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Tag: Pioneer Chicken

  • Now, A Fast-Food Ponzi Scheme: Feds Say Ohio Man Swindled Millions By Telling Investors He Built Chicken And Burger Restaurants

    EDITOR’S NOTE: Here’s one for your Bubba Blue notebook on the various ways to have a Ponzi scheme, as opposed to shrimp — and this one actually wafts with the myth of food — in this case, chicken and burgers.

    More than 200 investors have been fleeced in a bizarre scheme in which an Ohio man persuaded them to turn over $7 million to build franchise restaurants for Pioneer Chicken and McDonald’s, the FBI said.

    The trouble with David J. Harriett’s scheme, the FBI said, was that he “knew that neither he nor his company had any contracts with McDonald’s or Pioneer Chicken, let alone franchise construction contracts.”

    Harriett, 60, of Warren, Ohio, now has been charged with mail fraud. Prosecutors said the scheme operated for at least 14 years through Harriett’s company, DJ Harriett Inc.

    “Fraud in the market place is a significant problem that negatively affects consumer confidence and, ultimately, economic recovery,” said U.S. Attorney Steven M. Dettelbach of the Northern District of Ohio. “For these reasons, we will continue to vigorously prosecute Ponzi schemes.”

    The case was investigated by the interagency Financial Fraud Enforcement Task Force established by President Obama in November 2009.

    Harriett told investors he was a “project manager” for Pioneer and McDonald’s and built restaurants in Northeast Ohio, New York, Indiana, Pennsylvania and Florida, the FBI said.

    Investors were given promissory notes that purportedly “guaranteed the return of their investment, plus significant interest,’ the FBI said.

    It was all a fantasy, the agency said.

    “Harriet sent numerous letters through the mail to investors which falsely represented the success and growth of the company as well as the existence and success of franchise construction contracts,” the FBI said.

    Ponzi payments were made using money from some investors to pay other investors in a shell game, the FBI said.

    Harriett “knew the investor money was not being put to any legitimate use, but rather was being used to make Ponzi payments to other investors, to operate DJ Harriett and for his own purposes and personal use,” the agency said.