Thursday, July 5, 2012

Three Plead Guilty in $41 Million Ponzi Scheme Based in Ventura County That Promised Profits in Ad Toppers Video Advertisements

Two residents of Oxnard and a South Carolina man each pleaded guilty today to federal fraud charges, admitting that they participated in a $41 million investment scheme that victimized hundreds of investors across the United States.

Using Ventura County companies called Unlimited Cash Inc. (UCI) and Douglas Network Enterprises Inc. (DNE), the defendants told victims that UCI would sell ATMs and “Ad Toppers”—computer monitors capable of displaying video advertisements—and DNE would place the devices in commercial locations that would generate income. Victims were told they would earn income from ATM transaction fees and advertisement revenue generated by Ad Toppers, which would show ads for companies such as Coca-Cola, Gold’s Gym, and Paramount Pictures. Even though they took in approximately $41 million over a four-year period, the defendants did not place most of the ATMs and Ad Toppers sold to investors. The loss amount to victims is approximately $27 million.

Each of three defendants pleaded guilty today to 17 counts in an indictment that was returned in August 2010. The defendants are:

  • Alan G. Flesher, 64, of Oxnard;
  • Wayne D. Flesher, 62, of Oxnard (previously of Ventura); and
  • Nancy Carol Khalial, 64, of Oxnard.

The indictment in the case alleges that the defendants used the majority of investor funds to pay personal expenses and to continue operating the fraudulent scheme by paying personal salaries and sales commissions and by making Ponzi-style payments.

As a result of today’s guilty pleas, each of the three defendants faces a statutory maximum sentence of 340 years in federal prison. They are scheduled to be sentenced by United States District Judge Terry J. Hatter Jr. on October 1.

This investigation was conducted by the FBI and the United States Postal Inspection Service, which received assistance from the Securities Exchange Commission.

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