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Tag: precious metal schemes

  • 3 PONZI/FRAUD CAPSULES: (1) Washington State Woman Jailed In Alleged $126 Million Ponzi Scheme; (2) Charity, Church, Investors In Metro Washington, D.C., Allegedly Scammed In $27M Ponzi; (3) South Florida Man Sentenced To More Than 12 Years In $29.5M ‘Gold’ Scam

    Screen shot: PDF from section of Page 1 of the indictment of Doris E. Nelson in an alleged $126 million Ponzi operating internationally through multiple companies.

    EDITOR’S NOTE: This information is presented in the form of briefs, with links to external sources.

    1.) Doris E. Nelson, arrested/jailed in Spokane, Wash., region, last week after federal raid in April 2010. SEC filed civil charges in September 2011.

    The allegations against Nelson and multiple companies in Nevada, Utah and Canada are alarming, but also somewhat standard fare if you’ve been observing how schemes form and then explain away problems when trouble develops.

    Among the core allegations are these:

    • Nelson, of Colbert, Wash.,  ran a payday-loan business called “The Little Loan Shoppe” in the area of Spokane. The firm was linked to multiple LLCs in the United States and multiple LTDs in Canada. The business started out in the Canadian province of British Columbia in roughly 1997, and moved to the United States “in or about 2001.” Investors were told they could earn enormous profits from the spread between the loan shop’s expenses and what it charged customers for a short-term loan.
    • The Ponzi scheme took in “at least” $126 million and caused losses of more than $40 million — losses that affected “at least” 800 investors.
    • Federal prosecutors say they have identified “victim investors” in multiple Canadian provinces and multiple U.S. states. The indictment also lists a victim from Spain.
    • The payday loan business was not profitable. Investors were getting paid through a complex shell game that lasted for years and involved the formation of new companies, including marketing and “leads” arms.
    • Nelson and some of the defendants engaged in wire fraud, mail fraud and money-laundering.
    • Nelson lied to the Manitoba Securities Commission and advised certain parties to lie to the British Columbia Securities Commission (BCSC).
    • Nelson used investor funds to purchase a motor home valued at nearly $127,000, a Chevrolet Corvette valued at more than $61,000, a Mercedes Benz valued at nearly $112,000. She purchased more than $220,000 in clothing at the St. Johns Knits store and $217,000 at other stores, including Nordstrom.
    • Nelson lost $400,000 of investors’ funds gambling at various Las Vegas casinos.
    • Nelson spent investors’ money on luxury sea cruises, including nearly $29,000 on a Royal Caribbean cruise in which she also spent $23,500 in investor funds to gamble.
    • The promissory-notes scheme showed classic signs of collapse in October 2008. (More details below.) Nelson slashed payouts to investors — from an anticipated rate of between 40 percent and 60 percent to 10 percent. The 10 percent payouts collapsed by March 2009.
    • Nelson claimed Little Loan Shoppe bought the building it used in Spokane, but that was a lie. In truth, the company was paying rent to a company owned by Nelson’s husband.
    • In February 2008, leading up to the beginning of the end in October 2008, Nelson forecast “an explosion of profit.” In May, she announced that “our industry is thriving.” She then opened a new window for investments, telling marks that she was “excepting” new money, as opposed to “accepting” it.  “[T]his window of opportunity will probably not be open again due to the expected surplus of income . . .” she wrote.
    • Between late June and late July of 2008, Nelson announced a “massive marketing campaign” that would turn the operation into “one of the largest loan companies.”
    • Millions of dollars flowed to the teetering scheme after Nelson’s various hype fests.
    • In October 2008, Nelson lied to BCSC about how she was making interest payments to investors, denying that the money came from “newer” investors and claiming the cash came from loan profits.
    • BCSC ordered Nelson to stop issuing promissory notes. Nelson then told investors that changes to U.S. lending laws had “dramatically reduced our profits . . .”
    • In February 2009, Nelson advised investors to quit contacting her about their investments because the inquiries were distracting her. She then announced a purported account review. In March 2009, Nelson told investors that the account review was behind schedule and perhaps would not be completed until the middle of April.
    • In March 2009, Nelson traveled to Florida to try to get more money from existing investors.
    • The scam then collapsed in its entirety and investors experienced ruin.

    Read/view coverage of alleged Nelson scam at KXLY.com.

    The Alleged Garfield M. Taylor Ponzi Scheme In Metro Washington, D.C.

    2.) Garfield M. Taylor, others sued by SEC last week amid spectacular allegations of Ponzi fraud targeted at charities and people of faith, among others.

    Outlined below are some of the core allegations in the alleged Garfield M. Taylor Ponzi scheme, which includes multiple defendants and multiple companies. The SEC brought the case last week, alleging a $27 million Ponzi scheme.

    First, a quote from Stephen L. Cohen, the SEC’s associate director in the Division of Enforcement.

    “Garfield Taylor and his partners in the scheme touted themselves as seasoned and trustworthy financial professionals offering a conservative but lucrative investment opportunity. In reality, they were gambling away investor assets in extremely risky trades and operating a classic Ponzi scheme.”

    Key allegations:

    • Garfield Taylor, of North Bethesda, Md., formerly worked for Fannie Mae and “frequently” used its name in his fraud pitch. His companies, Garfield Taylor Inc. and Gibraltar Asset Management Group LLC, were charged by the SEC, as were five alleged “collaborators”: Maurice G. Taylor of Bowie, Md., who is the brother of Garfield Taylor; Randolph M. Taylor of Washington, D.C., who is the nephew of Garfield Taylor; Benjamin C. Dalley of Washington, D.C., who is the childhood friend and business partner of Randolph Taylor; Jeffrey A. King of Upper Marlboro, Md., whose sister is married to Maurice Taylor; William B. Mitchell of Middle River, Md.
    • The scheme operated “at least” between 2005 and 2010, targeting “middle class” investors and charities.
    • The FDIC’s name was used to sanitize the scam.
    • Unregistered brokers were used to recruit investors.
    • The firms themselves were not registered.
    • Misleading PowerPoint presentations were used.
    • A Baptist church in Maryland, a children’s charity in Washington and an investment club in Philadelphia were shown the PowerPoint presentations.
    • Fancy language such as “proprietary strategy,” “covered call investment strategy” and “unparalleled downside protection” was used.
    • The Baptist church also was shown a “fake ‘letter of recommendation’ from Charles Schwab.”
    • “This letter was not prepared by anyone at Charles Schwab. Rather, it is a fabrication.”
    • A retiree from Lanham, Md.,  plowed more than $780,000 into the scam, an amount that represented “nearly his entire retirement savings.”
    • At least one investor in 2009 was worried about his/her nest egg in the post-Bernard Madoff environment, but Dalley reassured the investor that the opportunity had “taken the internal measures to strictly regulate our traders and accounting to ensure that our investor’s investments are safe.”
    • When Dalley provided the assurance, he already knew that the opportunity “had not followed a covered call trading strategy and had instead engaged in highly speculative naked options trading.”
    • Garfield Taylor actually was operating a “joint Ponzi scheme” through his companies.
    • Garfield Taylor “convinced at least three individuals to give him the username and password to their online brokerage accounts in order for Garfield Taylor to place trades in those accounts on a discretionary basis in exchange for a share of any profits generated.” A Maryland woman duped in this fashion lost “nearly her entire account” originally worth $450,000 “in a matter of two months.”
    • Garfield Taylor used investors’ money to send his children to private school at a cost of $73,000.
    • At one point, one of the Garfield Taylor firms had “less than” $1,000 in its account, but an investor “wired approximately $590,000.” Garfield Taylor used the incoming money to make Ponzi payments.

    Read the SEC complaint.

    Gold Scammer Gets More Than 12 Years In Slammer

    3.) Jamie Campany, 48, of Palm Beach County, Fla., sentenced to federal prison in $29.5 million fraud.

    Key allegations:

    • More than 1,400 investors defrauded.
    • Multiple companies operating in South Florida and elsewhere involved, including Global Bullion Exchange LLC of Lake Worth. Scam also used name of “Barclay.”
    • Fraud fueled by telemarketing.
    • FBI, U.S. Postal Inspection Service and Florida Office of Financial Regulation handled probe.

    Read Feds’ statement announcing the Campany sentencing.

    Watch Campany tell ABC News how he scammed the masses.

     

  • INCREDIBLE: Florida — AGAIN: CFTC Charges Ft. Lauderdale Firm, Principals In Alleged Precious-Metals Scam; ‘Defendants Never Held Or Acquired Any Metals,’ Agency Says

    On the same day the SEC announced charges against two residents of South Florida in an alleged $30 million Ponzi scheme, the CFTC went to federal court and accused two other residents of the region of conducting a precious-metals scheme.

    Charged by the CFTC were James A. Ward of Ft. Lauderdale, and Nathaniel R. Walker of Lauderhill. Also charged was their firm, Kastle & Hawke Inc. of Fort Lauderdale.

    Florida has been plagued by spectacular fraud schemes. Just two days ago, David A. Smith, a citizen of Jamaica, pleaded guilty to charges in a $220 million Ponzi scheme. Last week, the U.S. Court of Appeals for the District of Columbia Circuit ruled that Ponzi-related orders of forfeiture totaling more than $65.8 million in a 2008 civil case would stand against Florida resident Andy Bowdoin, who now is charged criminally in the alleged AdSurfDaily Ponzi scheme. Prosecutors said Bowdoin’s ASD had gathered at least $110 million.

    In the case against Ward and Walker, the CFTC said “the defendants never held or acquired any metals for customers and charged customers interest on non-existent loans.”

    U.S. District Judge James I. Cohn has frozen their assets, amid allegations the company misappropriated at least $319,000 from customers hoodwinked in the scheme. Cohn also ordered books and records to be preserved.

    “To conceal their fraud, the defendants allegedly manufactured and sent false account statements and transaction confirmations to customers,” the CFTC charged.

    “K&H does not hold, nor has it ever acquired, any physical precious metals on behalf of customers,” the CFTC charged.

    When customers wanted to sell the metals they believed they had acquired, Ward manufactured one excuse after another, the CFTC alleged. Customers were told that “rogue” traders were responsible for his inability to sell the metals, according to the complaint.

    And they also were told that the metals could not be sold because of “problems in London,” because markets were closed for the holidays and because “force majeure” — things beyond the company’s control — had occurred, the CFTC charged.

    One of the things that occurred was that the unregistered company had advertised it was selling palladium on a leveraged basis to customers, an unlawful act in itself, the CFTC said.

    On the K&H website, the company told prospects they could take advantage of a “Leveraged Purchase Program” that allowed them to finance up to 77 percent of the costs of the precious metals over five years — “without having to make monthly payments or undergo credit checks,” the CFTC charged.

    Customers were told the company’s approach would lead to hefty profits, but it was all a scam, the CFTC charged.

    In April and May of 2010 — as the firm was explaining to customers why they could not claim their profits even as it was charging them interest on nonexistent loans — Ward withdrew $21,350 in cash from the company’s bank account “and spent nearly $9,000 at a grocery store chain, draining the bank account to a balance of less than $500,” the CFTC charged.

    Read the stunning CFTC complaint.

  • GNI Members: Failed Program Was ‘Honest’ And ‘Real’; Critics Should Shut Up And Focus On Haiti Earthquake

    Critics of Gold Nugget Invest (GNI), the collapsed Internet HYIP, do not understand that the program that advertised a return of 7.5 percent a week was “real,” according to a member writing on an online Ponzi board.

    Bickering about GNI only will lead to additional problems for the company, which is faithfully trying to reorganize, and the critics should send money to Haiti instead of infecting the membership with negative thinking, according to the member.

    “[W]hy not use your idle time for [the Haitian people?]” the GNI apologist asked on the ASA Monitor Ponzi board. “l doubt if you can do that ‘cos that is your true nature.”

    Haiti suffered a devastating earthquake Jan. 12. As many as 200,000 people are believed to have perished.

    In earlier posts, the apologist suggested that GNI critics were suffering from “mental illness” and observed that, “I will be very grateful if GNI runs for 20 years as a pronzi (sic) !!!!”

    The poster did not explain how a program purported to be a “real” business could create legitimate profits by operating as a Ponzi scheme.

    GNI, which positioned itself as a betting “arbitrage,” tanked last week. It is among a number of recent investment programs using the name of a precious metal or a precious mineral that have encountered difficulty either from members or law enforcement. GNI did not publish verifiable financial information. There is no way to verify GNI’s claims, including an apparent claim that certain resources are tied up in a purported banking investigation in Europe that has nothing to do with the company.

    GNI now says its program will pay “up to” 20 percent monthly through a “No Risk Wager.” The company did not explain how it had categorically eliminated risk during a period in which it apparently did not have access to the capital it needed to operate and had suddenly changed the rules, leaving existing members holding the bag while apparently still advertising for new members to entrust their funds to the firm.

    Some members, though, insisted they were standing by GNI because it always had “paid” and just hit a bump in the road.

    Canadian regulators last week declared a collapsed program known as Gold Quest International (GQI) a “sham” and both a Ponzi and a pyramid scheme. Investors dumped at least $27 million into the program, according to the U.S. Securities and Exchange Commission.

    GQI, which claimed Panamanian registration while operating from Las Vegas and saying it was immune to U.S. and Canadian law because it was affiliated with a “sovereign” Indian tribe, scammed thousands of investors, according to the SEC and the Alberta Securities Commission.

    At least $3.15 million linked to GQI ended up in New Zealand, in one or more bank accounts tied to a company known as Topaz Group Ltd., according to court filings by Larry Cook, the court-appointed receiver in the SEC case. The majority of that money then was “immediately transferred from the Topaz Group business account to the account of Wendy Smurthwaite Davies, the wife of John Davies,” according to court filings.

    John Davies was identified as the owner of Topaz Group.

    Other GQI money made its way into E-Bullion accounts in California, according to court filings. The E-Bullion money is tied up in a fraud and murder investigation of E-Bullion owner James Fayed, accused of having his wife killed in a Greater Los Angeles parking garage.

    Another “gold-themed” tie involves Brian David Anderson, a former Christian clergyman from Vancouver, British Columbia. Anderson recently was sentenced to 90 months in federal prison in the United States for operating a $4 million Ponzi scheme known as Frontier Assets.

    Anderson also was linked to a mysterious scheme known as the “Alpha Project.”

    U.S. and Canadian investigators identified Anderson as a pitchman for an international HYIP known as Flat Electronic Data Interchange (FEDI). FEDI’s operator, Abdul Tawala Ibn Ali Alishtari, also known as “Michael Mixon,” was convicted in September 2009 of financing terror and fleecing investors in the FEDI scheme.

    Records in the Anderson case include references to E-Bullion.