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Tag: Richard Elkinson

  • SENIOR FRAUD CAVALCADE CONTINUES: Ponzi Schemer, 86, Pleads Guilty; Stephen J. Klos Ripped Off Fellow Senior Citizens, Prosecutors Say

    Stephen J. Klos, an 86-year-old church usher who sold elderly congregants in the Seattle area into a $3 million Ponzi scheme that began in 2004, has pleaded guilty to 10 counts of securities fraud, the office of King County Prosecuting Attorney Daniel T. Satterberg said.

    Klos “met several of victims at his church and told them that he would invest their money but used most of it to repay prior investors and for his personal benefit,” Satterberg’s office said. He faces between 51 and 68 months in prison when sentenced Dec. 28 by Judge Bruce Heller.

    Only four years short of his 90th birthday, Klos now joins a curiously long list of convicted or alleged Ponzi schemers and/or swindlers who were detected or charged after their 65th birthdays.

    Others on the list include Bernard Madoff (New York/Florida); Andy Bowdoin (Florida); Arthur Nadel (Florida/now deceased); Martin B. Feibish (Rhode Island); Richard Piccoli (New York); Anthony Lupas (Pennsylvania); John William “Jack” Cranney (Massachusetts); Pat Kiley (Minnesota); Richard Elkinson (Massachusetts); Edward May (Michigan); John F. Langford (Texas); Hans P. Seibt (Nevada); Louis J. Borstelmann (California); Gerald J. “Jerry” Berke (California/Canada); Richard Horace Mayfield (Colorado); Richard M. Hersch (California); Richard Taft Johnson (Michigan); Julia Ann Schmidt (Texas); Ronald Keith Owens (Texas); James Blackman Roberts (Arkansas); Larry Atkins (North Dakota); Maxwell B. Smith (New Jersey); Judith Zabalaoui (Louisiana); Arthur Ferdig (California).

    NOTE: The list above is incomplete.

  • ‘Uniform’ Ponzi Swindler Richard Elkinson, 78, Sentenced To 102 Months In Federal Prison; 20-Year Scheme Collapsed After Arrest Of Bernard Madoff

    Richard Elkinson, the 78-year-old Ponzi swindler whose promissory notes scheme gathered $29 million over 20 years, has been sentenced to 102 months in federal prison.

    Elkinson resided in Framingham, Mass., and told investors he was in the business of providing uniforms to the government and other entities.

    But it was all a scam that lured investors with promises of outsize returns of between 9 percent and 15 percent in less than a year, federal prosecutors, the FBI and the SEC said.

    The scheme began to collapse in late 2008 after investors — motivated by the publicity the Bernard Madoff Ponzi began to receive  — “started seeking more information and documents about the uniform business,” the office of U.S. Attorney Carmen M. Ortiz of the District of Massachusetts said yesterday.

    Madoff, himself a senior swindler at the helm of a long-running Ponzi caper, was arrested on Dec. 11, 2008.

    Although Elkinson initially lulled investors in early 2009 with a variety of excuses about why he wasn’t making payments, he later fled Massachusetts. Elkinson was arrested at a Mississippi casino in January 2010. Investigators said they discovered evidence that the con man had an affinity for gambling and had conducted “a total of more than $3.7 million in currency transactions over $10,000” at Las Vegas casinos dating back to 1998.

     

  • KA-BOOM! SEC Files Emergency Action In Alleged Richard Elkinson ‘Uniform’ Ponzi Scheme; U.S. Attorney General Warns Fraudsters, ‘You Are Writing Your Ticket To Jail’

    Ka-boom! A federal judge has frozen the assets of alleged Ponzi schemer Richard Elkinson, accused of fleecing investors in Massachusetts by telling them he brokered deals for government uniforms and uniforms worn by Olympic athletes.

    Meanwhile, the attorney general of the United States ventured to Florida today and gave a dramatic speech at the Forum Club of the Palm Beaches. The speech was important symbolically — indeed, Florida is awash in a sea of Ponzi and mortgage-fraud schemes — and Holder wanted to reassure the noontime crowd of 700 that the government was doing everything it could to restore faith in the markets.

    But the speech also was important politically. The Obama administration wanted to showcase its new Interagency Financial Fraud Enforcement Task Force, which the President announced in November, and Holder chose Florida to drive home the message that Ponzi schemers, mortgage fraudsters and financial criminals are going to have many sleepless nights in the months ahead.

    “To those who see the victimization of others as an avenue to wealth, take notice,” Holder warned. “If you fabricate a financial statement, if you propagate an investment scheme, if you are complicit in an act of financial fraud, you are writing your ticket to jail.”

    Even as Holder was delivering his remarks, the SEC announced that it had sued Elkinson in an emergency action in Massachusetts that complemented the FBI’s criminal action in the case, dubbed a “Mini-Madoff” because it allegedly was both a Ponzi scheme and a case of affinity fraud that targeted Jewish investors.

    Court records show that the FBI was working the case on Christmas Eve, even as the government was shutting down for the holidays. Records also show that Massachusetts Secretary of State William Galvin sent a team of investigators to conduct interviews and to get to the heart of the matter while Massachusetts residents were doing their last-minute holiday shopping.

    State and federal agencies now have filed three separate actions in the Elkinson case. Elkinson, 76, was arrested at a casino in Biloxi, Miss., fresh off a trip to casinos in Las Vegas. The FBI said he had conducted at least $3.7 million in transactions at the Las Vegas casinos since 1998 and that investors in his Ponzi scheme were out $29 million.

    The SEC said today that Elkinson had “no relationship” with a uniform manufacturer based in Japan. Elkinson had told investors he had an exclusive arrangement and that only he was permitted to do business with the manufacturer.

    “Unfortunately, it was all make-believe,” the SEC said in its complaint. “Elkinson had no
    relationship with a Japanese uniform manufacturer, and there were no contracts to purchase uniforms. While some investors did receive payments of principal and interest, those payments were made using funds obtained from other investors, and Elkinson was able to keep the scheme going as long as most of the investors kept rolling over their investments.”

    Elkinson’s purported contracts to provide uniforms for government workers also were “fictitious,” the SEC said.

    The current attack on financial crime by law enforcement may be unprecedented. Holder said today that the FBI is investigating 2,800 cases of mortgage fraud, up a staggering 400 percent from 2005 case totals.

    In his Palm Beach remarks, Holder also dropped the names of Ponzi schemers.

    “Palm Beach is, in many respects, ground zero for the $65 billion Ponzi scheme perpetrated by Bernard Madoff — the largest investor fraud case in our nation’s history,” the attorney general said. “Before the house of cards Madoff built collapsed in 2008, before he was sentenced to 150 years in prison last June, before he became a notorious criminal on the cover of newspapers around the world, he was one of your neighbors.

    “His former home sits just north of us,” Holder continued. “An 8,700-square-foot mansion that’s worth . . . well, we’ll know what its worth once the U.S. Marshals Service auctions it off and the proceeds are distributed to Madoff’s victims.”

    Holder also mentioned the Ponzi cases of Tom Petters of Minnesota, Allen Stanford of the United States and Antigua and disbarred Florida attorney Scott Rothstein of Fort Lauderdale.

    “I’m proud that these men, along with more than 450 others convicted of corporate and securities fraud in 2009, have been taken out of the game,” Holder said.

    In Massachusetts, U.S. District Judge Joseph L. Tauro issued a temporary restraining that froze Elkinson’s assets. Tauro also entered an order freezing all proceeds of the misconduct held by others, and an order prohibiting the acceptance of additional investor funds.

    At the same time, Tauro ordered an accounting of assets and issued an order prohibiting the alteration or destruction of documents.

    The orders in the SEC case — as well as the legal action filed earlier this week by Galvin — bottle up any profits made by people who helped Elkinson promote the scheme.

    Holder said the law-enforcement community is fighting back against people who have licensed themselves to steal.

    “They’ve robbed people of their homes and their economic security,” Holder said.  “They’ve depleted bank accounts and pension funds.  In some places, they’ve dried up philanthropic giving and shuttered charities.  They’ve placed unfair challenges before cash-strapped governments, local police departments, small businesses, and American workers and consumers.”

  • Massachusetts Man, 76, Becomes Latest Senior Citizen Implicated In Ponzi Scheme; Richard Elkinson Accused Of $29 Million Fraud; Investigators Find Millions Of Dollars In Las Vegas Casino Transactions

    A Massachusetts man has been arrested in Mississippi and charged with orchestrating a $29 million Ponzi scheme by tricking people into believing they were investing in a company that provided uniforms for the Winter Olympics, the Pan American games and the government.

    Ironically, Richard Elkinson told investors he provided prison uniforms — and also uniforms for police officers, federal prosecutors said.

    It was not immediately clear how much of Elkinson’s purported uniform business was legitimate. Investigators say the Ponzi scheme might have been operating for 20 years before flaming out in December.

    The FBI was working the case on Christmas Eve, according to the criminal complaint. After securing purchase orders claiming the states of Connecticut and Georgia were among Elkinson’s customers, an agent called the phone numbers on the purported purchase orders.

    “In each instance, I encountered ‘disconnected’ messages,” the agent said.

    The investigation also revealed that Elkinson had an affinity for Las Vegas and claimed to have credit lines of $25,000 each at the Venetian, MGM Grand and Caesars Palace casinos.

    Elkinson, 76, of Framingham, was charged with mail fraud. The SEC and the Securities Division of the Massachusetts Secretary of State are assisting in the probe.

    Records in Las Vegas casinos show that Elkinson had “conducted a total of more than $3.7 million in currency transactions over $10,000” since 1998, prosecutors said. The Ponzi scheme began to collapse last year, and Elkinson missed a meeting with investors in December, and stopped answering his phone.

    Records suggest he was at the Wynn casino in Las Vegas Dec. 22, and canceled a reservation at the Venitian Dec. 23.

    The Alleged Scheme

    One of the elements, according to the complaint, was that the purported Japanese garment manufacturer, which purportedly had an office in Chatsworth, Calif., would do business with only Elkinson “personally,” a possible signal that agents believe Elkinson was attempting to keep investors from asking too many questions or performing thorough due diligence.

    In 2003 or 2004, according to the FBI, Elkinson showed investors a 1998 letter purportedly written by “Alan Shimuka” on the California office’s letterhead that said, “My Honorable Father, once again, requires me to state that we do business with Mr. Richard Elkinson of Northeast Sales.”

    “Elkinson allegedly represented that his business involved entering into contracts directly with large purchasers (such as government entities), in which Elkinson had to pay 50 percent of the contract amount as a down payment to the manufacturer in order to initiate the manufacturing process,” prosecutors said.

    “[U]pon completion and delivery of the uniforms, Elkinson reported that he would receive payment from the purchasing entity,” prosecutors continued. “[He] claimed that banks were unwilling to lend funds to his business based upon unexecuted contracts, so he needed to borrow a portion of the funds required to pay the 50 percent down payments.”

    As has been common in recent Ponzi schemes, Elkinson lulled investors with promissory notes, prosecutors said. In his specific case, Elkinson’s notes “generally required repayment within a term of 330-360 days, and with interest rates that ranged from 9 percent to 13 percent.

    “Upon maturity of the notes, investor/lenders were given an option to take a return of their principal and interest, to take interest only, or to roll the principal and interest over into a new note,” prosecutors said.

    In April or May of 2009, Elkinson began to default on the notes, providing investors “a variety of excuses,” prosecutors said.

    Among the excuses was that Elkinson’s wife was ill and he had to accompany her to Houston for treatment. Elkinson also told investors that government budgetary problems at the state level were delaying payments.

    The wheels fell off in December, when Elkinson missed a meeting with two investors and stopped answering his cell phone.

    In the early stages of the probe, investigators have identified about 130 investors and calculated that Elkinson owes them $29 million.

    U.S. Attorney Carmen M. Ortiz said that prosecutors will post information on a website to update victims. Here is the website:

    http://www.usdoj.gov/usao/ma

    Victims may also call the U.S. Attorney’s Office’s victim assistance toll-free number at 888-221-6023 to obtain status information.