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Tag: Montana Ponzi scheme

  • BULLETIN: Felony Warrants Issued For Accused Montana Ponzi Schemer And Affinity Fraudster Richard F. Reynolds; ‘Phony Gold And Foreign Currency Trading Schemes’ Alleged — With ‘Pastors’ Used As Pitchmen

    BULLETIN: Richard F. Reynolds, of the region of Bozeman, Mont., is wanted on 20 felony warrants, Montana officials said. Reynolds also is known as Richard F. Adkins.

    Reynolds, the office of Montana Commissioner of Securities Monica J. Lindeen said, presided over an “elaborate” caper that swindled “at least 140 victims from 21 states and 6 countries.”

    Between 2008 and 2011, the scam “shuffled investor’s money across more than 30 bank accounts to be spent on new cars, international vacations, and a new home for Reynolds and his wife,” Lindeen’s office said.

    As many as eight corporations Reynolds created over the three-year period may be part of the swindle, Lindeen’s office said.

    An investigation has been under way for 19 months, Lindeen’s office said.

    Reynolds faces up to 200 years in prison. The investigation is being conducted by Lindeen’s office and the Gallatin County Attorney’s Office, authorities said.

    A former employee of Reynolds told investigators that Reynolds was a devoted scammer “not concerned about who he hurts — seniors, and even single parents with kids,” Lindeen’s office said.

    “Reynolds allegedly used his connections with various ministers, pastors, and other religious leaders to recruit victims into his scheme,” Lindeen’s office said. “Pastors told investigators Reynolds paid approximately 10 percent of new funds they brought into the scheme, and tax records indicate that the pastors were considered employees of Reynolds’ companies. The pastors said they believed all of the money was being invested in foreign currency trading or gold opportunities until Reynolds abruptly cut off contact in the fall of 2011.”

    Some of the investors hailed from Russia, Mexico, Germany and South Korea, Lindeen’s office said. Court documents also reference Canada.

    Reynolds has not been arrested and is considered “wanted,” officials said.

    When arrested, Reynolds faces bond of $10 million, officials said.

    He was associated with an “umbrella” entity known as “United Consultant Investment Corporation” and nested “pyramid schemes” and embezzlement within his elaborate fraud mix, officials said.

    “Marketing materials given to potential victims promised 100 percent quarterly returns on investments in Reynolds’ phony gold and foreign currency trading schemes through two of his companies, Buffalo Exchange and Buffalo Extension LLP,” officials said.

    Losses preliminarily are estimated at more than $5 million.

    Link to affidavit of probable cause.

    Link to criminal information.

     

  • Arthur Heffelfinger Sentenced To Prison For Ponzi Scheme That Fleeced 97-Year-Old Widow Suffering From Advanced Dementia

    Arthur Heffelfinger, the Montana man accused criminally under state law last year of operating a pyramid promotional scheme and using clients’ money to sustain a Ponzi scheme that had gathered more than $2 million from at least 20 clients, has been sentenced to prison.

    Heffelfinger, 64, pleaded guilty to Ponzi and theft charges in July 2010. But he disputed a charge of Exploitation of an Older Person, amid allegations he had raided the account of a 97-year-old widow afflicted with advanced dementia. The widow was living out her final days in a nursing home. She died in 2009.

    Prosecutors said she was a nurse who had spent much of her life as a missionary in Africa. Heffelfinger also was accused of ripping off her husband, who had died in 2002 after suffering from Alzheimer’s disease. The husband also was in his 90s.

    Lewis and Clark County District Judge Kathy Seeley found Heffelfinger guilty of the exploitation charge in October 2010. Sentencing on all of the charges to which Heffelfinger either pleaded guilty or was found guilty occurred yesterday.

    Heffelfinger was given concurrent sentences of 10 years each on the pyramid/Ponzi and exploitation charges, and a suspended sentence of 10 years on the theft charge. The Helena Independent Record reported that Heffelfinger, a Vietnam veteran who argued he was driven to commit the crime by post-traumatic stress from the war, could be eligible for parole after serving 30 months of the sentence.

    Prosecutors said Heffelfinger began using the elderly couple’s money to make Ponzi payments just days after receiving it in March 2001, setting aside $36,000 of the couple’s initial deposit of $97,000 for his own use.

    After the woman’s husband died, prosecutors said, Heffelfinger continued to manage money for the woman. Subsequent funds entrusted to him also went to Ponzi payments. Records in the case suggest a tax-refund check for the woman in the amount of $28,776  received in June 2003 and entrusted to Heffelfinger immediately was used to make Ponzi payments and pay Heffelfinger’s bills.

    See earlier story.

  • BREAKING NEWS: Montana Forges Partial Settlement In Case That Alleged Ponzi Schemer Took $100,000 From Investment Client, Paid Earlier Client $50,000, Paid Lawyer $25,000 And Pocketed $25,000; Major State Investigation Remains Open

    Monica Lindeen, Montana Commissioner of Securities and Insurance
    Monica Lindeen, Montana Commissioner of Securities and Insurance

    UPDATED 9:28 P.M. EDT (U.S.A.) Donald Chouinard urged clients in Montana and Idaho to invest in what they thought was a “day-trading program,” authorities said.

    In one case, he allegedly persuaded a client to borrow a large sum to enter the program. The case is remarkable in the sense that one of its specific allegations provides a perfect illustration of how victims get suckered and how Ponzi schemes work.

    In a single transaction with an investor, all of the investor’s funds allegedly were consumed immediately, leaving the investor with nothing, authorities said.

    “Chouinard convinced one investor to obtain a $100,000 loan and invest with him because he could guarantee a high return in 30 days,” investigators said. “Instead of investing the $100,000 in the ‘day-trading’ program, Chouinard used $50,000 to pay off a previous investor, deposited $25,000 into his personal joint-checking account, and gave the other $25,000 to his attorney.”

    Montana Commissioner of Securities and Insurance Monica Lindeen announced a partial settlement today that calls for LPL Financial Corp. to pay nearly $1.3 million in restitution and a fine of $150,000 for failing to supervise Chouinard.

    LPL formerly employed Chouinard, who also is associated with two other firms. The settlement with LPL, which neither admitted nor denied wrongdoing, applies only to LPL and does not affect separate actions involving Chouinard and the other firms, DC Wealth Management Inc. and DC Associates Inc.

    “Too many hard working Montanans lost their savings due to the actions of Mr. Chouinard, but today we started the process of recovering those losses,” said Lindeen. “This settlement is the result of both efficient and effective enforcement work by this agency and a willingness by LPL Financial Corporation to arrive at a solution that addresses the needs of its clients. We are very pleased with this result.”

    Among the assertions against Chouinard are that he operated a Ponzi scheme, engaged in securities fraud, traded in the investors’ accounts without authorization, forged signatures to authorize certain trades and failed to provide investors with statements or tax documents for their “day-trading” investments.

    At the same time, investigators assert that Chouinard “routinely informed the investors about the values of their investments orally or via email,” but misrepresented the values — “in one case by as much as 10,000 [percent].”