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  • FBI Arrested Ponzi Suspect Aboard Jet Preparing For Flight To ‘Overseas’ Destination Last Month; Tarakeswar Chaudhary Taken Off Emirates Airlines Plane

    Federal agents and airport police have arrested a man suspected of operating a Ponzi scheme and fleecing investors in a fraudulent Google stock offering, the FBI said.

    Tarakeswar “Tarak” Chaudhary, 49, of Tustin, Calif., was arrested last month at San Francisco International Airport after he boarded an Emirates Airlines flight bound for an “overseas” destination, the FBI said.

    U.S. Marshals now have returned Chaudhary from San Francisco to Santa Ana to face the charges.

    Emirates Airlines is wholly owned by the government of Dubai and flies to 100 cities in 62 countries across the Middle East, Africa, the Indian Subcontinent, Europe, the Far East, South America and North America, according to its website.

    “Chaudhary was removed from an Emirates Airlines flight bound overseas at the time of his arrest,” the FBI said.

    Chaudhary, 49, operated a company known as Transpacific Intertrade Inc. He was charged with mail fraud in U.S. District Court in Santa Ana, Calif., on Dec. 7.

    “[He] defrauded victims by promising to invest their money in initial public offerings and secondary share offerings by companies such as Google, Inc., when in fact, no such investments were made,” the FBI and Acting U.S. Attorney George S. Cardona said.

    At least three victims “are believed to have provided over $3 million to Chaudhary,” the FBI said.

    As part of the scheme, Chaudhary mailed forged statements on Morgan Stanley letterhead to at least one victim from whom Chaudhary obtained $1 million,” the FBI said. “The forged statement indicated that stock purchases had been made through a Morgan Stanley account, when in fact, no such account existed.

    In make investors feel safe, Chaudhary “lulled” them by fabricating “the identity of a financial advisor at Morgan Stanley,” the FBI said.

    “Chaudhary told at least one victim that his investment of $995,000 was gone and that he had also defrauded at least 20 people out of a total of $10 million or more,” the FBI said. “Chaudhary recently admitted to another victim that he was running a Ponzi scheme and that he had not invested any of the victims’ money.”

  • PONZI ADVOCATES’ NIGHTMARE: Victims Line Up To Address Judge Who Will Sentence California Man In ‘Offshore’ Scheme; Jeffrey Gordon Butler Faces Up To 300 Years In Prison

    EDITOR’S NOTE: As you’re reading this story, keep in mind that the Ponzi scheme “industry” actually has advocates who advance the theory that all commerce should operate under the principle of caveat emptor (“let the buyer beware”), that the government should not be empowered to “interfere” with “commerce” and that “offshore” options are the best.

    ponzishameSo many victims fleeced out of their life savings in California by Jeffrey Gordon Butler wish to make statements at the sentencing phase of his trial that it may take a week or more to accommodate them.

    Eighty two of Butler’s Ponzi scheme victims were “elderly,” Orange County prosecutors said, noting gloomily for the record that  “[a]t least six victims died during the course of the trial and 52 victims died prior to the case being brought before the jury.”

    The Ponzi crime raised more than $11 million and affected at least 121 senior citizens. Family members of the deceased victims will speak on behalf of their departed loved ones during the sentencing phase.

    Butler, 51, of San Juan Capistrano, was convicted in June of 693 felony counts of securities and tax-related crimes. A jury in Orange County, Calif., returned the verdict after a trial that lasted nearly eight months. Butler faces a maximum sentence of 300 years in state prison.

    His wife, Peggy Warmath Butler, 49, faces up to 10 years. She was convicted of four felony tax counts.

    So many charges were brought against Jeffrey Butler that it took “two days for the verdict to be read,” prosecutors said.

    The sentencing phase now is under way. Prosecutors expect it may consume this entire week and extend into next week because the surviving victims or their family members want to tell the judge their stories about how the scheme affected them.

    Part of the scheme involved clients’ money being moved offshore without authorization to a “telecommunications company supposedly located on the eastern Caribbean island of Grenada,” prosecutors said.

    Because so many of the victims were nearing the end of their life spans or in poor health, prosecutors recorded their testimony prior to the trial “to ensure that the victim’s testimony was preserved in the event that they were unavailable to testify at trial due to death or illness.”

    When the scheme started to collapse, Butler lied to hold investors at bay,  prosecutors said.

    “Jeffrey Butler first met many of his victims while operating a company called Senior Information Services, which offered to assist senior citizens in the creation of living wills, trusts and other estate planning structures for a fee,” prosecutors said.

    “Through this business, the defendant gained the trust of many of his clients, whom he later victimized. Between 1995 and 2004, in a series of businesses that changed forms and names, Jeffrey Butler failed to provide his investors with any documents or other information about his companies, how the companies made money, or any of the risks of investing in the companies as required by law to protect consumers and investors,” prosecutors said.

    Butler used all the tricks in the book, including moving money between companies, keeping investors in the dark and skimming, prosecutors said.

    He “transferred investments between companies on several occasions without informing or providing only limited information to his elderly investors,” prosecutors said. “[Butler] immediately took 10 percent of the investors’ money for himself without their knowledge or consent.”

    And it only got worse from there.

    “Investors were not made aware that these investments were not authorized to be sold in California,” prosecutors said. “Some of the victims agreed to invest after being misled into believing that [the offshore company, Global Network Providers] was an Individual Retirement Account (IRA) qualified investment, when in reality the investments were not IRA qualified. In an effort to fool his investors, Jeffrey Butler simply had ‘IRA’ typed at the top of the promissory notes.”

    As the scheme was unraveling, Butler blamed his inability to make payments on Mother Nature.

    “Butler eventually ran out of funds to maintain his scheme and sent his victims a letter in which he continued to lie to investors, claiming that Hurricane Ivan had caused a delay in payments,” prosecutors said.