Post by ukipa on Dec 7, 2013 19:33:14 GMT 4
Billion-Dollar Investment Fraud: Undercover Agents Uncover the Scheme.
For a group of financial fraudsters, it seemed like the ultimate get in an investment scam—a victim willing to hand over $1 billion.
However, like victims of financial scams everywhere, these criminals should have paid more attention to the “if it sounds too good to be true, it probably is” adage—the wealthy “victim” in this case was actually an undercover FBI agent. And last month, the last three members of this group of con artists were sentenced to federal prison for their role in this scam. Several co-conspirators have previously pled guilty.
Beginning in 2005, the two-year undercover operation named Collateral Monte took leads from previous complaints, victim referrals, cooperating witnesses, and information from regulatory agencies and specifically targeted criminals who lured potential victims with offers of substantial returns on investments with little or no risk (also known as high-yield investment programs). And because the Orange County, California area served as an ideal backdrop for wealthy victim-investors, it was there that we set up a bogus financial advisory company purportedly to invest money from wealthy residents, including doctors and retirees. Our “company,” however, never interacted with actual investors…just suspected con men.
This particular case got underway with an Internet posting from an individual claiming he had access to a “private placement program” where the funds were guaranteed by the Federal Reserve Bank (the Fed), that a $10 million investment would return $100 million after 50 weeks, and that he also had access to other private placement programs with greater return rates but required higher minimum investments.
We e-mailed the author of the posting and said we had a potential investor interested in the offer. Over the next few months, the scam’s operators appeared to be working directly out of the high-yield investment scam playbook—our investor was first introduced to some lower-level players whose job was to basically vet potential investors to ensure they actually had the money they claimed. Eventually, members of our undercover team were introduced to others higher up the chain with official-sounding titles: Fed trade administrator, compliance officer, underwriter, banking expert, bank liaison, and trader.
The scheme, which offered international investment opportunities through the trading of bank securities, gradually progressed to its ultimate goal—to gain control of all or a portion of the victim’s money.
And along the way, our undercover “investor” was told various lies by the scammers, including:
■Only a privileged few were invited to participate in these types of investment opportunities and there were only a few traders in the world authorized to offer them.
■The investment program was regulated by the Federal Reserve Bank, had to follow strict federal guidelines, and was overseen by a Fed trade administrator and Fed compliance officer
■The investment’s extraordinary rates of return were the result of conducting multiple trades in rapid succession.
■One of the primary reasons these trading programs existed was to generate funds for humanitarian purposes and that a portion of the investor’s profits must be used towards that end.
By October 2008, we had enough evidence—e-mails, phone calls, in-person meetings, etc.—to get a criminal indictment against eight co-conspirators. And by going after these criminals proactively, we were able to stop them before they harmed actual victims.
Resource:
- www.fbi.gov/news/stories/2013/december/billion-dollar-investment-fraud/billion-dollar-investment-fraud
Three Investment Advisers Sentenced in California for Roles in $1 Billion High-Yield Investment Fraud
U.S. Department of Justice November 20, 2013
Office of Public Affairs(202) 514-2007/TDD (202) 514-1888
WASHINGTON—Three former investment advisers were sentenced on November 19, 2013 for their roles in attempting to defraud a wealthy investor of $1 billion through a high-yield investment fraud scheme.
Acting Assistant Attorney General Mythili Raman of the Criminal Division and U.S. Attorney Andre Birotte, Jr. of the Central District of California made the announcement.
William J. Ferry, a former stock broker and investment adviser; Dennis J. Clinton, a former real estate investment manager; and Paul R. Martin, a former senior vice president and managing director of Bankers Trust, were convicted on July 31, 2012, of conspiracy, mail fraud, and wire fraud. The investor they attempted to defraud was, in reality, part of an undercover FBI team that posed as wealthy investors and investment managers to stop fraudsters before they actually harmed victims.
Ferry, 71, of Newport Beach, California, was sentenced to serve 15 months in prison. Clinton, 65, of San Diego, California, was sentenced to serve 30 months in prison. Martin, 64, of New Jersey, was sentenced to 30 months in prison.
Evidence at trial established that from February to December 2006, Ferry, Clinton, Martin, and others conspired to promote a high-yield investment fraud scheme that promised an extremely high return at little or no risk to principal. The defendants claimed their investment program was a “Fed Trade Program” that was regulated by the Federal Reserve Bank, that they had to follow strict Fed guidelines, and that a Fed trade administrator administered their program, with compliance duties handled by a Fed compliance officer.
Investors also were told that once the investment program passed compliance, it would become registered in Washington, D.C., with the Fed. The defendants falsely represented to FBI undercover agents that they would arrange for them to meet a Federal Reserve official and/or the chairman of the board of a major U.S. bank to confirm the existence of the defendants’ investment program. The defendants falsely claimed that these Fed investment programs existed primarily to generate funds for project funding and humanitarian purposes, such as Hurricane Katrina relief. The promised profits from investing in a Fed program had to be divided in equal amounts, with one portion going to some humanitarian purpose, another portion to some kind of project financing, and the remainder to the investor. The defendants represented to the undercover agents that the agents’ offshore bank account would be managed by a Swiss banker who was already managing billions of dollars for the defendants.
Throughout the scheme, Ferry acted as an underwriter and member of the compliance team; Martin acted as a banking expert; and Clinton acted as a trouble shooter during the compliance phase and transfer of funds to the Swiss banker.
Another conspirator, Brad Keith Lee, of California, who acted as the contact with the Swiss banker, pleaded guilty to conspiracy and wire fraud on April 13, 2009, and was sentenced to 24 months in prison on January 11, 2010. Oregon resident John Brent Leiske, who acted as a trader during the scheme, pleaded guilty in the District of Oregon to conspiracy, mail fraud and wire fraud on January 24, 2012, and was sentenced to 120 months in prison on February 14, 2013.
This continuing investigation is being conducted by the FBI. This case is being prosecuted by Senior Litigation Counsel David Bybee and Trial Attorney Fred Methingy of the Criminal Division’s Fraud Section.
For a group of financial fraudsters, it seemed like the ultimate get in an investment scam—a victim willing to hand over $1 billion.
However, like victims of financial scams everywhere, these criminals should have paid more attention to the “if it sounds too good to be true, it probably is” adage—the wealthy “victim” in this case was actually an undercover FBI agent. And last month, the last three members of this group of con artists were sentenced to federal prison for their role in this scam. Several co-conspirators have previously pled guilty.
Beginning in 2005, the two-year undercover operation named Collateral Monte took leads from previous complaints, victim referrals, cooperating witnesses, and information from regulatory agencies and specifically targeted criminals who lured potential victims with offers of substantial returns on investments with little or no risk (also known as high-yield investment programs). And because the Orange County, California area served as an ideal backdrop for wealthy victim-investors, it was there that we set up a bogus financial advisory company purportedly to invest money from wealthy residents, including doctors and retirees. Our “company,” however, never interacted with actual investors…just suspected con men.
This particular case got underway with an Internet posting from an individual claiming he had access to a “private placement program” where the funds were guaranteed by the Federal Reserve Bank (the Fed), that a $10 million investment would return $100 million after 50 weeks, and that he also had access to other private placement programs with greater return rates but required higher minimum investments.
We e-mailed the author of the posting and said we had a potential investor interested in the offer. Over the next few months, the scam’s operators appeared to be working directly out of the high-yield investment scam playbook—our investor was first introduced to some lower-level players whose job was to basically vet potential investors to ensure they actually had the money they claimed. Eventually, members of our undercover team were introduced to others higher up the chain with official-sounding titles: Fed trade administrator, compliance officer, underwriter, banking expert, bank liaison, and trader.
The scheme, which offered international investment opportunities through the trading of bank securities, gradually progressed to its ultimate goal—to gain control of all or a portion of the victim’s money.
And along the way, our undercover “investor” was told various lies by the scammers, including:
■Only a privileged few were invited to participate in these types of investment opportunities and there were only a few traders in the world authorized to offer them.
■The investment program was regulated by the Federal Reserve Bank, had to follow strict federal guidelines, and was overseen by a Fed trade administrator and Fed compliance officer
■The investment’s extraordinary rates of return were the result of conducting multiple trades in rapid succession.
■One of the primary reasons these trading programs existed was to generate funds for humanitarian purposes and that a portion of the investor’s profits must be used towards that end.
By October 2008, we had enough evidence—e-mails, phone calls, in-person meetings, etc.—to get a criminal indictment against eight co-conspirators. And by going after these criminals proactively, we were able to stop them before they harmed actual victims.
Resource:
- www.fbi.gov/news/stories/2013/december/billion-dollar-investment-fraud/billion-dollar-investment-fraud
Three Investment Advisers Sentenced in California for Roles in $1 Billion High-Yield Investment Fraud
U.S. Department of Justice November 20, 2013
Office of Public Affairs(202) 514-2007/TDD (202) 514-1888
WASHINGTON—Three former investment advisers were sentenced on November 19, 2013 for their roles in attempting to defraud a wealthy investor of $1 billion through a high-yield investment fraud scheme.
Acting Assistant Attorney General Mythili Raman of the Criminal Division and U.S. Attorney Andre Birotte, Jr. of the Central District of California made the announcement.
William J. Ferry, a former stock broker and investment adviser; Dennis J. Clinton, a former real estate investment manager; and Paul R. Martin, a former senior vice president and managing director of Bankers Trust, were convicted on July 31, 2012, of conspiracy, mail fraud, and wire fraud. The investor they attempted to defraud was, in reality, part of an undercover FBI team that posed as wealthy investors and investment managers to stop fraudsters before they actually harmed victims.
Ferry, 71, of Newport Beach, California, was sentenced to serve 15 months in prison. Clinton, 65, of San Diego, California, was sentenced to serve 30 months in prison. Martin, 64, of New Jersey, was sentenced to 30 months in prison.
Evidence at trial established that from February to December 2006, Ferry, Clinton, Martin, and others conspired to promote a high-yield investment fraud scheme that promised an extremely high return at little or no risk to principal. The defendants claimed their investment program was a “Fed Trade Program” that was regulated by the Federal Reserve Bank, that they had to follow strict Fed guidelines, and that a Fed trade administrator administered their program, with compliance duties handled by a Fed compliance officer.
Investors also were told that once the investment program passed compliance, it would become registered in Washington, D.C., with the Fed. The defendants falsely represented to FBI undercover agents that they would arrange for them to meet a Federal Reserve official and/or the chairman of the board of a major U.S. bank to confirm the existence of the defendants’ investment program. The defendants falsely claimed that these Fed investment programs existed primarily to generate funds for project funding and humanitarian purposes, such as Hurricane Katrina relief. The promised profits from investing in a Fed program had to be divided in equal amounts, with one portion going to some humanitarian purpose, another portion to some kind of project financing, and the remainder to the investor. The defendants represented to the undercover agents that the agents’ offshore bank account would be managed by a Swiss banker who was already managing billions of dollars for the defendants.
Throughout the scheme, Ferry acted as an underwriter and member of the compliance team; Martin acted as a banking expert; and Clinton acted as a trouble shooter during the compliance phase and transfer of funds to the Swiss banker.
Another conspirator, Brad Keith Lee, of California, who acted as the contact with the Swiss banker, pleaded guilty to conspiracy and wire fraud on April 13, 2009, and was sentenced to 24 months in prison on January 11, 2010. Oregon resident John Brent Leiske, who acted as a trader during the scheme, pleaded guilty in the District of Oregon to conspiracy, mail fraud and wire fraud on January 24, 2012, and was sentenced to 120 months in prison on February 14, 2013.
This continuing investigation is being conducted by the FBI. This case is being prosecuted by Senior Litigation Counsel David Bybee and Trial Attorney Fred Methingy of the Criminal Division’s Fraud Section.