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Tag: religious Ponzi scheme

  • ‘In God We Trust’ Securities Huckster Found Guilty In $17 Million Swindle; Byron Keith Brown Had ‘Fleet’ Of Luxury Cars; Feds Call Business ‘Tangled Financial Web Of Lies’

    A Virginia man who traded on religious sentiments and the motto printed on U.S. currency to fleece investors in a $17 million Ponzi and securities swindle potentially faces decades in prison after being found guilty in Maryland of wire-fraud and money-laundering charges.

    Byron Keith Brown bought at least 16 luxury or high-performance cars with investors’ money, including brands such as Lamborghini and Rolls-Royce, prosecutors said.

    Brown, 32, of Vienna, operated In God We Trust Financial Services (IGT) and used his websites to ask prospects to turn over $1 million at a time, prosecutors said. He formerly lived in Ellicott City, Md.

    A veteran IRS investigator said the case demonstrated that a huckster could create the appearance of success to mask “a tangled financial web of lies.”

    “Ponzi schemes can thrive for a time on false claims about how the money is being invested and where the returns are coming from,” said Rebecca Sparkman, special agent in charge of the IRS Criminal Investigations Unit in the District of Columbia field office

    “[B]ut that time is gone and as this verdict shows it is time for those responsible to face judgment,” Sparkman said.

    Brown, prosecutors said, filed bankruptcy in 1999 — but soon emerged with a tale of fabulous success that painted him as the head of an international firm that specialized in catering to wealthy investors from offices in Washington, D.C., Wilmington, Del., New York, and London, England.

    It was all an illusion, prosecutors said.

    “[H]e had rented a mailbox or services at a virtual office that provided telephone answering services and mail forwarding services to clients,” prosecutors said.

    And Brown “used computer software to create an illusion that the investor was logging into a banking website and viewing account information when in fact, the account numbers were made up,” prosecutors said.

    U.S. Attorney Rod J. Rosenstein said the government, to date, has seized 16 high-end cars linked to Brown.

    “Byron Brown used the Internet to make it appear as if he were running an investment management business for wealthy investors, when in fact he was stealing millions of dollars from investors and using it to buy a fleet of luxury cars,” Rosenstein said.

    Included in Brown’s investor-funded haul were a 2004 Bentley, a 2005 Rolls-Royce Phantom, a 1936 Auburn Speedster, a 2007 BMW, a 1997 Jaguar, a 2006 Aston Martin, a 2007 Lamborghini, a 2008 Maserati, two Mercedes and a 2002 Ferrari, prosecutors said.

    “In addition to sentencing criminals to prison, our goal is to seize any assets purchased with criminal proceeds,” Rosenstein said.

    Brown was not licensed as a broker, dealer or investment adviser in Maryland, Virginia or the District of Columbia. The scheme operated between 2003 and 2009.

    America was dependent on the horse and buggy when the motto “IN GOD WE TRUST” became part of the national consciousness.

    The motto first appeared on the 1864 two-cent coin, the U.S. Department of the Treasury notes on its website. Abraham Lincoln was President at the time, and the United States was engaged in the Civil War against the breakaway South.

    On Nov 13, 1861, the Rev. M. R. Watkinson, Minister of the Gospel from Ridleyville, Pa., wrote to Treasury Secretary Salmon P. Chase, observing that “the Almighty God” should be recognized in some form on U.S. coins.

    Chase acted almost instantly to make it happen, according to the Treasury Department, which had received many similar “appeals from devout persons throughout the country,” the Treasury Department notes.

    Watkinson reasoned a nation that did not acknowledge God one day might be regarded a nation of heathens, according to his letter to Chase.

    “From my hearth I have felt our national shame in disowning God as not the least of our present national disasters,” Watkinson wrote to Chase nearly 150 years ago.

    In a letter dated Nov. 20, 1861 — a week after the date on Watkinson’s letter — Chase instructed James Pollock, director of the Mint at Philadelphia, to prepare a motto for U.S. coinage.

    Here is how the letter read, according to the Treasury Department.

    Dear Sir: No nation can be strong except in the strength of God, or safe except in His defense. The trust of our people in God should be declared on our national coins.

    You will cause a device to be prepared without unnecessary delay with a motto expressing in the fewest and tersest words possible this national recognition.

    The words “IN GOD WE TRUST” became the official U.S. motto by an Act of Congress in 1956, when Dwight Eisenhower was President. The words officially were added to paper currency, beginning in 1957.

    Brown operated at least three companies that used the “In God We Trust” theme, prosecutors said. Experts say scammers frequently use appeals to faith and patriotism to steal from investors or line them up to be fleeced in fraud schemes.

    Visit the Treasury Department website to read about the history of “IN GOD WE TRUST” on U.S. coins and currency.

  • 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.