INVESTMENT FRAUD

October 15, 2009

SEC Sues David F. Merrick and TIRN for Alleged Investment Scam

by Boston Lawyer

October 15, 2009 – The SEC has filed an emergency civil action against David F. Merrick, Traders International Return Network (TIRN), MS Inc., GTT Services, Inc., MDD Consulting, Inc., and Go ! Tourism, Inc alleging financial fraud. According to the complaint, Merrick and his business entities operated a $22 million Ponzi scheme since at least July 2008.

Using a website, www.mytirn.com, Merrick allegedly raised funds from at least 2500 investors by promising monthly dividends of
up to 22% stating that investor money would be used to buy foreign currency trading, international bonds, international stocks and other investments. Merrick and TIRN instructed customers to deposit funds into accounts in the name of MS and GTT, entities controlled by Merrick. Merrick then allegedly transferred money from those accounts into other accounts in the names of MS, GTT Services, MDD Consulting, and Go ! Tourism.

According to the SEC, Merrick and TIRN did not invest in any type of securities but instead used the money for Merrick’s personal use and to repay earlier investors. The SEC also claims that Merrick used at least $3.7 million to finance his lifestyle and to pay credit card bills from MS and GTT Services.

October 9, 2009

Gregory Bell Pleads Guilty for his Involvement in Petters Company Inc. Scam

by Boston Lawyer

October 9, 2009 – Gregory Bell, a former Chicago hedge fund manager and owner of Lancelot Investment Management, LLC, pled guilty to one count of wire fraud yesterday in the United States District Court for the District of Minnesota. Wire fraud carries a maximum of 20 years imprisonment and a fine of $250,000. Bell’s sentencing will be decided at a later date.

Bell is just one of several defendants in a pending civil action filed by the SEC against Thomas J. Petters, a Minnesota businessman charged with operating a multi-billion dollar Ponzi scheme from 1995 to 2008. Bell started Lancelot in 2001 and from 2002 to 2008 raised over $2.62 billion from hundreds of investors, who sold security interests in hedge funds they managed to Lancelot. According to the SEC’s complaint, Bell exchanged almost all of the investor funds for notes from Petters Company Inc. and fraudulently assured that their investments were in safe hands.

October 9, 2009

Richard M. Harkless Sentenced to 100 Years for Operating MX Factors Ponzi Scheme

by Boston Lawyer

October 9, 2009 – Richard M. Harkless, 65 years old from Riverside, California, was sentenced to 100 years in federal prison on September 28, 2009. Harkless was convicted of three counts of mail fraud, three counts of wire fraud, and one count of money laundering. Apparently Harkless operated a multi-million dollar investment scam through his business entities Mx Factors LLC, BBH resources LLC and JTL Financial Group LLC. Harkless’ three sales agents, Daniel Berardi, Jr., Thomas Hawkesworth, and Randal W. Harding were all sentenced to 6 years in federal prison for their involvement.

In addition to jail time, Harkless was ordered to pay over $42 million in disgorgement, civil penalties, and prejudgment interest. The judgment ordered Berardi and Hawkesworth, managing members of BBH Resources, LLC, to pay over $11 million and Harding, managing member of JTL Financial Group, LLC, to pay over $17 million.

According to the SEC, between 2000 and 2003 Harkless and his sales agents induced approximately 600 investors from all over the country to invest over $60 million. Mx Factors offered potential investors 14% returns on short term 2 to 3 month investments. Most of Mx Factors’ clients were construction contractors, wholesalers, and manufacturers who sought accounts receivable financing.

September 29, 2009

Judgment Entered Against Clelia A. Flores and Maximum Return Investments, Inc. for Alleged Investment Scam

by Boston Lawyer

September 29, 2009 – Yesterday, a federal court judge in Los Angeles, California entered a default judgment against Clelia A. Flores and her business Maximum Return Investments, Inc (“MRI”) in a lawsuit brought by the SEC. According to the SEC’s complaint filed in April, Flores and MRI operated a $23 million Ponzi scheme targeting the Hispanic-American community. The judgment entered ordered a permanent injunction against Flores and MRI from committing future violations of various SEC regulations as well as ordering Flores and MRI to pay over $11 million in fines and disgorgement fees.

Flores and MRI allegedly solicited investors by offering rates of return as high as 25% in just 30 to 45 days. The funds were supposedly invested in real estate, commodities, and bank trading instruments. However, the complaint alleged that neither Flores nor MRI invested in the promised securities.

Instead, the SEC claims that Flores and MRI paid out approximately $13 million to older investors, in a typical Ponzi scheme pattern, and used $5.6 million for high-risk investments and start-up companies that never paid MRI any returns. Apparently, Flores used $3.5 million for personal expenses including a $443,000 house and $1.5 million for MRI’s operating expenses and an extravagant party for investors.

September 9, 2009

SEC sues Philip G. Barry and Leverage Group Companies Alleging Illegal Investment Scam

by Boston Lawyer

September 9, 2009 – Philip G. Barry and his business entities Leverage Group, Leverage Option Management Co., Inc., and North American Financial Services were sued yesterday by the Securities and Exchange Commission. The SEC has charged Barry with securities fraud alleging that he operated a Ponzi scheme, which commenced in 1978, involved approximately 800 investors with over $40 million in losses.

The fraudulent investment scam operated out of Barry’s Brooklyn, New York offices. The alleged victims include many residents and friends from his own Bay Ridge neighborhood, where he grew up and still resides.

According to the SEC’s complaint, Barry lured investors with promises of returns as high as 21% on investments in options and other securities. However, Barry apparently used investor funds for other investments including real estate, a mail order pornography business, and other personal uses. Allegedly, Barry ceased making investments in options and other securities as early as 1999.

September 8, 2009

SEC Sues Sidney & Charlotte Hanson: Perpetrators of Queen Shoals Investment Ponzi Scheme

by Boston Lawyer

September 8, 2009 – Sidney S. Hanson and Charlotte M. Hanson and twelve fraudulent business entities, including Queen Shoals, LLC, have been charged with securities fraud by the Securities & Exchange Commission. The couple had been running a scam promising high interest returns on “private” loans. The SEC announced today that the United States District Court for the Western District of North Carolina had entered a September 3, 2009 Order freezing the Hanson’s assets as well as the assets of all twelve entities they controlled.

In May, 2009, over $2 million in gold and silver bullion and coins had been seized from the Charlotte, North Carolina office of Queen Shoals Investments. Also, on July 28th, 2009, Sidney Hanson pleaded guilty to securities fraud, mail fraud, and money laundering. He has not been sentenced, but faces up to 20 years of imprisonment for each charge in addition to millions of dollars in fines.

The Hansons, through a network of 45 salespeople, were able to convince approximately 500 people throughout the country to invest $32.5 million from 2006 to 2009. Characterized as “private loan agreements,” the Hansons offered interest rates ranging from 8% to 30%, claiming that money was invested in low-risk treasury bills, precious metals, and foreign currency. However, a majority of clients’ money was used for high-risk private investments. None of the money was actually invested in treasury bills.

July 31, 2009

Diversity Capital Investments Sued by SEC in Southern California Ponzi Scheme

by Boston Lawyer

July 31, 2009 – Damian Meneses, Edward Lantz Ferguson, Joel S. Ley, Jr. and their four business entities were charged with securities fraud on Monday by the Securities and Exchange Commission (“SEC”). The SEC claims they were& operating a Ponzi scheme primarily based on foreign currency trading. The alleged scheme was mostly operated out of Southern California and involved investors from both the U.S. and Mexico. The SEC claims that Meneses, Ferguson, and Ley raised at least $14 million on their promises of guaranteed returns on investment in foreign currency trading.

The SEC’s complaint alleges that Meneses, 37, guaranteed a 4% monthly return to investors in his company Diversity Capital. Diversity Capital was allegedly affiliated with Diversity Capital Bancorp de Mexico, Ltd., located in New Zealand. Meneses claimed that Diversity Capital invested clients’ money in foreign currency trading. He encouraged investors to refinance their mortgages and invest the earnings in his company. According to Diversity Capital’s website, the company manages over $1.7 billion. The SEC claims that the funds invested in Diversity Capital were not used for currency trading, but instead for personal bills of Meneses and to pay earlier investors in a Ponzi-like fashion.

July 19, 2009

William Parente: Death May Have Been Linked to Investor Fraud

by Boston Lawyer

July 18, 2009 – William Parente, 58, attorney, financier and arguably the perpetrator of an investment fraud and grand ponzi scheme, allegedly died on April 20, 2009 in a Towson, Maryland hotel room from self-inflicted knife wounds. According to Baltimore County investigating authorities, prior to taking his own life, he brutally murdered his wife, 58, and two daughters, age 11 and 19, in an apparent murder/suicide.

However, there is a group of Parente clients, investors and acquaintances, who knew both the man and his family, and who believe it is out of the question that he could have carried out this gruesome act. Rather, they are convinced that Parente also was murdered, that the suicide was staged as a cover up, and that his death and the death of his family was perpetrated when Parente could not repay debts owed to an investor or investors who had entrusted him with their cash.

The Federal Bureau of Investigation is presently investigating Mr. Parente’s financial dealings, having seized records from his Lexington Avenue, New York law office. They refuse to comment on the status of the investigation, except to state that it is ongoing. One apparent problem is that those records, which were seized remain off limits to investigators until the issue of attorney/client privilege has been resolved.

However, one big step may be the recent filing of a probate petition for Parente’s estate in the Nassau County Surrogate Court by a Public Administrator. Such appointments are necessary when no family member has voluntarily assumed the duty of probating the estate of a deceased relative, which appears to be the case here.

It appears that there will be no lack of creditors, making claims against the estate. According to published and unpublished reports, Parente was a financier, who borrowed private money from investors in exchange for unsecured promissory notes, offering very attractive interest rates. He claimed to be financing bridge loans on real estate and other business ventures, also at high interest rates, which he signed personally.

Parente was both an attorney and an accountant, and many of his investors were also clients, friends and recommended friends of friends. There appear to be at least 20 to 30 such investors who collectively invested sums in excess of $25 million, though some believe the total sum invested is far greater.

June 22, 2009

Millennium Bank Scam: FBI Fans Out to Investigate Criminal Conduct

by Boston Lawyer

A closer look at the Millennium Bank Ponzi Scheme: Boston trial lawyer, the attorney, takes a look at the facts involving Caribbean based Millenium Bank, which operated out of offices in Napa, California until closed by the SEC in March, 2009.

It appears the FBI has been given the green light to actively investigate the possibility of criminal charges stemming from the Millennium Bank ponzi scheme, engineered by Canadian, William J. Wise. This past week numerous investors were contacted and interviewed by FBI agents. Many such investors appear to have lost their life savings, following an announcement by the SEC and the filing of a federal court action in Texas, suggesting that Millennium was not a legitimate bank, but a multi-million dollar ponzi scheme.

The investigation involves Millennium Bank, which was a St. Vincent & Grenadines registered bank that actively promoted its high interest CDs on the internet and elsewhere. The ads and the rates tempted hundreds of investors to place their savings in what they believed to be safe, but offshore money instruments, which were not insured by the FDIC. While reports differ as to the magnitude of the fraud, it appears that at least $100 million had been invested.

There appears to be no specific pattern or methodology employed by the agents in pursuing information. In one instance, agents appeared in the early morning at the residence of a married couple who had invested savings with Millennium, placed the husband and wife in separate rooms and proceeded to pose questions with tape recorders rolling; not your typical victim/witness interview.

In another case, an FBI agent appeared at a residence without warning and accompanied by a town police officer in his squad car. Another investor was interviewed by an FBI agent who claimed to be investigating on behalf of both the SEC and the Internal Revenue Service. Many investors are left wondering whether it is the perpetrators of the bank fraud or themselves that are the subject of the investigation.

May 29, 2009

Millennium Bank Receiver Seeks to Sell Assets of Perpetrators

by Boston Lawyer

Massachusetts Investment Fraud Lawyer, the attorney, reviews the latest court filings by the Receiver in the
SEC vs. Millennium Bank action now pending in the U.S. District Court for the Northern District of Texas:

It appears that the Millennium Bank Receiver has begun the process of liquidating assets seized as a part of the SEC action against Millennium Bank, its affiliates, and the individuals who helped perpetrate this multi-million dollar ponzi scheme. On May 22, 2009, a set of motions were filed in the Northern Texas U.S. District Court seeking specific authority to sell off a range of personal property items. The Court has yet to rule on the motions

flying jet.jpg For example, one
motion has been filed, seeking court authority to sell off the infamous
Millennium jet airplane, which was seen and photographed in 2008 and 2009 in places as far and wide ranging as Caracas, Venezuela, Geneva, Switzerland, and Lyon, France. The plane flies no more and is presently stored and maintained in a hangar in Atlanta, Georgia.

The aircraft apparently has an appraisal of $5.6 million, but the Sovereign Bank has a secured lien of $4.3 million and the Receiver seeks the Court’s authority to sell it for a price not less than $3.7 million, which would still leave a debt owed to the bank. Thus, the sale of this valuable asset will bring no money to the Receiver’s estate, or end up reimbursing any monies to swindled investors.

Jewelry, cars and wine collections and a home owned by Jackie Hoegel are in the list of items, which the Receiver seeks to liquidate, some requested to be sold on Ebay. However, it seems unlikely that this collection of assets, and the hundreds of thousands, which might come in, will even put a small dent on the hundreds of millions taken as the result of this fraud.