Brian Ray Dinning, 47, of Toronto, Canada, has been indicted by a federal grand
jury on wire fraud charges.
Neil H. MacBride, United States Attorney for the Eastern District of
Virginia, made the announcement after the indictment was returned by the grand
jury. Dinning has been charged with 25 counts of wire fraud, which each carry a
maximum penalty of 20 years in prison, if convicted.
According to the indictment, Dinning was a graduate of Regent University Law
School and also obtained an LL.M in tax from the Georgetown University Law
Center. From early 2005 until the present, Dinning allegedly recruited
approximately 23 individuals to invest in his numerous “for-profit” corporations
that he had established. He did this by falsely advising investors that they
would accrue significant financial gains from South African projects, such as a
luxury Oceanside housing development, a luxury Oceanside hotel and private
residence club, as well as diamond and gold mining operations. The indictment
alleges that Dinning also used “not-for-profit” corporations to obtain donations
purportedly for charitable, environmental, agricultural, medical, and community
projects for the tribal people of South Africa, as well as developing wildlife
habitats for native African species.
Regardless of whether his investors made investments for profit or donations
for charitable causes to Dinning’s various corporations, upon receipt of these
funds from his investors, Dinning is alleged to have immediately used their
money for personal and family gain, for payment of his and his family’s
expenses, for payment of alimony and child support to his ex-wife, for payment
of private school tuition for his children, and to make the down payment and
subsequent mortgage payments on his new $975,000 home in Suffolk. As a result,
Dinning allegedly obtained more than $2.9 million from his investors, of which
he retained more than $2 million for his and his family’s benefit.
This case was investigated by the Norfolk Division of the FBI. Assistant
United States Attorney Steve Haynie is prosecuting the case on behalf of the
United States.
Criminal indictments are only charges and not evidence of guilt. A defendant
is presumed to be innocent until and unless proven guilty.
A copy of this press release may be found on the website of the United States
Attorney’s Office for the Eastern District of Virginia at
http://www.justice.gov/usao/vae.
Showing posts with label ponzi. Show all posts
Showing posts with label ponzi. Show all posts
Wednesday, August 29, 2012
Sunday, August 19, 2012
SEC Shuts Down $600 Million Online Pyramid and Ponzi Scheme
The Securities and Exchange Commission announced fraud charges and an
emergency asset freeze to halt a $600 million Ponzi scheme on the verge of
collapse. The emergency action assures that victims can recoup more of their
money and potentially avoid devastating losses.
The SEC alleges that online marketer Paul Burks of Lexington, N.C. and his company Rex Venture Group have raised money from more than one million Internet customers nationwide and overseas through the website ZeekRewards.com, which they began in January 2011.
According to the SEC’s complaint filed in federal court in Charlotte, N.C., customers were offered several ways to earn money through the ZeekRewards program, two of which involved purchasing securities in the form of investment contracts. These securities offerings were not registered with the SEC as required under the federal securities laws.
The SEC alleges that investors were collectively promised up to 50 percent of the company’s daily net profits through a profit sharing system in which they accumulate rewards points that they can use for cash payouts. However, the website fraudulently conveyed the false impression that the company was extremely profitable when, in fact, the payouts to investors bore no relation to the company’s net profits. Most of ZeekRewards’ total revenues and the “net profits” paid to investors have been comprised of funds received from new investors in classic Ponzi scheme fashion.
“The obligations to investors drastically exceed the company’s cash on hand, which is why we need to step in quickly, salvage whatever funds remain and ensure an orderly and fair payout to investors,” said Stephen Cohen, an Associate Director in the SEC’s Division of Enforcement. “ZeekRewards misused the power of the Internet and lured investors by making them believe they were getting an opportunity to cash in on the next big thing. In reality, their cash was just going to the earlier investor.”
The SEC’s complaint alleges that the scheme is teetering on collapse with investor funds at risk of dissipation without its emergency enforcement action. Last month, ZeekRewards brought in approximately $162 million while total investor cash payouts were approximately $160 million. If customers continue to increasingly elect to receive cash payouts rather than reinvesting their money to reach higher levels of rewards points, ZeekRewards’ cash outflows would eventually exceed its total revenue.
Burks has agreed to settle the SEC’s charges against him without admitting or denying the allegations, and agreed to cooperate with a court-appointed receiver.
According to the SEC’s complaint, ZeekRewards has paid out nearly $375 million to investors to date and holds approximately $225 million in investor funds in 15 foreign and domestic financial institutions. Those funds will be frozen under the emergency asset freeze granted by the court at the SEC’s request. Meanwhile, Burks has personally siphoned several million dollars of investors’ funds while operating Rex Venture and ZeekRewards, and he distributed at least $1 million to family members. Burks has agreed to relinquish his interest in the company and its assets plus pay a $4 million penalty. Additionally, the court has appointed a receiver to collect, marshal, manage and distribute remaining assets for return to harmed investors.
The SEC’s investigation was conducted by Brian M. Privor and Alfred C. Tierney in the SEC’s Enforcement Division in Washington D.C. The SEC acknowledges the assistance of the Quebec Autorite des Marches Financiers and the Ontario Securities Commission.
The SEC alleges that online marketer Paul Burks of Lexington, N.C. and his company Rex Venture Group have raised money from more than one million Internet customers nationwide and overseas through the website ZeekRewards.com, which they began in January 2011.
According to the SEC’s complaint filed in federal court in Charlotte, N.C., customers were offered several ways to earn money through the ZeekRewards program, two of which involved purchasing securities in the form of investment contracts. These securities offerings were not registered with the SEC as required under the federal securities laws.
The SEC alleges that investors were collectively promised up to 50 percent of the company’s daily net profits through a profit sharing system in which they accumulate rewards points that they can use for cash payouts. However, the website fraudulently conveyed the false impression that the company was extremely profitable when, in fact, the payouts to investors bore no relation to the company’s net profits. Most of ZeekRewards’ total revenues and the “net profits” paid to investors have been comprised of funds received from new investors in classic Ponzi scheme fashion.
“The obligations to investors drastically exceed the company’s cash on hand, which is why we need to step in quickly, salvage whatever funds remain and ensure an orderly and fair payout to investors,” said Stephen Cohen, an Associate Director in the SEC’s Division of Enforcement. “ZeekRewards misused the power of the Internet and lured investors by making them believe they were getting an opportunity to cash in on the next big thing. In reality, their cash was just going to the earlier investor.”
The SEC’s complaint alleges that the scheme is teetering on collapse with investor funds at risk of dissipation without its emergency enforcement action. Last month, ZeekRewards brought in approximately $162 million while total investor cash payouts were approximately $160 million. If customers continue to increasingly elect to receive cash payouts rather than reinvesting their money to reach higher levels of rewards points, ZeekRewards’ cash outflows would eventually exceed its total revenue.
Burks has agreed to settle the SEC’s charges against him without admitting or denying the allegations, and agreed to cooperate with a court-appointed receiver.
According to the SEC’s complaint, ZeekRewards has paid out nearly $375 million to investors to date and holds approximately $225 million in investor funds in 15 foreign and domestic financial institutions. Those funds will be frozen under the emergency asset freeze granted by the court at the SEC’s request. Meanwhile, Burks has personally siphoned several million dollars of investors’ funds while operating Rex Venture and ZeekRewards, and he distributed at least $1 million to family members. Burks has agreed to relinquish his interest in the company and its assets plus pay a $4 million penalty. Additionally, the court has appointed a receiver to collect, marshal, manage and distribute remaining assets for return to harmed investors.
The SEC’s investigation was conducted by Brian M. Privor and Alfred C. Tierney in the SEC’s Enforcement Division in Washington D.C. The SEC acknowledges the assistance of the Quebec Autorite des Marches Financiers and the Ontario Securities Commission.
Friday, July 6, 2012
Thomas Kelly Sentenced for Ponzi Investment Scheme
Richard S. Hartunian, United States Attorney for the Northern District of New York, and Clifford C. Holly, Special Agent in Charge, Albany Division, Federal Bureau of Investigation, make the following announcement:
Thomas E. Kelly, 64, of Johnson City, New York, was sentenced today in United States District Court to a term of imprisonment of four years and three months in connection with his previously entered plea of guilty to the felony crime of mail fraud. In addition, United States District Court Judge Norman Mordue imposed a term of five years’ supervised release, which will follow completion of Kelly’s prison sentence.
At the time of his plea in February 2012, Kelly admitted that for a period of at least 15 years, ending in November 2010, he perpetrated a scheme to defraud and obtain money by false and fraudulent pretenses, representations, and promises, and he used the United States mail in furtherance of his scheme to defraud. During the years of the fraud, Kelly was employed as a financial consultant by a number of banks located in the Binghamton, New York area. In his position as financial consultant, Kelly recommended that clients sell off legitimate securities investments in order to invest in a fictitious entity Kelly called Seneca Group. Kelly promised investors with Seneca Group a stable, secure investment. Instead, Kelly used money invested with Seneca Group to, among other things, make risky investments in the stock market and pay some of Kelly’s personal expenses. Over the years of the fraud, at least 19 individuals invested in Seneca Group due to Kelly’s recommendation. The amount of loss to investors as a result of Kelly’s scheme was almost one million dollars.
The nature of Ponzi-type schemes such as this one is that some investors request the return of “interest,” principal, or some similar request. Individuals who conduct Ponzi-type schemes often return some money to some investors in order to keep the scheme alive. For example, if some money is returned as requested, investors are likely to reinvest and recommend to others investment with, in this case, Kelly’s Seneca Group.
The case was investigated by the Federal Bureau of Investigation, Binghamton Resident Agency, and it was prosecuted by Assistant United States Attorney Thomas P. Walsh. Further inquiries may be directed to the telephone numbers listed above, or to the United States Attorney’s Office, Binghamton Office, at (607) 343-3711.
Thomas E. Kelly, 64, of Johnson City, New York, was sentenced today in United States District Court to a term of imprisonment of four years and three months in connection with his previously entered plea of guilty to the felony crime of mail fraud. In addition, United States District Court Judge Norman Mordue imposed a term of five years’ supervised release, which will follow completion of Kelly’s prison sentence.
At the time of his plea in February 2012, Kelly admitted that for a period of at least 15 years, ending in November 2010, he perpetrated a scheme to defraud and obtain money by false and fraudulent pretenses, representations, and promises, and he used the United States mail in furtherance of his scheme to defraud. During the years of the fraud, Kelly was employed as a financial consultant by a number of banks located in the Binghamton, New York area. In his position as financial consultant, Kelly recommended that clients sell off legitimate securities investments in order to invest in a fictitious entity Kelly called Seneca Group. Kelly promised investors with Seneca Group a stable, secure investment. Instead, Kelly used money invested with Seneca Group to, among other things, make risky investments in the stock market and pay some of Kelly’s personal expenses. Over the years of the fraud, at least 19 individuals invested in Seneca Group due to Kelly’s recommendation. The amount of loss to investors as a result of Kelly’s scheme was almost one million dollars.
The nature of Ponzi-type schemes such as this one is that some investors request the return of “interest,” principal, or some similar request. Individuals who conduct Ponzi-type schemes often return some money to some investors in order to keep the scheme alive. For example, if some money is returned as requested, investors are likely to reinvest and recommend to others investment with, in this case, Kelly’s Seneca Group.
The case was investigated by the Federal Bureau of Investigation, Binghamton Resident Agency, and it was prosecuted by Assistant United States Attorney Thomas P. Walsh. Further inquiries may be directed to the telephone numbers listed above, or to the United States Attorney’s Office, Binghamton Office, at (607) 343-3711.
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:
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.
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.
Monday, June 18, 2012
Anchorage Woman Sentenced to Seven Years in Prison for Running Ponzi Scheme
Acting U.S. Attorney Kevin Feldis announced today that Samantha Delay-Wilson of
Anchorage was sentenced in federal court in Anchorage to 84 months in prison on
her conviction of defrauding investors and lenders of over $5 million during the
course of her more than decade-long Ponzi scheme. The 84-month sentence is to be
served in addition to the more than five years Delay-Wilson was sentenced to
serve on her separate state fraud convictions.
On June 15, 2012, Samantha Dorothy Delay-Wilson, 65, of Anchorage was sentenced by United States District Court Judge Russell Holland.
According to Assistant U.S. Attorney Aunnie Steward, who prosecuted the case, the following facts provided the basis for Delay-Wilson’s guilty plea:
Delay-Wilson carried out a Ponzi scheme for over a decade, defrauding 14 individuals by making false representations and promises and by providing false documents to victims regarding investments she would make on their behalf and regarding her assets and credentials. Delay-Wilson guaranteed investors a high-rate of return and made false claims regarding how she was going to invest the victims’ money, making different claims to different victims. She told victims she would invest their money in a global investment fund, European sub-prime loans, and an investment banking service company, when, in fact, she used the victims’ money for her personal expenses, to fund her lavish lifestyle, and to pay out earlier investors.
Acting U.S. Attorney Kevin Feldis stated, “The Department of Justice takes fraudulent investment schemes very seriously and works to deter this type of conduct through prosecution. Today’s prison sentence demonstrates that those who prey on the trust of others and defrauds investors will be caught and punished.” Investment schemes happen, even in Alaska, and we all need to be alert to such fraud.”
Mary Rook, Special Agent in Charge of the FBI in Alaska, stated, “Part of the FBI’s mission is to identify, deter, and disrupt significant financial crime targeting individuals, businesses, and industries within the United States. Financial crimes often leave the victims in financial ruin from which it may take years to recover.”
“It can be devastating when the financial well-being of an individual falls into the wrong hands through trickery and deceit,” said Kenneth J. Hines, the IRS Special Agent in Charge of Alaska. “Victims of financial fraud schemes like this suffer emotional pain as well as a devastating financial loss.”
Judge Holland commented that the scheme lasted “an amazing length of time” because of Delay-Wilson’s ability to manipulate people. Judge Holland also noted that the offense was aggravated by the fact that the money defrauded from several of the victims was their retirement money.
Mr. Feldis commended the Internal Revenue Service Criminal Investigations, the Federal Bureau of Investigation, and the Anchorage Police Department for the investigation that led to the successful prosecution of Delay-Wilson.
On June 15, 2012, Samantha Dorothy Delay-Wilson, 65, of Anchorage was sentenced by United States District Court Judge Russell Holland.
According to Assistant U.S. Attorney Aunnie Steward, who prosecuted the case, the following facts provided the basis for Delay-Wilson’s guilty plea:
Delay-Wilson carried out a Ponzi scheme for over a decade, defrauding 14 individuals by making false representations and promises and by providing false documents to victims regarding investments she would make on their behalf and regarding her assets and credentials. Delay-Wilson guaranteed investors a high-rate of return and made false claims regarding how she was going to invest the victims’ money, making different claims to different victims. She told victims she would invest their money in a global investment fund, European sub-prime loans, and an investment banking service company, when, in fact, she used the victims’ money for her personal expenses, to fund her lavish lifestyle, and to pay out earlier investors.
Acting U.S. Attorney Kevin Feldis stated, “The Department of Justice takes fraudulent investment schemes very seriously and works to deter this type of conduct through prosecution. Today’s prison sentence demonstrates that those who prey on the trust of others and defrauds investors will be caught and punished.” Investment schemes happen, even in Alaska, and we all need to be alert to such fraud.”
Mary Rook, Special Agent in Charge of the FBI in Alaska, stated, “Part of the FBI’s mission is to identify, deter, and disrupt significant financial crime targeting individuals, businesses, and industries within the United States. Financial crimes often leave the victims in financial ruin from which it may take years to recover.”
“It can be devastating when the financial well-being of an individual falls into the wrong hands through trickery and deceit,” said Kenneth J. Hines, the IRS Special Agent in Charge of Alaska. “Victims of financial fraud schemes like this suffer emotional pain as well as a devastating financial loss.”
Judge Holland commented that the scheme lasted “an amazing length of time” because of Delay-Wilson’s ability to manipulate people. Judge Holland also noted that the offense was aggravated by the fact that the money defrauded from several of the victims was their retirement money.
Mr. Feldis commended the Internal Revenue Service Criminal Investigations, the Federal Bureau of Investigation, and the Anchorage Police Department for the investigation that led to the successful prosecution of Delay-Wilson.
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