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Tag: William Wise

  • William J. Wise, International ‘Mastermind’ Of $129.5 Million Ponzi Fraud Involving CDs, Pleads Guilty To 18 Felonies; Top U.S. Attorney Says Federal Prosecutors ‘Around The Country’ Have Identified ‘Unprecedented Rise’ In Investment Fraud Schemes With ‘Staggering Losses’

    “The fraudsters prey upon vulnerable victims, do not respect local or even state boundaries, and often loot the victims’ life savings.” — Melinda Haag, U.S. Attorney for the Northern District of California, Sept. 13, 2012

    It featured confidence-boosting names: Millennium Bank, United Trust of Switzerland and Sterling Bank and Trust.

    But it was a cross-border Ponzi scheme that operated for 10 years. Its international “mastermind” controlled each of the entities and duped investors into purchasing at least $129.5 million in “bogus CDs,” federal prosecutors in two U.S. districts said this week.

    William J. Wise, the mastermind, was a resident of Canada. But he also operated in the region of Raleigh, N.C., luring investors with tales of outsize returns made possible by profitable overseas investments, prosecutors said. In 2009, the SEC said Wise was assisted by Kristi M. Hoegel of Napa, Calif.

    Hoegel, the SEC said at the time, used as many as five aliases. One proved to be the name under which she was charged criminally in February 2012: Jacquline Hoegel.

    On Wednesday, Wise pleaded guilty to 18 felonies, prosecutors said. He potentially faces decades in prison.

    Here is a breakdown of the Wise guilty pleas: one count of conspiracy to commit mail and wire fraud; twelve counts of mail fraud; three counts of wire fraud; one count of money laundering; and one count of tax evasion.

    “The United States Attorneys around the country have identified an unprecedented rise in investment fraud schemes, involving thousands of victims and staggering losses,” said U.S. Attorney Melinda Haag of the Northern District of California. “The fraudsters prey upon vulnerable victims, do not respect local or even state boundaries, and often loot the victims’ life savings. This case is an example of U.S. Attorneys working together – from the Northern District of California to the Eastern District of North Carolina – to identify the schemes, find the perpetrators and bring them to justice.”

    Haag was backed by Thomas G. Walker, the U.S. Attorney for the Eastern District of North Carolina.

    “The individuals who commit these crimes have no regard for the well-being of their victims – only the desire to make a quick buck,” Walker said. “United States Attorney’s offices, along with federal, state and local law enforcement officials, work diligently each and every day to see that those who commit these crimes are the ones who pay.”

    Prosecutors stressed that “[t]he Sterling Bank and Trust referred to in the indictment and plea agreement is not affiliated with the Sterling Bank & Trust headquartered in Southfield, Michigan, with thirteen branches in the San Francisco Bay Area.”

    It is not unusual for scammers to trade on the name of a well-known entity or to cherry-pick parts of a well-known name to sanitize a fraud scheme and create comfort in the minds of investors. The Trevor Cook Ponzi scheme in Minnesota, for example, cherry-picked the name of UBS and also used names that sounded regal.

    Ponzi-forum hucksters often do the same thing, dazzling investors with tales of fantastic “offshore” profits and using names that instill comfort and confidence.

    Prosecutors noted pointedly this week that Wise “agreed to work with the government and the Receiver appointed by the Texas District Court to obtain control over any remaining investor funds in bank accounts in the United States or in foreign countries. ”

    North Carolina was rocked Aug. 17 with SEC allegations that Zeek Rewards, an MLM “program” married to a penny-auction site known as Zeekler and operated by Paul R. Burks of Rex Venture Group LLC, was a $600 million Ponzi- and pyramid scheme that may affect more than 1 million people.

    Kenneth D. Bell, the court-appointed receiver in the Zeek case, now says there may be 2 million victims. Zeek used as many as 15 financial vendors, including offshore vendors, the SEC said.

    Court records strongly suggest Burks was cooperating with the SEC before the agency’s civil charges became public. The U.S. Secret Service said last month that it also was investigating Zeek.

    The SEC said last month that Burks had agreed to cooperate with the receiver.

    The Wise case resulted from “a lengthy investigation by the IRS-Criminal Investigations Division,” prosecutors said.

     

  • RECOMMENDED READING: Prospective Class Action Against Accused Ponzi Schemer Ephren W. Taylor II Names Alleged Facilitators And Raises Specter Of Crime Spigot Involving ‘Self-Directed’ IRAs

    This cash came from the Trevor Cook Ponzi scheme and was stashed, according to filings in the civil case against Cook. Cook is serving a 25-year-sentence in federal prison. Photo source: Court records.

    EDITOR’S NOTE: As America’s fraud plague continues, some of the scammers are polluting the free market with incongruous and even bizarre schemes  — even as they purport to represent the best that freedom offers.

    The PP Blog highly recommends that readers check out this September 2011 document from the SEC that warns about scammers targeting holders of self-directed IRAs. Reading the document may help improve your understanding of the story below. There are differences between IRAs (emphasis added below): 

    “An Individual Retirement Account (IRA) is a form of retirement account that provides investors with certain tax benefits for retirement savings,” the SEC says. “Some common examples of IRAs used by investors include the traditional IRA, Roth IRA, Simplified Employee Pension (SEP) IRA, and Savings Incentive Match Plan for Employees (SIMPLE) IRA. All IRA accounts are held for investors by custodians or trustees. These may include banks, trust companies, or any other entity approved by the Internal Revenue Service (IRS) to act as a trustee or custodian.

    “A self-directed IRA is an IRA held by a trustee or custodian that permits investment in a broader set of assets than is permitted by most IRA custodians,” the SEC continues. “Most IRA custodians are banks and broker-dealers that limit the holdings in IRA accounts to firm-approved stocks, bonds, mutual funds and CDs.

    “Custodians and trustees for self-directed IRAs, however, may allow investors to invest retirement funds in other types of assets such as real estate, promissory notes, tax lien certificates, and private placement securities. While self-directed IRAs may offer investors access to an array of private investment opportunities that are not available through other IRA providers, investments in these kinds of assets may have unique risks that investors should consider. Those risks can include a lack of disclosure and liquidity — as well as the risk of fraud.”

    Here, now, a story about how holders of self-directed IRAs allegedly had their pockets picked . . .

    There’s Trevor Cook, who’s doing 25 years for his massive Minnesota Ponzi caper aimed at Christians, even as the trial of three of his accused colleagues is getting under way. Then there’s Kurt Barton, who’s doing 17 years for his Texas fraud scheme that also targeted people of faith and was described by the FBI as a robbery that took place without the aid of a gun.

    Meanwhile, there’s William Wise, a onetime international fugitive charged in California with a massive Ponzi scheme centering on offshore CDs. (Wise surrendered earlier this week.) And then there’s Robert Stinson Jr., the Pennsylvania Ponzi swindler now doing more than 33 years for his “Life’s Good” scam. (The FBI said he was wiring money even as a raid was under way.)

    And who could forget Californian Daniel C.S. Powell, implicated by the SEC in a life-settlement scam? (The venture became known as “Christian Stanley,” and its website traded on the name of former President Bill Clinton.)

    Then there’s Chris Cornett, implicated by the CFTC in a Forex swindle.

    Here’s why these names are important: All of these individuals — and more — are listed as scammers or alleged scammers in a proposed class-action lawsuit against Ephren W. Taylor II, now implicated by the SEC in a massive Ponzi swindle known as “City Capital.” The alleged City Capital targets were  people of faith.

    Though not defendants in the Taylor/City Capital lawsuit, the other alleged (or proven) scammers all had something in common beyond their abilities to separate people from their money, according to the complaint: complicit bankers and/or a means of plowing customers’ money from self-directed IRAs (SDIRAs) into their fraud schemes.

    SDIRAs are sold as freedom-celebrating devices that encourage personal responsibility and permit their holders to be more flexible in their investment choices. By law, the accounts are held by a custodian or trustee. Even so, sharks allegedly swim in these waters — and the worst of the worst may deny they have any duties to their customers and may be turning a blind eye to fraud schemes as a means of keeping a fee-generating, steady supply of fresh meat and blood in the water.

    “I am encouraging our plaintiffs to raise their voices and to make their legislators and regulators aware of how Ponzi schemes continue to be perpetrated through the use of self-directed IRA investment vehicles,” said Cathy Lerman of Cathy Jackson Lerman PA, one of the firms involved the prospective class action.

    Other attorney/firms involved in the litigation include California local trial counsel David Dorenfeld of Snyder Dorenfeld LLP; Michael W. Brown, an associate at Snyder Dorenfeld; and Jim Gitkin, principal of Salpeter Gitken LLP.

    Among the defendants named in the Taylor class action are Bank of America; Missouri Bank and Trust of Kansas City; Equity Trust Corp. of Ohio (an SDIRA provider); Entrust New Direction IRA Inc. of Colorado; The Entrust Group of California (an SDIRA provider); Entrust Administration Inc. of California; and Sunwest Trust Inc. of New Mexico. Other defendants also are named, and there is an allegation that Taylor used as many as 50 shell companies as part of his long-running fraud.

    A separate proposed class action has been filed against SDIRA providers named in the Taylor class action. That lawsuit alleges that as much as $94 billion may be tied up in SDIRAs nationwide, suggesting that fresh meat and blood could churn in the waters indefinitely.

    In effect, the lawyers are arguing that SDIRAs, which are lightly regulated or not regulated at all, have become the tools of criminals and are being used to separate investors from their money in one scam after another. Unlike traditional IRAs, SDIRA vessels may end up steering vast sums of cash into “opportunities” that not only may be exceptionally risky, but also may be downright crazy — such as Taylor’s purported “sweeps machines.”

    The Taylor lawsuit, for instance, argues that African American Christians effectively found themselves owning machines used in illegal gambling parlors and that churches that had invited Taylor to speak also got swept into incongruous schemes.

    Liberty City Church of Christ in Miami lost $100,000, owing to Taylor’s scams, the lawsuit contends. William Lee of Raleigh, N.C., got duped of $160,000 because Taylor and associates caused him to believe he was making a “socially conscious” investment that would help the public at large while at once resulting in an individual profit.

    The same thing happened to Gennet Thompson of Delray Beach, Fla. Thompson entrusted $17,200 to Taylor in one “opportunity” and $10,500 in another, according to the complaint.

    Trudy Morgan of Lithonia, Ga, had a similar experience — one that sucked away $30,000, according to the complaint.

    Read the complaint against Taylor, the banks and the SIDRAs.

     

  • BULLETIN: American, Canadian Indicted In Alleged Ponzi Scheme Involving More Than $129 Million; Jacquline Hoegel, William Wise Charged In San Francisco

    BULLETIN: Jacquline Hoegel, an American living in American Canyon, Calif., has been charged criminally in an alleged Ponzi scheme that gathered $129.5 million, the office of U.S. Attorney Melinda Haag of the Northern District of California said.

    Also indicted was William Wise, a citizen of Canada. Wise, 62, formerly resided in Raleigh, N.C.  A warrant has been issued for his arrest, prosecutors said.

    Hoegel, 55, made an initial appearance before U.S. Magistrate Judge Carolyn Delaney in Sacramento, and was released on bond, prosecutors said.

    The case flowed from an SEC civil prosecution brought in March 2009. Hoegel and Wise now have been charged criminally with conspiracy, mail fraud and wire fraud for their actions involving the sale of CDs issued by Millennium Bank, United Trust of Switzerland and Sterling Bank and Trust.

    Hoegel also has been charged with four counts of making and subscribing a false tax return, one count of obstruction and one count of false statements, and Wise also has been charged with money-laundering, prosecutors said.

    “The CDs issued by Millennium Bank, United Trust of Switzerland and Sterling Bank and Trust all promised CD purchasers guaranteed rates of returns — sometimes over 16 percent — that were allegedly based on overseas investments,” prosecutors said.  “In fact, CD purchasers’ funds were not used for overseas investments that generated the promised returns; the funds were instead used to enrich Wise and Hoegel and to make interest payments to earlier CD purchasers.”

    When the SEC brought the civil case three years ago, customer losses were estimated at $75 million. More than 1,200 investors were affected by the scheme, which was unraveled by the IRS, the FBI and federal prosecutors in the Northern District of California and the Eastern District of North Carolina, Haag’s office said.

    The 23-count indictment was returned under seal Feb. 21. It was unsealed after Hoegel’s arrest yesterday, prosecutors said.

    In 2009, the SEC said the CDs “purportedly offered returns that were up to 321 percent higher than legitimate bank-issued CDs.”