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Tag: Minnesota Ponzi schemes

  • BULLETIN: Pat Kiley, Trevor Cook Ponzi Pitchman, Sentenced To 20 Years in Federal Prison

    breakingnews72BULLETIN: Patrick Kiley, a radio host and conspiracy theorist who warned of “massive, massive chaos” and became a pitchman for the $194 million Trevor Cook Forex Ponzi scheme in Minnesota, has been sentenced to 20 years in federal prison.

    Kiley, 75, now becomes the fifth person sentenced to a long prison term in the epic Cook caper, one of the largest financial frauds in Minnesota history. The others include Jason Bo-Alan Beckman, 43, (30 years); Gerald Joseph Durand, 62, (20 years); and Christopher Pettengill, 56, (90 months).

    Cook was sentenced to 25 years. The defendants each face a restitution order of more than $155 million.

    Like other scams, the Cook fraud traces part of its downfall to a decision to trade on a famous name — in this case, UBS. But the real UBS sued for trademark infringement, prompting Cook and his cronies to adopt other names and immerse themselves in a deeper and deeper sea of incongruity. Conservative Christians were the principal targets.

    Kiley emerged a key Cook rainmaker, but ultimately tried to paint himself a Cook victim, describing Cook as “Pontius Pilate,” the Roman prefect many Christians believe authorized the crucifixion of Jesus.

    At one point, Kiley tried to turn the tables on the CFTC — like the SEC, one of the agencies to sue Cook and Kiley — by asking the judge overseeing the case to sanction a CFTC attorney $1,000 and make the penalty payable to Kiley. Kiley asserted the CFTC lawyer filed an “offensive” pleading. He also contended that SEC recordings of his pitch were filled with “distortions” and that a website bearing his name had been put together by an individual with a high “sleaze factor.”

    Kiley made these assertions, according to court documents, after he earlier had lied while asserting that Cook’s outsized returns were possible because the scheme was borrowing money at zero interest from a bank that complied with Shariah law, which forbids the payment of interest.

    A judge ultimately ordered Kiley to undergo a psychiatric exam and a medical exam, delaying his sentencing until today.

    From a statement today by federal prosecutors (italics added):

    In 2007, when UBS, AG, filed a trademark infringement lawsuit against Cook, Durand, Kiley, and others, the defendants began operating their scheme under other names, including but not limited to those identified by the terms “Oxford” and “Universal Brokerage FX.” They then continued to solicit investors for the currency program, utilizing telemarketing, media spots, and seminars in which they repeated the false representations noted above. Kiley, a Christian radio host, solicited investors for the scam through his radio talk show, which was carried on more than 200 stations across the country. On those programs, he regularly warned listeners to avoid financial ruin by giving their life savings to his company for investment.

    Some of the money linked to the Cook scheme literally was found jammed inside of walls. Other loot was found in a shopping-mall locker.

    Jon Jason Greco was sentenced to 10 months in prison for concealing loot linked to the Cook scheme.

  • RECOMMENDED VIEWING: ‘American Greed’ To Air Story On Trevor Cook Ponzi Scheme Tonight

    “Talk Radio Takedown” from CNBC’s “American Greed” program is expected to air at 10 p.m. EDT today, after a National Hockey League playoff game concludes.

    Visit the CNBC site.

    Watch the teaser (part of which features the taped voice of one of Cook’s radio pitchmen and chief bloviators) . . .

    The Cook/Kiley Forex fraud largely was aimed at conservative Christians and senior citizens.

  • Prosecution Asks Court To Impose Life Sentence On Jason Bo-Alan Beckman, Pitchman For Trevor Cook Ponzi Scheme; Beckman Says He Should Serve 364 Days And Then Become A Professional Speaker

    “The nature and circumstances of this offense and Mr. Beckman’s history and characteristics, viewed together, cry out for a life sentence. With respect to Mr. Beckman, nothing less than a liberty-ending sentence would reflect the seriousness of this offense, promote respect for the law and provide just punishment. But perhaps most importantly, Mr. Beckman must be locked up for the rest of his life because he is a very dangerous individual who is certain to hurt people if he is ever released.” — From prosecution sentencing memo for convicted swindler Jason Bo-Alan Beckman, a pitchman of the Trevor Cook Ponzi scheme, Dec. 11, 2012

    EDITOR’S NOTE: The $194 million Trevor Cook Ponzi scheme is believed to be the second-largest scam of its sort in Minnesota history, trailing only Tom Petters’ epic, $3.65 billion caper. Cook was sentenced to 25 years. Prosecutors in the office of U.S. Attorney B. Todd Jones now are asking a federal judge to sentence convicted Cook pitchman Jason Bo-Alan Beckman to life in prison — or 411 years. In essence, prosecutors are arguing that Beckman was even worse than Cook, a reprobate drunkard who spent victims’ money on booze, strippers and an enormous mansion, and that Beckman piled on crimes targeted at elderly victims even as he helped Cook steal people into poverty.

    ** _____________________________________ **

    UPDATED 5:20 P.M. ET (U.S.A.) The Trevor Cook Ponzi scheme targeted at senior citizens and conservative Christians never has received the national media attention it deserves. But the Cook case is back in the news today.

    Man, is it ever . . .

    For starters, it became public yesterday that convicted Cook pitchman Jason Bo-Alan Beckman apparently believes he should spend only 364 days in prison “followed by three years of probation requiring 2000 community service hours.”

    While on probation and performing his community service, Beckman contended, he would “devote” himself “to speaking to financial firms and investors about what to do and what not to do.”

    And as an extra carrot for a lenient sentence, “Beckman would arrange for the immediate delivery of a check for $19,000,000 for payment to victims.”

    The Star Tribune of Minneapolis/St. Paul broke the news this morning about Beckman’s apparent belief he could make multiple felony convictions go away with a wrist slap, by using his checkbook as a lure to victims and by turning himself into a professional speaker on the subject of avoiding the perils of intercontinental financial crime.

    One victim who contacted the PP Blog today questioned whether Beckman was having a pipe dream about having $19 million. A court-appointed receiver has been policing up money from the scheme since 2009. Since becoming implicated in the Cook scheme, Beckman has become known for offering up bizarre constructions.

    He “had the temerity to testify that the money he stole from” an elderly couple “constituted his ‘earnings,’” prosecutors said yesterday. And he also divined a construction by which he was the “top ranked” portfolio manager in the United States “based on a Morningstar comparative study,” they asserted.

    To say the prosecution wasn’t impressed by Beckman’s opinion on how justice might best be served perhaps is the greatest understatement in the history of Ponzi-scheme prosecutions worldwide.

    Beckman, 42, deserves life in prison — or, as a technical matter 4,932 months or 411 years, according to prosecutors.

    “Mr. Beckman is a man with no semblance of a conscience who exudes in his conduct and affairs a sense of great entitlement,” prosecutors argued. “Entitlement to make untrue, grandiose claims about himself. Entitlement to groom the trust of vulnerable persons and then to violate that trust. Entitlement to steal his victims’ money and to use it for luxury items for himself. Entitlement to misuse professionals to cloak his schemes with a skein of legitimacy. Entitlement, when caught, to lie to everybody – the press, his victims, hired attorneys, and this Court – doggedly and repeatedly, about what he knew and when he knew it. To all that appears, Mr. Beckman’s entire life has been deeply suffused with sociopathy. In Mr. Beckman’s mind, the rules simply do not apply to him.”

    In 2011, the SEC memorably described Beckman as guilty of “contumacious disobedience” for his manipulation of victims and the courts. The SEC made the claim after criminal prosecutors asserted that Beckman stole millions of dollars from an elderly husband and wife now in their nineties and tried to make it appear as though the wife — a stroke victim with “hemispheric paralysis” — had become his business partner.

    Beckman sold two life-insurance policies on the woman’s “then 92-year old husband” for about $3.9 million, and then converted “the proceeds of that sale for his own benefit,” prosecutors alleged last year.

    As a companion fraud scheme that flowed from Beckman’s role in the Cook Ponzi, Beckman tried to dupe the National Hockey League in a deal that would make him a part owner of the Minnesota Wild, prosecutors said.

    And even as he was stealing from people now in their nineties and confined to a nursing home while trying to run a scam on the NHL and his own attorneys, Beckman “almost completely wiped out the Arthur W. Quiggle [Family] Trust,” prosecutors said.

    “In 2007, without authorization, he sold $3.4 million of its low-basis, high-dividend paying stock, funneling the proceeds to the currency program,” prosecutors said. “This triggered enormous capital gains within the trust and wiped out most of the trust’s dividend income, which defeated the trust’s purpose of providing income to the Quiggle family. Then, in July of 2008, just weeks after several attorneys warned Mr. Beckman that the currency program was illegal and a likely Ponzi scheme, Mr. Beckman caused the trust to borrow $3.7 million against its remaining marketable stocks and stole all of it. Again, much of it ended up paying off huge deficits incurred in Mr. Beckman’s name at various trading houses to buoy his chances of becoming an owner of the Wild.”

    Beckman is scheduled to be sentenced Jan. 3.

     

  • RECOMMENDED READING: [BULLETINS]: 3 Trevor Cook Ponzi Scheme Pitchmen Found Guilty

    The Star Tribune and the Pioneer Press are reporting that Trevor Cook Ponzi scheme pitchmen Jason Bo-Alan Beckman, Pat Kiley and Gerald Durand have been found guilty in federal court in Minnesota.

    Read breaking coverage at the Star Tribune.

    Read breaking coverage at the Pioneer Press.

    The PP Blog will have more on the verdicts at a later time . . .

  • UPDATE: Criminal Prosecutors Say Jason Bo-Alan Beckman Stole Nearly $4 Million From Elderly Husband And Wife; Wife A Stroke Victim With ‘Hemispheric Paralysis,’ According To Court Records; Beckman’s Manipulations Amount To ‘Contumacious Disobedience,’ SEC Says

    UPDATE: Facing a margin deficit of more than $10 million and at risk of having his trading account closed in February 2008, Jason Bo-Alan Beckman — a figure in the Trevor Cook Ponzi scheme — sought to address the whopping shortfall and prop up the monumental fraud by stealing about $3.9 million from an elderly couple, federal prosecutors in Minnesota now say.

    Separately, a federal judge has denied Beckman’s bid for the court to release $3,000 for living expenses. Chief Judge Michael J. Davis ruled Beckman could not have the money after receiver R.J. Zayed and the SEC claimed Beckman had failed to repay an earlier loan of more than $5,120 made to him from receivership proceeds and had shown no proof that $1,248 of that sum had gone to pay child-support obligations as required.

    Beckman, 41, has been charged both civilly and criminally, amid allegations he was a central figure in Cook’s $194 million fraud, believed to among the largest in Minnesota history. Victims have complained that Beckman is thumbing his nose at them, and prosecutors say he “has provided shifting and inconsistent rationalizations” for his conduct.

    The SEC chose a different phrase to describe Beckman’s alleged manipulations of victims and the courts: contumacious disobedience. (See definition below.)

    In shocking new allegations, criminal prosecutors said Beckman stole millions of dollars from an elderly husband and wife now in their nineties and tried to make it appear as though the wife — a stroke victim with “hemispheric paralysis” — had become his business partner.

    Beckman sold two life-insurance policies on the woman’s “then 92-year old husband” for about $3.9 million, and then converted “the proceeds of that sale for his own benefit,” prosecutors alleged.

    He told neither the wife nor the husband about the sale, but later claimed that the woman — described by prosecutors as “C.O.” — had become an investor in Oxford Private Client Group, an advisory firm controlled by Beckman that allegedly fed Cook’s Ponzi.

    “Put differently,” prosecutors alleged, “Beckman now claims that C.O., who was a stroke victim in her eighties, knowingly contributed millions of dollars to the Oxford Private Client Group capital so that she could become Beckman’s partner in high finance.”

    The woman, prosecutors said, resides with her husband at an assisted-living facility and suffers from partial paralysis on her left side.

    She “can transfer herself from one place to another only with significant assistance,” prosecutors said.

    Prosecutors interviewed the woman at the facility last month and now are seeking court approval to take her formal deposition at the facility and preserve it for trial, saying it was “doubtful that she would be able to give live testimony in a federal courtroom without great hardship to herself.”

    Prosecutors argued that she was a “critical witness” who’d told them that “Beckman arranged for the purchase of the life insurance policies” on her husband’s life in 2005, telling the couple that he would sell the policies “at a substantial profit.”

    But Beckman “subsequently told her that the policies had no value,” prosecutors said. “She reported that Beckman did not tell her that he sold the policies or that their sale had generated almost $4 million in proceeds. She reported that she certainly did not give Beckman permission to use the proceeds. Perhaps most importantly, she reported that she never purchased an interest in the Oxford Private Client Group. On this point she was unequivocal.”

    In successfully arguing against the release of funds to Beckman, the SEC said his victims “face a dire situation.”

    “The Court has already accommodated Beckman by ordering that some of the limited, frozen funds be advanced to him,” the SEC argued. “Beckman has returned the Court’s leniency with contumacious disobedience.”

    See definition of “contumacious” here.

  • BULLETIN: R.J. Zayed, Court-Appointed Receiver In Trevor Cook Ponzi, Recovers More Than $1.1 Million In Switzerland

    Trevor Cook

    BULLETIN: The court-appointed receiver in the Trevor Cook Ponzi scheme has recovered more than $1.1 million that had been tied up in Switzerland.

    Receiver R.J. Zayed says that $1,127,495 has been deposited in a U.S. Court account.

    “[T]he Receiver has now accomplished the goal of repatriating the Swiss funds so that money can be returned to investors,” Zayed said in a court filing dated yesterday.

    The development is good news to Cook’s swindled investors — but it was not without costs and legal drama.

    An individual U.S. investor in the Cook Ponzi scheme filed a criminal complaint in Switzerland to give himself priority to the funds, putting himself ahead of hundreds of other swindled investors and violating a U.S. court order, Zayed said.

    Records show that the U.S. investor who filed the claim lost at least $598,921 in the swindle.

    A Swiss prosecutor would not release the Cook cash to U.S. investors as a whole while the individual complaint was pending, and Zayed filed a contempt motion in the United States against the individual Cook investor, accusing him of being an impediment to the receivership’s efforts to claim the sum for all defrauded investors.

    The Swiss complaint filed by the U.S. investor was withdrawn on May 24, Zayed said.

    With the impediment of  the U.S. investor’s complaint removed, “the Swiss prosecutor was able to lift the freeze on the Receiver’s UBS account and clear the way for the money to be returned to the United States and the victims of this fraud,” Zayed said.

    Zayed said the U.S. investor likely did not have the resources to pay back the receivership estate for the money it expended trying to prevent a single investor from gaining an unfair share of the Swiss proceeds, so the receivership — with the Swiss sum safely returned to the United States for the benefit of all investors — dropped the contempt complaint.

    Jason Bo-Allan Beckman helped finance the U.S. investor’s Swiss action in December 2009 — more than a month after Cook’s assets were frozen and investors were prohibited by court order from engaging in self-help to recover stolen funds, according to court filings.

    Beckman later emerged as a defendant in an action filed by the SEC that accused him of being a leading figure in the $194 million Ponzi and Forex caper.

  • UPDATE: Renee Marie Brown, Sued By SEC Last Year In Mysterious ‘Fund X’ Scam, Now Faces Criminal Charges Of Securities Fraud, Wire Fraud And Money Laundering

    Renee Marie Brown, the Minnesota woman accused by the SEC last year of orchestrating a bizarre fraud known as “Fund X,” has been indicted on criminal charges of securities fraud, wire fraud and money laundering.

    Brown, 47, of Golden Valley, presided over a company known as Investors Income Fund X LLC, which the SEC described as a “sham” bond fund that promised investors annual returns of 8 percent or 9 percent.

    Federal prosecutors now say that Brown lied to investors when she told them she had put $200,000 of her own money into the purported fund.

    “Fund X never was a bond fund, and Brown never invested any of her own money in Fund X,” prosecutors said. “Moreover, Brown allegedly used more than $500,000 of the investors’ funds for her personal use, including the purchase of a condominium and the payment of credit card bills. Allegedly, the ‘returns’ distributed to investors merely were transfers from Fund X investors’ funds, not legitimate returns from investments.”

    Money-laundering came into play because Brown transferred $85,000 in fraud proceeds into the account “of another one of her companies,” prosecutors said.

    And securities fraud and wire fraud occurred because she fraudulently induced investors to give her money and electronically communicated with financial institutions and her marks, prosecutors said.

    Brown potentially faces decades in prison if convicted of all counts in the indictment. The case was brought by elements of the Financial Fraud Enforcement Task Force created by President Obama in November 2009.

    Minnesota has been home to a number of massive fraud capers in recent years. Brown’s assets were frozen on the very same day in 2010 that Ponzi schemer Tom Petters was sentenced to 50 years in federal prison.

  • Florida Ponzi Property Of Accused Minnesota Fraudster Bo Beckman Will Drain Cash, Receiver Says; Home With 5 Bathrooms Is ‘Under Water’ And Should Be Beckman’s Problem To Solve

    This 10-room home with five baths and a garage of nearly 1,100 sq. ft. in Florida is "under water" on its mortgage and could create a drain on the receivership estate in the Bo Beckman fraud case, according to the court-appointed receiver.

    Accused Minnesota fraudster Jason Bo-Alan Beckman’s 5,097-sq.-ft.-home with five bedrooms, five bathrooms and a roomy garage of nearly 1,100 sq. ft. in Palm City, Fla., is seriously “under water” on its mortgage and thus creates a drain on assets that are best used to compensate victims, the court-appointed receiver has advised a federal judge.

    Receiver R.J. Zayed has asked Chief U.S. District Judge Michael J. Davis for an order that would return control of the property to Beckman and his wife on the theory it is “imprudent to diminish the Receivership’s severely limited resources to continue efforts to market and/or maintain the Property.”

    The Beckmans, whose home in Minnesota is in foreclosure, owe “at least” $207,000 more than the Florida property is worth, Zayed advised Davis. The receiver noted that the mortgage has a balance of more than $707,301 and that the home may not even fetch $500,000 if sold.

    The “negative equity” should be the Beckmans’ problem, not the problem of the victims of his alleged fraud, which is part of the Trevor Cook Ponzi scheme case, Zayed argued. The SEC sued Bo Beckman earlier this month, alleging that he was a “leading” figure in Cook’s fraud and had “guaranteed” annual returns of 12 percent or greater in an international Forex scheme.

    Cook is serving a 25-year sentence in federal prison.

    Bo Beckman, according to the SEC, purchased luxury homes in three states and assembled a fleet of luxury cars. He essentially is accused of being a rainmaker for Cook by driving nearly $50 million to the $190 million fraud.

    “[T]he Receiver is not seeking to abandon the [Florida] property, but rather have the Court confirm the return the property to the Beckmans’ custody, control and possession, thereby placing at least some of the burden of unwinding the fraud on its perpetrators,” Zayed advised Davis.

  • BULLETIN: SEC Charges Jason Bo-Alan Beckman In Trevor Cook Ponzi Scheme; Judge Freezes Assets; Agency Says Investors’ Cash Used To Make Child-Support Payments And Puchase ‘Luxury Homes’ And Cars

    BULLETIN: Jason Bo-Alan “Bo” Beckman has been charged civilly by the SEC in the Trevor Cook Ponzi scheme in Minnesota and named a “leading” figure, according to court filings. The case against Beckman was brought as an action separate from the civil action against Cook, who also was charged criminally and is in federal prison serving 25 years after pleading guilty last year.

    The SEC’s complaint suggests other defendants may follow.

    “His fraud was part of a bigger scheme orchestrated by and with Trevor Cook and several associates,” the agency said, alleging that Beckman raised about $47.3 million of the $194 million gathered in the overall fraud — roughly 25 percent of the overall total. Former radio host Pat Kiley previously was charged civilly.

    Chief U.S. District Judge Michael J. Davis has frozen Beckman’s assets.

    One individual — a 41-year old nurse — submitted a sworn affidavit to Davis that Beckman promised him “guaranteed” annual returns of “12% or greater.”

    The nurse, an inexperienced investor who put $130,000 into the scheme, asserted he learned about the purported currency-trading program from Hollie Beckman, Beckman’s wife. Hollie Beckman has been named a relief defendant amid assertions she received ill-gotten gains. Her assets also have been frozen.

    Another inexperienced investor — a 60-year-old man who previously was retired but has returned to work because his life savings of nearly $750,000 were wiped out in the scheme — said in a sworn affidavit that Beckman promised him a “guaranteed”  return of 10.5 percent. Like the nurse, the man was given a tour of the Van Dusen Mansion, the landmark Minneapolis estate from which Beckman and Cook conducted business.

    This man rolled over his 401K account and liquidated his pension fund to become an investor, according to an affidavit.

    Yet-another inexperienced investor — a 62-year-old man who works as a water-plant operator — said he put $99,300 into the scheme by liquidating an account at Bear Stearns. Beckman promised him that his “fixed” account would generate about 13 percent annually, according to a sworn affidavit.

    All told, the SEC charged, “Beckman’s investors ultimately lost over $39 million by investing in the Currency Program and putting their money in his hands.” About 143 investors gave Beckman their money.

    Luz M. Aguilar, an SEC investigator, said that $85 million of the $194 million “was never invested in any type of foreign currency trading.”

    And Aguilar alleged that “the Beckmans deposited approximately $7.7 million into their personal joint accounts.” The funds originated “from accounts containing funds of investors,” according to Aguilar.

    More than $61,000 was used to make child-support payments, Aguilar alleged.

    But most of the money went to fuel an extravagant life-stlye, according to Aguilar. Here is a list of some of the spending:

    • $210,828 for automobile payments. The fleet allegedly included a 2010 Jaguar, a 2008 Land Rover, a 2006 Land Rover, a 2008 Mercedes, a 2008 Suzuki and a 2000 Mercedes.
    • $1.49 million for payments “toward the purchase” of luxury homes in Minneapolis, Texas and Florida.
    • $695,000 for credit-card payments.
    • $180,000 for a suite to watch hockey games.
    • $36,000 to “resorts.”
    • $76,000 to a country club.
    • $108,000 for cash withdrawals.
    • $224,000 for construction and repairs.
    • $997,000 for payments to seven law firms.
    • $223,000 for taxes.

    “Beckman was in a position to know the truth about the Currency Program,” the SEC charged. “He worked side-by-side with Trevor Cook at the Van Dusen mansion. Red flags waved all around him. For example, he knew — by April 2008, over a year before the scheme collapsed — that investors’ funds were pooled and were not in segregated accounts at all. He also learned from Trevor Cook that the location of investors’ funds was ‘not a black and white situation.’ The warning signs were glaring. Yet Beckman kept [quiet] — and kept taking tens of millions of dollars from investors . . .

    “Now that the Currency Program is over — and the money flow has stopped — the Beckmans apparently are struggling to make ends meet. Their expansive home in the Minneapolis suburbs is in foreclosure,” the SEC said.

    The SEC asked Davis to halt a sheriff’s sale set for March 14, and the judge issued an order blocking it.

    Even though Beckman had serious doubts about Cook, he kept them to himself, not sharing with investors information they needed to make informed decisions, the SEC charged.

  • BULLETIN: Now, An Investment-Fraud Scheme Targeted At Indian-Americans And Members Of The Hindu Faith; SEC Says Amit V. Patel Of Minnesota Poses ‘Danger To The Investing Public’

    BULLETIN: The SEC has obtained an asset freeze against a Minnesota man in an alleged investment- and affinity-fraud scheme targeted at Indian-Americans and followers of the Hindu faith.

    Amit V. Patel of Shoreview raised “at least $2.5 million from at least five individuals that he met in the Indian-American community and Hindu temples in Minnesota,” the SEC charged.

    He also “received millions of dollars more from dozens of other individuals.,” the SEC said, alleging that “Patel took advantage of his cultural affinity and shared religious heritage with his victims, and exploited their trust in his standing in the community.”

    Patel was deemed “a danger to the investing public” by the SEC.

    U.S. District Judge Joan N. Ericksen of the District of Minnesota has issued a temporary restraining order against Patel and an order freezing all assets under his control.

    Patel, whom the SEC described as an unemployed engineer, employed a strategy known as Iron Condor that led to a loss of almost all of investors’ money.

    Shoreview is in Ramsey County, in the Minneapolis/St. Paul region.

    Read the SEC complaint.

  • PONZI NEWS/UPDATES: Fire Destroys ‘3 Hebrew Boys’ Ponzi Headquarters; Minnesota Man Gets Nearly 10 Years In Prison In Ponzi Case; California Man Gets 25

    Sign of the apocalypse? The headquarters of the “3 Hebrew Boys” Ponzi scheme in Columbia, S.C., was gutted in a fire Monday and Tuesday. Firefighters spent 19 hours over two days battling the blaze, but the “building and all contents . . . were completely destroyed,” according to Beattie B. Ashmore.

    Ashmore is the court-appointed receiver in the case. Proof-of-claim forms for victims of the $80 million Ponzi swindle became available April 15, only 11 days before the fire broke out. The cause of the fire is under investigation, and the building was an asset of the receivership estate.

    “All computers and documents have been stored off-site since the Receiver took possession of the building in October 2007,” Ashmore said. “The building was being managed by a reputable property management company, fully insured and continuously monitored by a security company. The Receiver will make a claim immediately with the Hartford Insurance Company for the full value of the building with the insurance proceeds going to the benefit of the victims.”

    The 3 Hebrew Boys case is one of the strangest in the United States, drawing comparisons to the alleged AdSurfDaily Ponzi scheme owing to elements of affinity fraud and antigovernment rhetoric.

    Joseph Brunson, Tim McQueen and Tony Pough were convicted in November of swindling tens of millions of dollars in a bogus debt-relief “ministry.” The purported aim of the program was to free people from government “bondage,” and the investigation was referred to as “Satan’s handiwork.”

    In the earliest days of the 3 Hebrew Boys case, more than 100 people protested on behalf of the scheme at a rally in Columbia, saying the government did not understand the program, had overreached in its prosecutorial efforts, refused to deny it was wrong and had chosen to move forward with the case in a bid to save face.

    In an approach similar to one used by the AdViewGlobal (AVG) autosurf, members were forced to agree to a confidentially clause that purportedly prohibited them from discussing the company outside the confines of meeting places. Participants were threatened with a $1 million penalty for sharing information.

    AVG, which has close ties to ASD, morphed into a “private association” in February 2009. Members were scolded for sharing information and calling the autosurf an “investment” program. As the company appeared to be collapsing in May and June, members were threatened with copyright-infringement lawsuits for sharing information published by the firm.

    Brunson, McQueen and Pough are jailed awaiting sentencing. After they were found guilty of 174 counts mail fraud, money-laundering and transporting stolen goods, the men filed documents accusing former U.S. Attorney Walt Wilkins of treason and committing acts of war by prosecuting them.

    The men became known as “3 Hebrew Boys” after operating a website with the same name, which is based on a biblical story of believers who escaped a furnace by relying on their faith. The Ponzi scheme operated under the name Capital Consortium Group LLC.

    Minnesota Ponzi Sentencing

    A Ponzi scheme operator in Rosemount, Minn., has been sentenced to 117 months in prison and ordered to pay $21.8 million in restitution to victims.

    Charles “Chuck” E. Hays, 56, has been detained since his arrest in February 2009. He pleaded guilty last year to one count of mail fraud, one count of wire fraud and one count of structuring transactions to avoid financial reporting requirements.

    Among the items seized in the case was a $3 million yacht acquired with investors’ money. Hays operated a firm known as Crossfire Trading LLC and bilked investors out of more than $20 million by operating a Ponzi scheme.

    “Hays told potential investors he was a day trader in stock index futures and other futures contracts,” federal prosecutors said.

    Investors plowed money into the scheme based on lies told by Hays, and he “admitted he diverted and converted those funds for his personal use and other unauthorized purposes,” prosecutors said.

    The sentencing judge in the case was U.S. District Judge Donovan Frank.

    California Ponzi Sentencing

    Milton Retana, 46, of Huntington Park, was sentenced to 25 years in prison for a $62 million Ponzi scheme that bilked mostly Spanish-speaking investors out of at least $33 million.

    The case became known as the “Best Diamond case.” Retana operated a purported real-estate investment company known as Best Diamond Funding. It was yet another instance another in which the name of a precious metal or mineral was used in a Ponzi scheme.

    Evidence of the fraud was hidden in the back of a religious bookstore operated by Retana’s wife, prosecutors said. When investigators searched the bookstore, they found millions of dollars in cash. Best Diamond was located next door to the bookstore.

    The scheme — like many other Ponzi schemes — featured an appeal to religion, prosecutors said.

    “Best Diamond Funding solicited money through advertisements in Spanish-language magazines, on the Internet, and during weekly investment seminars at locations across Los Angeles. The raucous investment seminars often had as many as 300 potential investors and incorporated religious messages,” prosecutors said.

    “Retana guaranteed returns as high as 84 percent each year, claiming that he would purchase properties in bulk at below-market prices and immediately sell them for a profit,” prosecutors said. “However, records obtained by federal investigators showed that Retana used only a tiny fraction of the victims’ money to purchase real estate and that his company was actually losing money.”

    The sentencing judge in the case was U.S. District Judge R. Gary Klausner.