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Tag: Steven M. Dettelbach

  • 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.

  • Financial Fraud Enforcement Task Force Credited With Bust In Bizarre Ohio Ponzi Involving ‘Unique Momentum Filter’; Enrique F. Villalba Charged With Wire Fraud

    An Ohio man who graduated from West Point and earned a law degree in Washington state has been charged in a bizarre Ponzi and investment-fraud scheme that allegedly combined the science of physics with a unique “momentum filter” that purportedly enabled him to predict how the futures market would behave with “an uncanny degree of certainty.”

    Enrique F. Villalba, 47, of Cuyahoga Falls, was charged in the scheme, which was conducted from Beachwood Ohio, prosecutors said.

    Villalba is a graduate of the United States Military Academy at West Point and  the University of Puget Sound School of Law, prosecutors said. Separately, he was sued by the SEC and the CFTC.

    Prosecutors said investors losts millions of dollars in the scheme, and that Villalba used some of the money to fund coffee shops he owns in Hudson and Stow, Ohio. The coffee shops are known as “Rico Latte,” and the investment business was known as “Money Market Alternative LP.”

    Villalba called his investment methodology “Money Market Plus,” saying clients could realize long-term gains averaging between 8 percent and 12 percent, prosecutors said. The scheme collapsed last year, after perhaps operating for more than a decade.

    “Villalba represented that his knowledge of physics, when combined with his application of a unique ‘momentum filter,’ allowed him to predict with ‘an uncanny degree of certainty’ how the futures market would trend at various times during a given month, thereby allowing him to purchase and sell futures contracts to maximize gains,” prosecutors said.

    Investors were told Villalba would place stop orders as a hedge against losses, but he did not place the orders, causing investors to lose “millions of dollars,” prosecutors said.

    Money from investors was “converted” by Villalba to fund the coffee shops, buy property in Vermillion, Ohio, and also to make Ponzi payments to clients, prosecutors said.

    The scheme netted about $29.7 million, prosecutors said.

    “This case serves as an example to the public that the Department of Justice and the Financial Fraud Enforcement Task Force will fight fraud in order to protect the integrity of the financial markets,” said U.S. Attorney Steven M. Dettelbach.

    “If you lie to investors, there will be a steep price to pay,” Dettelbach said. “This case resulted from tremendous coordination between the Department of Justice and civil enforcement agencies to protect the rights of investors all over the country.”

    President Obama started the Financial Fraud Enforcement Task Force in November.