entity may have links to an extremist group — The Little Shell Pembina Band of North America — monitored by the Anti Defamation League.

    The ‘Goldfinger’ Murder

    Cook, who performed an international paper chase in the GQI case, further informed the judge that certain GQI assets are tied up in a homicide investigation in California.

    “The owner of E-Bullion was arrested in August 2008 for arranging the murder of his wife, a co-owner of E-Bullion,” Cook said. “The Receiver and the Commission have made numerous inquiries regarding future access to the E-Bullion business records and funds, and we have been advised the U.S. Attorney’s office has not made a decision on when or how these records and funds will be administered.”

    E-bullion co-founder James Fayed, 46, was charged with murder by the Los Angeles District Attorney’s office in September 2008. Prosecutors said he paid Jose Luis Moya, 49, a sum of $25,000 to arrange the murder of his wife, Pamela Fayed. The case has been dubbed the “Goldfinger Murder” in California.

    E-bullion was one of the payment processors used by GQI, which the SEC says operated a $28 million Ponzi scheme with Panamanian registration from Las Vegas. GQI purported to be immune from U.S. law because it was part of a “sovereign” Indian tribe in North Dakota.

    More than 2,100 investors from the United States and Canada participated in GQI. Participants perhaps received as much as $19 million in Ponzi payments, according to investigators in the United States and Canada.

    Cook reported that he had recovered only $389,145.57 to date by tracking money all over the world. Much of the money simply disappeared after making its way to New Zealand, he said.

    “Defendant David Greene has testified that he believed that GQI was going to pay investors the returns promised to them via the profits earned by GQI’s investments in Topaz Group Ltd., an entity based in New Zealand,” Cook said. “The Receiver has identified approximately $3.15 million in payments to Topaz Group from the Tri Fund Inc. account, David Greene[‘s] personal account, and John Jenkins[‘] personal account.

    “The Receiver identified and contacted the owner of Topaz Group Ltd., John Davies, in New Zealand,” Cook continued. “Davies advised the Receiver that the funds he received from David Greene were sent to him on behalf of David Greene. Davies stated that Greene always represented that the investment was Greene’s personal investment and it was not until February 2008 that Greene disclosed the funds belonged to an investment group. Davies stated the funds were not for a specific investment, but were used to fund the expenses of individuals working in Europe to complete various banking transactions that were scheduled to close and pay large profits. Davies further stated that none of these transactions were successful.

    “The Receiver, with the Commission’s assistance, has obtained copies of the Topaz Group Ltd. bank account records in New Zealand,” Cook said. “The Receiver has examined and analyzed this account and determined the majority of the funds transferred by Greene to Topaz were immediately transferred from the Topaz Group business account to the account of Wendy Smurthwaite Davies, the wife of John Davies. A small percentage of the funds Greene sent to Topaz were wired to the individuals identified by John Davies as working on the banking transactions in Europe, and the remainder appear to be used for Topaz Group’s miscellaneous expenses.

    “The Receiver and the Commission have participated in conference calls with the New Zealand law enforcement authorities,” Cook said. “The Receiver has provided the New Zealand investigators with information concerning transfers of investor funds from Defendants Greene and Jenkins to Topaz Group Ltd.”

    For additional information see this document from the Alberta Securities Commission.

    See this filing by the SEC.

    Cook also is the receiver in the case against Affiliate Strategies Inc., the parent company of the Noobing autosurf. Noobing pitched itself to individuals with hearing impairments.