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Re: Scam of the day, Pyramid Scheme
Chapman, Spira & Carson - Disscusion

From: The Securities and Exchange Commission Reports
Date: 4/14/99
Time: 4:25:44 AM
Remote User:


A wonderful website called the stock detective put together what they thought were some of the great scams of recent years from the annals of the Securities and Exchange Commission. If you've been scammed, let them know.

Enforcement Highlights Show Sponsored by WallStreet Guru From the archives of The US. Securities and Exchange Commision, Stock Detective scours thousands of public records to bring you highlights of the graft and punishment of accused Wall Street "No-Gooders." Use this page for amusement and for an educational dose of reality... lest the next deceived investor be yourself.

(Click SEC File # to view entire document.)


02/25/99 lr16071 Boiling up another Ponzi - A federal judge in Colorado has ordered defendants to pay more than $7 million in disgorgement and penalties from a Ponzi scheme that raised more than $15 million from unwitting investors. Operating behind the name Commercial Express and using boiler rooms, they pumped funds out of people who were told they were getting in on the ground floor of a telemarketing empire that would sell consumer goods. Less than 10 percent of the proceeds were spent on the product, but about 60 percent went to commissions. If investors missed the boiler room warning sign, promises of quarterly returns as high as 26 percent should have stopped 'em cold. --------------------------------------------------------------------------------

02/24/99 lr16069 Smoke and mirrors - After assuming the name of a dormant public company, merging it with a privately held firm and renaming it Interactive Multimedia Publishers (IMP), P. Joseph Vertucci and Bruce E. Straughn were just getting started. According to the SEC, Vertucci and Straughn then arranged a gutsy network of paid promoters and stock touters who ran up the price of IMP stock. At that point, Vertucci, Straughn and their merry band dumped their shares, made a bundle and left many hapless investors with squat. The SEC is seeking a restraining order against this group in U.S. District Court in Akron, Ohio. --------------------------------------------------------------------------------

02/17/99 lr16063 You can't bilk city hall - Scam artists who weaseled almost $7 million out of public and non-profit agencies have been chastised by the SEC. Robert Cochran, James Pannone, Sakura Global Capital, Inc. and Steven Strauss were defendants in the multi-faceted case. Cochran and Pannone were accused of rigging a bid to the Turnpike Authority, guaranteeing that it would go to Sakura. They also allegedly negotiated a $6.59 million undisclosed brokerage fee with Strauss, jeopardizing the tax-exempt status of the bonds. The defendants also were charged with similar bid-rigging scams involving a health care organization and a county development agency. All told, they agreed to more than $450,000 in fines. --------------------------------------------------------------------------------

01/27/99 lr16047 A secret is something you tell one other person - Larry Smath thought he'd found a way to beat the financial press at its own game: He found a foreman at a news distributor who would fax him advance copies of Business Week's Inside Wall Street column. According to the SEC's complaint, Smath paid the foreman about $200 apiece for at least 18 columns. Smath then re-sold the info to four other brokers. When all was said and done, about $8 million was invested based on the pirated information, but it was not clear how much profit was made. --------------------------------------------------------------------------------

01/13/99 lr16025 False promises and empty pockets - After conning $2 million out of investors with promises of a ground floor deal on an Internet casino gambling site, Alan Lenchner and Robert Matias got off pretty easy. While they are barred from future violations of the SEC's registration and fraud rules, their checkbooks are still intact. Lenchner and Matias baited investors with returns of almost 600 percent, but instead used most of the money for their own needs and to run their boiler room operation. And since they spent all of the money before they got caught, all but $26,000 of the almost $2 million they were supposed to repay has been waived by a federal judge. --------------------------------------------------------------------------------

01/13/99 lr16022 Give my regards to scam artists - Former senior officers and directors of Livent Inc., a Canadian theater owner and producer, have been charged with multiple counts of fraud spanning eight years. Livent produced Broadway shows like "Ragtime" and "The Phantom of the Opera." The SEC claims the fraud netted some of the defendants at least $7 million, but generated much higher illegal profits through stock trades and business deals that were consummated based on fraudulent financial information. For example, in fiscal 1996, Livent reported pre-tax earnings of $14.2 million when the company had actually incurred a $20 million loss. --------------------------------------------------------------------------------

12/30/98 lr16012 Brotherly love - When Todd J. LaScola got caught investing $6 million of the International Brotherhood of Electrical Workers' funds in high risk, extremely illiquid promissory notes, he didn't panic. Faced with a lawsuit from the union for illegal use of its funds, LaScola simply turned to what he thought were less attentive clients and diverted funds from their accounts to cover his problems with IBEW. Oops, someone was paying attention. A federal judge has entered an injunction against LaScola and two firms he worked for, CPI Investment Management, Inc. and CPA Advisors Network Inc., prohibiting them from violating the SEC's anti-fraud provisions and freezing the assets of LaScola and CPI. --------------------------------------------------------------------------------

12/29/98 lr16011 Crumbs - It was slim pickins' for investors who were duped into buying shares of First Zurich and Compunomics. After defendants spent more than $4 million they pumped out of the scheme, there was nothing left to repay the victims of the scam, except for about $20,000 and some computer equipment. A federal judge decided that meager amount would be spread too thinly to mean anything to the 2,000 investors. So, he ordered the hardware be donated to the Pasadena, Calif. school system and the cash divided between Salvation Army chapters in New Orleans and Cheyenne, Wyo., each a central point in the fraud. --------------------------------------------------------------------------------

12/22/98 lr16008 Big Timber - W.R. Grace & Co. is facing fraud charges from the SEC, which says the Florida-based conglomerate manipulated its reported quarterly and annual earnings. The allegations focus on claims Grace made about the financial results for its Health Care Group from 1991 through 1995. By tampering with its earnings reports, Grace also padded the company's earnings per share. Ingeniously, Grace put all of this in writing and filed it with the SEC. --------------------------------------------------------------------------------

12/08/98 lr15995 Syn No More - It took awhile, but the SEC has shut down an outfit it says has sold more than 60 million shares of unregistered stock since 1985. The SEC filed a complaint against Ronnie R. Neihart and Synvion Corporation charging them with securities fraud. Some of the tricks Neihart used to lure investors into buying Synvion shares included suggestions of a Nasdaq listing and misrepresenting the value of its inventory and touting contracts that did not exist. --------------------------------------------------------------------------------

12/01/98 lr15989 Forget about that swamp land, or the Brooklyn Bridge… - The SEC has shut down an operation that raised almost $5 million through the sale of "virtually worthless historical bonds" to hundreds of investors. Two-Thirds International, Peter J. Zaccagnino III, John L. Klein Merrill H. Klein and Sterling International Bahamas Ltd. are charged with fraudulently selling historical bonds, many of which were issued in the 19th Century by companies that no longer exist. Among these offerings were railroad bonds, which the sellers said were still backed by gold and worth up to $10.8 billion EACH. Why investors didn't get suspicious when they were offered these seemingly literal gold mines for $330,000 tops, is anyone's guess. Not only were Zaccagnino and company selling this worthless paper, they were also charging investors to appraise their value. They raised more than $400,000 through this scheme, according to the SEC. --------------------------------------------------------------------------------

11/30/98 lr15988 Trotsky's revenge? - Mexican investors lost more than $80 million when a money manager put their funds in highly leveraged, Russian Ruble-backed debt instruments, rather than the safe havens he'd promised. Sharp Capital, Inc. and Mauricio Gutierrez are named as defendants in the SEC's complaint, which also claims investors were given false confirmation and portfolio statements, which "falsely reflected the purchases and sales" in their accounts. Three-quarters of Sharp Capital's investors' funds were invested in Russian debt in August when that economy collapsed. Most of the money was lost, and what's left is in illiquid investments. --------------------------------------------------------------------------------

11/20/98 lr15984 The 200 percent solution - At least 100 investors forked over $15 million to a pair of hucksters guaranteeing 200 percent returns monthly. The investments were prime bank instruments being peddled by Wayne L. Nattrass, Eagle Vision Holdings Inc., and Westminster Trading Trust. Gullible investors were told their money was being put into prime bank instruments that were sponsored by the Federal Reserve and the International Monetary Fund. And, if that wasn't enough, they also were told their money was "guaranteed against risk of loss by the top twenty-five world banks", according to SEC documents. Folks, this is the poster child for "if it sounds too good to be true, it probably is" category. --------------------------------------------------------------------------------

11/19/98 lr15981 Inside out - The SEC has amended its insider trading case against Euro Security Fund, adding several defendants and upping the amount of insider profits by more than $7 million. The original complaint alleges that insiders bought shares in Elsag Bailey Process Automation in the two weeks prior to a tender offer for the Dutch company's common stock that sent shares soaring 90 percent. The illegal inside traders would have made more than $6 million, according to the original complaint. The SEC's newest revelation brings that total to $13 million. --------------------------------------------------------------------------------

11/18/98 lr15979 Chuck Ponzi would be proud… - The SEC has added two more people to its already lengthy list of Ponzi schemers who bilked more than 1,700 investors out of $100 million. Anthony Gianninoto and Eileen Laine join First Interregional Equity Corporation, First Interregional Advisors Corporation and Richard Goettlich in the complaint. According to the SEC, investors were sold rights and titles to equipment leases that had previously been sold to other investors. All together, investors were sold $300 million in equipment leases, exceeded the actual value of the leases by $100 million. Some of the money coming from later investors was used to pay off earlier investors in classic Ponzi scheme fashion. Gianninoto and Laine are accused of helping to cook the books so investors wouldn't catch on. --------------------------------------------------------------------------------

11/06/98 lr15969 When did Congress ever vote on THIS? - A 30-count indictment has been handed down charging two California men with taking more than $7 million from investors by peddling securities of a bogus bank - the Native American Free Trade Association (NAFTA). The SEC complaint claims Ronald G. Sparks and Owen K. Stephenson told investors the bank was unregulated and operating on Apache tribal land in Oklahoma. Investors were conned into making deposits into the non-existent bank. Sparks and Stephenson, who also forgot to tell investors about their past scrapes with the feds on banking and securities fraud charges, are accused of using the stolen funds for their personal needs. --------------------------------------------------------------------------------

10/26/98 lr15945 And in the center ring… - While annual stock market returns have been averaging in the double digits until lately, there are some things that should give anyone pause, even in a raging bull market. Take, for example, projections of annual returns ranging from 34,000 percent to 1.2 million percent. Yes, million, as in six zeroes. Imagine: a foregone pizza ($10) becomes $120,000 by the millennium. A romantic dinner ($300) becomes $3.6 million by next Christmas. Some people bought it, and lost more than $1.7 million before the SEC shut down Kenton Capital, Ltd. and Donald Wallace. Wallace, along with other promoters, is accused of selling investors bank instrument trading programs with outrageous projected returns. --------------------------------------------------------------------------------

10/23/98 lr15944 Legit by association? - Heavy-handed sales tactics and a national ad campaign that included CNBC helped these scamsters raise more than $6 million through the fraudulent offering of unregistered securities that claimed to involve trading options on foreign currency. The SEC has obtained a temporary restraining order against Unique Financial Concepts and its founders. Investors were promised returns as high as 1,000 percent. Instead, most of the money was funneled into personal accounts, and some was used to pay off existing investors - the hallmark of a Ponzi scheme. --------------------------------------------------------------------------------

10/19/98 lr15938 Lotto's biggest threat. - For as little as $50,000 down, you could be a millionaire by next weekend. That was the bait dozens of people took from three Southern California businessmen who conducted a fraudulent investment scheme involving the "fictional trading of securities purportedly issued by major international banks." Investors were guaranteed returns of $1 million a week for 40 weeks, for an initial investment of either $50,000 or $150,000. All three men agreed to permanent injunctions that prohibit them from violating anti fraud provisions of securities law. --------------------------------------------------------------------------------

10/06/98 lr15931 Really, you can't take it with you. - An upstate New York businessman accused of securities fraud committed suicide after being served with subpoenas from the SEC. Samuel A. Yacono, and three companies he controlled, was facing charges of fraudulently offering and selling at least $5 million worth of debentures to investors. The SEC claims he told investors the debentures were CD "alternatives" and as safe as "putting money in the bank." Instead, he used the money for personal expenses, including two life insurance policies valued at $3 million. Proceeds from those policies are in limbo while the SEC seeks restitution for investors. --------------------------------------------------------------------------------

10/02/98 lr15922 10,000 rubles for your thoughts. - More than 1,000 investors fell prey to a Florida-based group, International Capital Management, promising extraordinary profits from a foreign currency exchange program. Investors lost more than $18 million in the scam, which was run out of a boiler room through high pressure telemarketing tactics. Investors were told their principal would be safe, while earning 3 to 6 percent monthly. According to the SEC, the currency trading program lost money, none of the investors' principal was safeguarded and stop-loss orders were not used, as investors had been promised. --------------------------------------------------------------------------------

09/30/98 lr15920 What are friends for? - Two Portland, Ore. men got caught trying to profit from insider information when one tipped the other about a pending merger of energy companies. Peter J. Brix was a director of Portland General Corporation while it was in merger negotiations with Enron, one of the country's largest energy companies. When Brix found out the merger was a done deal, he tipped his friend Ellison C. Morgan, who went out and bought 20,000 shares of Portland General stock in the name of a corporation he controlled. That cost him almost $600,000. But when the merger was announced, Morgan's Portland General shares shot up more than 22 percent. Morgan sold his newly purchased shares, pocketing $109, 292 after commissions and fees. But someone was watching, and the SEC not only took back Morgan's profit, but fined him another $109,292 plus $11,000 in interest. Brix, the tipster, paid a penalty equal to Morgan's profit. --------------------------------------------------------------------------------

09/30/98 lr15919 A true sense of loyalty. - There's more than one way to make money and sometimes people think they're doing it by not losing money. Take Steven Henke and Chan Dasdigoudar, officers in California Micro Devices Corporation. Instead of holding onto their company's stock, or take almost $1 million in losses, these two cooked the books, boosting revenue for 1994, then sold their stock. When word got out about the falsified accounts, Cal Micro's stock price plummeted from $22 to $3.88. Henke and Dasdigoudar weren't the only ones who tried to avoid the loss. The SEC has already settled with other Cal Micro principals. In this case, the commission wants the insiders to pay up the losses that are rightfully theirs. --------------------------------------------------------------------------------

09/30/98 lr15916 No one is immune. - Even big corporations sometimes find themselves at the mercy of unscrupulous traders.Take AT&T, which lost more than $150 million from its pension fund due to unauthorized trades. Bing Sung, an investment advisor for Rhumbline Advisers, had lured the telecommunications giant into an options trading program he had developed and managed. AT&T thought it was protected from unauthorized trades through risk-limiting guidelines Sung had agreed to. But then Sung changed the rules, sneaking info from AT&T that allowed him to get exemptions from the restrictions on several exchanges. Once the losses started, they snowballed, and all the while Sung was misleading AT&T about the health of the fund. --------------------------------------------------------------------------------

09/24/98 lr15899 Stay tuned for the latest scam. - Jerry Wenger, host of the radio stock promo show "The Next SuperStock" and perennial darling of the SEC, is the target of another government stock fraud investigation. Wenger and several cronies are accused of a pump 'n dump of the now-defunct OmniGene Development Inc. shares. Wenger, who has twice been penalized for violating SEC rules, is accused of fraud and violating the SEC's anti-touting rules by not disclosing that he was compensated 66,000 shares of OmniGene stock for promoting the company on his nationally syndicated program. Those promotions helped boost OmniGene share prices, at which point Wenger and his friends allegedly cashed in. --------------------------------------------------------------------------------

09/21/98 lr15892 Going, going, gone. - Ten people have been charged in a prime bank Ponzi scheme that took in more than $19 million from 80 investors, primarily along the East Coast. Investors were told their funds were being invested in a 40-week bank debenture trading program. They were guaranteed weekly returns of 1 percent, and also were told that their investments were secured by Government National Mortgage Association or Federal Home Loan Mortgage Corporation bonds. The scamsters even produced forged and counterfeit documents to lure investors into their scheme. --------------------------------------------------------------------------------

09/18/98 lrl5890 Blind greed. - More than 500 people got cheated out of at least $15 million in a boiler room operation that promised returns of up to 26 percent quarterly. (Yep, do the math, that comes out to more than a 100 percent return annually). Not only did boiler room operators blind investors with dollar signs, they also forgot to tell them that the salespeople were making 60 percent commissions. Must have slipped their minds. --------------------------------------------------------------------------------

09/16/98 lr15882 Shhhhh. I'll let you in on a little secret. - Struck dumb by the prospect of a 100 percent return on their money in less time than it takes most people to buy a new car, almost 200 people turned over $6.6 million to a group of Los Angeles-based hustlers. The defendants told investors their funds would be used for a secret "bank trading" program. Within 90 banking days of their first deposit, these wise money managers would double their money. In the meantime, they were told, their principal would be secured and the investment was risk free. Where did these happy souls learn about this secret program available only to a smart and lucky few? At an off-shore investment seminar run by Investors International Publishing, owned by one of the defendants. --------------------------------------------------------------------------------

09/14/98 lr15880 Invest in Kosovo now, before the tourist season drives up prices. - This could have been one of the lines investors swallowed before giving up more than $4 million to a group of land sharks posing as agents of foreign securities traders. Who would fall for such a ludicrous pitch? Well the same people who believed they'd be getting a 4,300 percent annual return on their investment, that said investment was safe and the returns were even guaranteed. --------------------------------------------------------------------------------

09/04/98 lr15872 But do they insure against lack of common sense? - A group of con artists raised more than $4.5 million from investors who thought they were buying into an insurance vending machine company. The company, American Automation Inc., was going to place enough machines to generate $100 million in profits by the end of the first year. Only problem is, not a single vending machine has been sold, nor is it clear if the company even has any machines to sell, and the only money coming in is from the hapless souls who thought they were getting in on something big. --------------------------------------------------------------------------------

09/02/98 lr15868 Chapter two... - Where there's one Ponzi scheme, there's likely to be another. That's what the SEC must have figured when it unearthed Capital Acquisitions' $24 million pyramid in December. Earlier this month, the SEC amended the Capital Acquisitions complaint to include a similar Ponzi ploy operated by many of the same defendants in the Capital ruse. The new complaint claims Laser Leasing Inc. raised more than $9 million from investors in a fraudulent plan that used money from new investors to make interest payments to people who's money came in earlier.. --------------------------------------------------------------------------------

09/01/98 lr15864 It's not easy being green...- One of the dozens of slimy stock promoters hoodwinking investors pushed too far recently, and the SEC came crashing down on its fraudulent, misleading head. Green Oasis Environmental Inc., its president, William D. Carraway and Green's public relations firm are accused of "using false and misleading press releases and other public statements to increase the price and volume of trading in Green Oasis shares for their personal profit…." Via the Internet and other means, Carraway and Raymond C. O'Brien, who controlled the PR firm touting Green Oasis, sold more than $3 million worth of Green Oasis stock. --------------------------------------------------------------------------------

08/21/98 lr15857 Blame it on Uncle Sam...- A Virginia scam artist bilked gullible investors out of more than $8 million, selling them unregistered securities he claimed were backed by a (non-existent) trust fund. Hugh F. Rollins told investors their money would earn up to 84 percent interest annually because he was loaning it out to cash-starved government contractors who would pay above the going rate in order to secure the money they needed to finish their contract and get paid by Uncle Sam. Although Rollins has agreed to pay restitution, it is not clear whether he has the funds to do so. --------------------------------------------------------------------------------

08/19/98 lr15856 Rolling the dice...- A preliminary injunction against a group of California charlatans may staunch the flow of money investors were losing in Internet Casino Sports Gaming Inc. The people behind this scheme - Robert Matias, aka Robert Duvall, and Alan Lenchner, aka Alan Lane - raised more than $2 million by selling "limited liability units" to about 152 investors. For their money, investors would own a chunk of the casino the scammers said they were going to run online. Investors were told they could earn up to 581 percent interest (yes, people actually believed this). Only about 10 percent of the money raised was used to develop the casino website, with the rest going into the pockets of the defendants and their families, as well as for luxury items like a Mercedes Benz sport utility vehicle. Guess those dice came up craps. --------------------------------------------------------------------------------

08/20/98 lr15844 Saving the Third World... - The SEC has expanded its prosecution of a group who bilked investors by putting together a series of sham transactions between companies controlled by the defendants. Investors were lured into buying shares of Medical Diagnostic Products Inc., aka Novatek International Inc., with phony press releases claiming lucrative contracts. Novatek allegedly sold medical diagnostic kits to health agencies in Russia and Latin America. Another company, New England Diagnostics Inc., has been added to the complaint. Through these companies, some of which were falsely valued at $50 million, the defendants raised at least $4.5 million, most of which was used for personal expenses or given to family members. The defendants are also accused of filing materially false statements with the SEC. --------------------------------------------------------------------------------

08/11/98 lr15838 All that Glitters.... - A lawsuit filed in federal court against a group of would-be movie moguls claims they bilked 660 investors of more than $8 million during a two year period. According to the complaint filed by the SEC, four companies and three individuals talked people into buying "general partnership units" in Desert Gold, a general partnership that allegedly would produce a movie. Investors were promised returns of between 160 and 445 percent. To date, no movie has been produced and all of the investors' funds have been spent. --------------------------------------------------------------------------------

07/16/98 lr15814 Closing the Asylum Gates - A federal judge in New Jersey has closed the books on a stock fraud scheme that centered around the family that founded the Crazy Eddie chain of electronics stores in the Northeast. Sam Antar, two of his sons and one son-in-law were founded guilty of insider trading violations that brought them more than $27 million between the 1970 and 1985. The defendants' schemes "artificially inflated the price of their Crazy Eddie stock holdings, which they sold to unwitting investors." --------------------------------------------------------------------------------

07/16/98 lr15813 Same Scam, Different Name - The SEC has shut down a Ponzi scheme that bilked almost 200 investors out of more than $7 million by telling them their money was backed by the U.S. Government, and promising returns as high as 24 percent. Many of the scheme's victims were elderly or widows who were talked into liquidating annuities and other investments in order to buy "International Certificates of Deposits." According to the SEC, only about $2.69 million of the funds raised illegally are still available to pay back investors. --------------------------------------------------------------------------------

07/16/98 lr15812 Future Hall of Famer? - A California man is accused of losing more than $11 million of his clients' money, many of whom were professional athletes. In a complaint filed against John W. Gillette, the SEC said he acted as an unregistered investment advisor to more than 85 people. The Commission says Gillette made "materially false and misleading statements" when recommending investments, misappropriated clients' profits and paid some clients with other investors' money. --------------------------------------------------------------------------------

07/14/98 lr15808 For a good time, push 1. For fraudulent investments, push 2 - Five corporations and 13 individuals were ordered to pay more than $3 million in civil penalties and disgorgement in a dating service scheme gone awry. The SEC claims investors who bought Touch Tone Partners securities were misled about the use of their funds, and that none of the securities sold or sales offices selling them were registered with the Commission. --------------------------------------------------------------------------------

07/10/98 lr15805 It is easier for a camel to go through the eye of a needle, than for a rich man to enter into... - A temporary restraining order has been issued halting a religious pyramid scheme. Charles Groeschel (aka pastor Chuck) and the Association for Individual Ministries are accused of defrauding investors of at least $1.5 million by "using biblical language." Groeschel told investors that the "more they give (to his ministry), the more they will receive." Meanwhile, Groeschel, who has a previous pyramid fraud conviction, was sending investor money to a corporation he controlled. Once he found out the SEC was investigating, the money was funneled to an offshore account. --------------------------------------------------------------------------------

07/10/98 lr15804 To be ripped off, insert your money here... - The SEC won an emergency restraining order against a Texas company and its principals, who took $3 million from almost 500 investors. Kendyll R. Horton, Hazel A. Horton and Merle B. Gross sold stock in American Automation, Inc. which they said was developing for market automated vending machines that would sell auto insurance. Investors were told the company would have $100 million in profits within three years. The defendants also promised investors there would be a public offering of the stock, which would significantly increase its value. The SEC says the Hortons and Gross used investors' funds for personal expenses and business expenses unrelated to American Automation Inc. --------------------------------------------------------------------------------

07/09/98 lr15803 Pitfalls of revisionist accounting - When the books finally close on a fiscal year, it's not unheard of for a company to have to restate its financials - a comma here, a couple of zeros there. When the SEC does it for you, look out. The Commission has filed suit against former executives of Media Vision Technology, claiming they directed others to falsify financial records and profited from the lies. Paul C. Jain, Steven J. Allan, Robert S. Williams and Wayne Nakamura are accused of fraud and insider trading. At issue are Media Vision's 1993 financial results. According to the SEC's complaint, revenues were overstated by $91 million and earnings inflated by $119 million. As a result, Media Vision's stock reached a high of $46.50, and a market cap of $630 million, in January 1994. Within five months, the stock had declined to $2.63 per share, but not before Jain, Allan and Nakamura combined reaped more than $2.3 million by selling their shares of Media Vision stock. --------------------------------------------------------------------------------

06/29/98 lr15794 Another player who ain't a payin' - James G. Freeman and 18 companies he controlled were ordered in April to disgorge more than $10 million in illegal profits. However, all but $15,444.78 (no, we didn't forget any zeros) was waived based on the defendant's proven inability to pay. Freeman was at the top of a Ponzi scheme that reaped more than $26 million from 500 investors in 1994 and 1995. These "Freeman Notes" were sold like promissory notes and renewable every nine months. Investors were guaranteed a 12 percent annual return, plus a longevity bonus equal to 8 percent of all funds maintained in the alleged investment for each year the Freeman note was renewed. --------------------------------------------------------------------------------

06/24/98 lr15789 Like sheep to the slaughter, or perhaps lemmings over the cliff - A Texas court has frozen the assets of two corporations and five people associated with those organizations in a scheme that bilked investors of more than $11 million. Lennox Investment Group, Ltd., Active International, Inc., Randall W. Law, James F. Wardell, Monica M. Iles, Frank L. Teitz and Daniel B. Benson are accused by the SEC of selling unregistered prime bank securities to 50 investors in 10 states. The investors were told that their money would be placed in escrow accounts, where the principal would be guaranteed. Investors also were told their funds would be invested in a trading program that would yield returns of 122.5 percent per week for 40 weeks. The complaint alleges that no trading program existed and the defendants stole $11.1 million from the investors. --------------------------------------------------------------------------------

06/19/98 lr15787 P.T. Barnum told us about these guys - A complaint has been filed by the SEC against three people accused of selling more than $3.5 million worth of 19th Century state and railroad bonds that have negligible value as collectibles. Albert E. Carter, Kelly Polatis and Eunice Polatis sold bonds issued in 1873 by the Chicago, Saginaw & Canada Railway Co.; in 1870 by the East Alabama & Cincinnati Railway Co. and by the state of Mississippi in 1838. Investors were told the bonds were redeemable in gold and guaranteed by the U.S. government. The complaint also claims that Carter sold interests in an offshore investment program. Carter allegedly told buyers of the worthless 19th century bonds that, by placing the bonds in the offshore program, they could realize "annual returns of 100 percent to 500 percent." Assets of the defendants and three relief defendants, who received proceeds from the bond sales, have been frozen. --------------------------------------------------------------------------------

06/09/98 lr15777 If you play, you don't necessarily have to pay - More than eight years after his misdeeds began, a Massachusetts man who took in more than $14 million has been sentenced to almost three years in federal prison and ordered to pay $4 million in restitution. Robert D. Gersh was sentenced on charges that he misappropriated $4 million entrusted to his two companies, Boston Municipal Securities and Devonshire Escrow and Transfer Corp. Through these two corporations, Gersh sold more than $14 million in certificates of participation to investors who were told they were backed by government equipment leases. When the leases were paid off, Gersh used most of the money for his personal business, making only token "interest" payments to investors. Gersh was also ordered to disgorge more than $7.5 million, but most of that penalty was waived, based on his proven inability to pay. --------------------------------------------------------------------------------

06/09/98 lr15772 Off the Hook, But not out of the Slammer - A man serving jail time for ripping off investors also has been sanctioned by the SEC. Ted Mong is serving a 15 to 35 year sentence after a jury found him guilty on a 78-count criminal indictment based on methods used to raise more than $1.5 million selling promissory notes. Among other things, Mong promised investors they would earn returns of 230 percent on their initial investments. --------------------------------------------------------------------------------

06/05/98 lr15770 Don't Bank on it - The SEC has asked for emergency injunction against seven individuals and two companies it suspects of selling forged and fictitious securities for more than a year. The complaint claims the group raised millions of dollars by selling a fraudulent bank certificate that they said was issued by the Bank of Tokyo-Mitsubishi Ltd. SEC officials are concerned that the individuals involved have more than one "sham document" with which to dupe investors. Besides the injunction to stop trading, the SEC is also seeking disgorgement of $2 million. --------------------------------------------------------------------------------

06/02/98 lr15763 Lead Parachute - An Arizona man was sentenced to 57 months in prison and three years of supervised release for squandering more than $6 million of investors' retirement savings. Jerry G. Allison, former president of Qualified Pensions, Inc., also was ordered to pay restitution of $6.6 million. According to the SEC, Allison misappropriated millions of dollars placed with QPI by investors who thought they were put into Individual Retirement Accounts and other retirement savings plans. Allison also was accused of executing securities transactions for his clients without registering as a broker. --------------------------------------------------------------------------------

05/29/98 lr15762 But was it a Boxster? - Promising investors that he would pay them 5 to 7 percent interest per week, John D'Acquisto raised more than $7 million in a money laundering scheme. He spent part of that on a new Porsche and half a million on a couple of racehorses. But now he's faced with attorney's fees. --------------------------------------------------------------------------------

05/18/98 lr15743 Floored - The SEC has amended a complaint originally filed in February that charged eight floor brokers on the New York Stock Exchange and six securities firms with illegal trading on the floor of the Exchange. The amended complaint adds the charge of trading ahead of customer orders against five of the brokers. According to the SEC, the brokers and securities firms made $11 million by trading on knowledge gleaned by brokers on the floor, and trading through illegal accounts set up by the firms. Brokers are prohibited from trading on their own behalf when on the floor of an exchange because it gives them an unfair advantage. --------------------------------------------------------------------------------

05/04/98 lr15730 Curtain Call - Three years and two fraudulent schemes later, the SEC has filed a complaint against a company that bilked investors out of at least $3 million while raising capital for what they claimed would be a chain of family entertainment restaurants. Hollywood Trenz, Inc. and its officers are the focus of the complaint. The SEC claims Hollywood Trenz's first scheme involved inflating a worthless portfolio of defaulted bank loans into a $7 million asset. In its second prank, the company raised more than $2.5 million through fraudulent sale of securities. Hollywood Trenz registered securities to be sold under the SEC's S-8 rules, which allow for transfer of shares for employee compensation. --------------------------------------------------------------------------------

05/01/98 lr15729 Banking on Misery - Two men who sold more than $100 million in viaticals - selling your life insurance benefits to a third party to get cash before dying - settled charges by the SEC that they misled investors. Joel and Leslie Steinger, who owned Mutual Benefits Corporation, were accused of telling investors they held irrevocable interests in certain policies when they did not. The Steingers were also accused of holding money in the company's checking account, not a trust account like they told investors. The brothers were also charged with selling unregistered securities. --------------------------------------------------------------------------------

04/23/98 lr15719 Every Trick in the Book - The MO of a pump 'n dump that brought in more than $6.5 million was a checklist of warning signs investors should have known to look out for. Alter Sales Co., Inc., a distributor of automotive parts, sold unregistered securities, sold shares at huge discounts out of the market and then resold them at a profit, created fictitious accounts on and offshore to launder the proceeds and finally got caught. The SEC filed a microcap manipulation complaint against the company and at least five people who were involved in the scam. --------------------------------------------------------------------------------

04/20/98 lr15711 Capping the Wells - The SEC shut down a Texas operation that scammed investors in 40 states out of more than $7.5 million during a three-year period. Shares in United Energy Partners Inc. were sold to investors based on false information and omission of important facts. For instance, salesmen were paid commissions as high as 15 percent. And half the investors' money was funneled into United Energy's operating account where it was spent at management's discretion, not on specific drilling sites as investors were promised. --------------------------------------------------------------------------------

04/15/98 lr15707 Eating His Words - Popular radio finance jock and stock promoter Jerome Wenger is the subject of an SEC complaint alleging that he promoted Transco stock on his show without disclosing that he was being paid to do so. Wenger allegedly received 59,000 shares of Transco stock between June and August last year, plus a check for $4,000. In return, Wenger plugged Transco's stock at least 40 times on his radio show during a three-month period. Wenger's show, the Next SuperStock, shares its name with Wenger's newsletter. According to the SEC's complaint, Wenger made a $71,000 profit when he sold his Transco stock. Stock Detective warned readers about Wenger months ago, --------------------------------------------------------------------------------

04/13/98 nd98-68 Unlimited Moxie - The U.S. Securities and Exchange Commission has taken action against the individual behind a fraudulent limited partnership scheme that took in more than $14 million in six years. Thomas B. O'Connell is accused of selling interests in two unregistered limited partnerships between 1989 and 1995 by telling investors that the partnerships were earning returns between 27 percent and 46 percent. In fact, the money was going straight into O'Connell's pockets or to pay off earlier investors, in a classic Ponzi scheme. --------------------------------------------------------------------------------

04/13/98 lr15700 More Moxie - The SEC has also filed a complaint claiming that a California man bilked investors out of almost $500,000. Matthew P. Bowin is charged with luring investors into what sounded like a risk-free investment in a high-tech startup company, IPS. He told them that their money would be placed in escrow and, if a minimum $500,000 was not raised, all money would be returned. Well, Bowin never hit the half-million mark, and he spent all of the cash actually raised. --------------------------------------------------------------------------------

04/03/98 nd98-64 Making A List And Checking It Twice - The SEC has cancelled the registrations of more than 65 broker-dealers either for failure to comply with the requirements of the Securities Investor Protection Corp. or failing to be a member of a self-regulatory organization. Investors who have not received their cash or securities from broker-dealers on the list should immediately contact the National Association of Securities Dealers Inc. For a complete list, click on this listing's link to the SEC. --------------------------------------------------------------------------------

03/31/98 nd98-61 Cuffed - The principals of Bondage Breaker Ministries are in trouble again for not handing property over to a court-appointed trustee after a federal court said they had bilked investors out of more than $24 million. Geoffrey P. Benson, Susan L. Benson, Lindsey K. Springer and several other defendants violated SEC laws when they promoted investments and "guaranteed returns of as much as 181 percent" through investments that turned out to be worthless or non-existent.


03/30/98 lr15689 You Better Not Go Home Again - Two U.S. citizens operating from Central America have been ordered to repay more than $9 million in illegal gains, including interest, by a federal judge. Lloyd R. Winburn, Swiss Trade & Commerce Trust Ltd., and Eddie R. Blackwell spent two years selling worthless investments in the Banner Fund International Offshore Arbitrage Leveraging Program, mainly to unsophisticated investors. Winburn and Blackwell advertising the scam as an opportunity for small investors to get in on big deals only hot shots enjoy, claiming the investors' money would be "leveraged into large profits with little or no room for loss." In fact, the two men spent the money on real estate, a shrimp farm in Belize and on different trusts in the U.S. set up to loan money to friends and relatives.

Winburn and Blackwell were ordered to repay $6.5 million raised through their false and misleading statements and $2.7 million in prejudgment interest. Since they had used the U.S. mail to pull off the fraud, the judge rejected the defendants' claim that U.S. courts had no jurisdiction since they were operating out of foreign countries.


03/26/98 lr15685 Cashing in on cash machines - In one of the SEC's largest lawsuits involving Internet fraud, and its first involving ATM's, four individuals have been ordered to pay more than $1.2 million for their parts in a Ponzi scheme that involved selling investment contracts for the sale and leaseback of Automatic Teller Machines. Defendants Charles R. Rietz, Gilbert, Az.; Robert R. Parrish, Gilmer, Texas; Robert J. Struth, Southern California; and Stephen Edgel, Carmichael, Calif. offered the phony investments over the Internet and raised almost $4 million from more than 130 investors nationwide. --------------------------------------------------------------------------------

03/25/98 lr15683 Name dropping gone bad - A group of individuals and their California-based companies have had their assets frozen and put into receivership by a federal judge on claims they bilked desperate people out of $5 million with fake obesity clinics. Defendants David A. Colvin, Job Kjell Hovik, Lamar Ellis and John Larson are accused of "falsely representing that former U.S. Surgeon General C. Everett Kiip and NBC newsman Tom Brokaw were affiliated with one of the defendants' companies, Medical Advantage. Defendants also misrepresented that an initial public offering of Medical Advantage stock was imminent when, in fact, the company was insolvent. --------------------------------------------------------------------------------

03/25/98 lr15681 Chapter 11 no longer closes the book on all judgments - An U.S. Bankruptcy judge ruled recently that a $75 million securities fraud judgment could not be discharged through an individual's bankruptcy filing. Robert E. Brennan has a "fiduciary duty" to customers of First Jersey Securities, where he was the principal and presided over a scheme to extract massive overcharges. Brennan had filed for bankruptcy in August 1995 after a federal court entered the fraud judgment against him and held Brennan and First Jersey liable for disgorgement of $75 million. --------------------------------------------------------------------------------

03/10/98 lr15660 Better Living Through Creative Finance - The SEC is closing the books on a Ponzi scheme that cost investors at least $25 million during a two-year period. Robert N. Taylor, head of The Better Life Club of America, and two other defendants were found guilty of securities fraud and unlawful sale of securities. Taylor raised more than $45 million from investors by conning them into placing their money in an advertising pool with promises of doubling their money in less than three months.

Investors were told their money would be used to advertise Better Life Club products that supposedly were money makers. Instead, funds from later investors were used to pay off earlier ones. None of the club's for-profit ventures - including a 900 number - ever made a dime.

Taylor, a convicted felon, wasn't too creative with the investors' largesse, so some of the assets will be recovered. In addition to buying a $300,000 home in Maryland with his former lover, Taylor built a 40-foot swimming pool, bought three cars and created trust funds for his two sons. On top of that, court documents estimate Taylor received between $800,000 and $1.2 million in cash.

Joining Taylor as defendants were his accountant, Wilkins McNair Jr. and Elizabeth Lawson, Taylor's former companion. McNair was ordered to pay $120,000. Lawson was ordered to pay more than $65,000 and give up her interest in the Maryland home, which she owned jointly with Taylor, and a Jaguar he had given her.

Taylor is serving a 41-month prison sentence for violating a court order that prohibited him from using $2.7 million of Better Life Club assets that had been frozen by the court. He has been ordered to repay $25.8 million to bilked investors.

Stock Detective's SEC Highlights from 1997

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Last changed: March 17, 2000