SEC v. Daren L. Palmer and Trigon Group, Inc., United States District Court for the District of Idaho (Civil Action No. CV 09-75-S-EJL) (February 26, 2009)

SEC Files Complaint Against Daren L. Palmer and Trigon Group, Inc. for Operating a $40 million Ponzi Scheme and Obtains Orders Freezing Assets, and Appointing a Receiver

The Securities and Exchange Commission filed a Complaint on February 26, 2009, in the United States District Court for the District of Idaho, alleging that Daren L. Palmer ("Palmer"), a resident of Idaho Falls, Idaho, and his investment business Trigon Group, Inc. ("Trigon"), a Nevada corporation, raised at least $40 million as part of a Ponzi scheme that has defrauded at least 55 investors. According to the Commission's Complaint, from at least 1996 until October 2008, Palmer and Trigon defrauded investors by representing that invested funds would be used in a riskless trading program that earned annual returns of 20 percent or more. The Complaint alleges that Palmer and Trigon sold securities in the form of promissory notes and investment contracts in unregistered transactions, and told investors that their principal would be invested in indexes, S&P 500 options or futures, currency futures and stocks in a way that would generate high returns with no risk. The Complaint alleges that, instead, Palmer and Trigon were using funds put into the program by later investors to pay fictitious returns to earlier investors in a classic Ponzi scheme. The Commission's Complaint further alleges that Palmer used investor funds to build a partially completed $12 million home in Idaho Falls, Idaho, to purchase snowmobiles, to pay himself compensation of $25,000 to $35,000 a month, and for other personal expenses. The Complaint also alleges that while Palmer told investors he was licensed to sell securities, he has never been licensed to sell securities and that neither Palmer nor Trigon is registered with the Commission in any capacity.

The Commission asked the court to order a preliminary injunction enjoining Palmer and Trigon from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and enjoining Palmer from future violations of Section 15(a) of the Exchange Act. In addition, on February 26, 2009, the court signed an order freezing all assets of Palmer and Trigon and appointing a receiver in the matter.

The Commission acknowledges the assistance of the U.S. Commodities Futures Trading Commission, the Federal Bureau of Investigation, and the Idaho Department of Finance in bringing this action.

http://www.sec.gov/litigation/litreleases/2009/lr20918.htm

A grand jury in Seattle, Washington, has indicted ROBERT MIRACLE, MUKHTAR KECHIK, and FAHIMI FISAL in a twenty-three count Indictment charging Conspiracy, Mail Fraud, Wire Fraud, Money Laundering, and Tax Evasion. The Indictment alleges that the men operated a $65-million “Ponzi” scheme. MIRACLE, 48, was arrested at his home in Bellevue this morning, and will be arraigned on the Indictment this afternoon at 2:30. KECHIK, 52, and FISAL, 32, both are Malaysian nationals. Warrants have been issued for the arrest of KECHIK and FISAL.

According to the Indictment, MIRACLE operated a number of companies allegedly involved in oil development in Malaysia and Indonesia, including: Laramie Petroleum, Inc.; MCube Petroleum, Inc.; Diski Limited Liability Company; Basilam Limited Liability Company; and Halmahera-Rembang Limited Liability Company. MIRACLE and his co-defendants represented to investors that these companies were making money from oil-field development and from the sale of oil-field services. In fact, the funds of later investors were used to pay off the investments of earlier investors. Between September 2004 and October 2007, MIRACLE took in more than $65 million from investors and paid out more than $36 million in returns to investors, using funds from later investors. The remainder of the investor monies—more than $28 million—was used in a failed effort to develop oil and gas on fields in Indonesia, as well as to pay for a lavish lifestyle for MIRACLE and his cohorts.

According to the Indictment, as part of the conspiracy, MIRACLE allegedly mislead investors both about his business background, and about the success of the companies he promoted. MIRACLE falsely claimed to have been employed by NASA and Disney. MIRACLE also allegedly falsely claimed that his companies actually were producing and selling oil and gas. Between 2004 and 2007, MIRACLE issued a number of press releases and “investor updates” touting his companies’ successes. According to e-mails referenced in the Indictment, the conspirators plotted to make false financial statements, which they referred to as “simulation files,” that falsely showed that the companies were producing oil and gas, and receiving revenues from the sale of that oil and gas. MIRACLE also allegedly created false bank documents to support their fraud.

As part of the Indictment the government is seeking to forfeit a two-carat diamond ring MIRACLE purchased for more than $38,000 and a painting that MIRACLE purchased in Italy for $27,000. The Indictment also alleges that MIRACLE used investor funds to take ten of his family members on a week-long cruise at a cost of more than $77,000, and that he evaded taxes on more than $527,000 of income in 2005 by falsely classifying the money that he received from his companies that year as loans to him from the companies, rather than as salary.

The charges contained in the Indictment are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

The case is being investigated by the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigation Division, and the Washington State Department of Financial Institutions.

The case is being prosecuted by Assistant United States Attorneys Carl Blackstone and Andrew C. Friedman, and Special Assistant United States Attorney Tyler Letey. For additional information, please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, at (206) 553-4110 or Emily.Langlie@usdoj.gov.

Washington, D.C., Jan. 8, 2009 — The Securities and Exchange Commission has charged a Philadelphia-area investment fund manager and his firm for conducting a multi-million dollar Ponzi scheme, and has obtained an emergency court order freezing their assets.

Additional Materials

• Litigation Release No. 20847
• SEC Complaint

According to the SEC’s complaint, Joseph S. Forte of Broomall, Pa., fraudulently obtained an estimated $50 million from as many as 80 investors through the sale of securities in the form of limited partnership interests in his firm, Joseph Forte, L.P. The SEC alleges that Forte told investors that he would invest the funds in an account that would trade in securities futures contracts, including S&P 500 stock index futures. According to the complaint, despite the impressive and consistent returns he reported to investors, Forte consistently lost money in the limited trading that he did, withdrew millions of dollars in so-called fees for his personal use based on the falsely inflated value of Forte LP, and used investor funds to repay other investors.

“As alleged in our complaint, Forte engaged in lies, deception and rapacious behavior at the expense of innocent investors, many of whom considered themselves his friends and close acquaintances,” said Daniel M. Hawke, Director of the SEC’s Philadelphia Regional Office. “Using other people’s money, Forte promised and reported outrageous returns over more than a 10-year period, and because of his relationships with investors was able to lull them into trusting him with their funds.”

Judge Paul S. Diamond, U.S. District Judge for the Eastern District of Pennsylvania, issued an order on January 7 granting a preliminary injunction, freezing assets, compelling an accounting, and imposing other emergency relief. Without admitting or denying the allegations in the Commission’s complaint, Forte and Forte LP consented to the entry of the order.

The SEC�s complaint alleges that Forte has been conducting a Ponzi scheme since at least 1995. Forte, who has never been registered with the SEC in any capacity, has admitted that he misrepresented and falsified Forte LP’s trading performance from the very first quarter. From 1995 through Sept. 30, 2008, Forte and Forte LP reported to investors annual returns ranging from 18.52 percent to as high as 37.96 percent. However, from January 1998 through October 2008, the Forte LP trading account had net trading losses of approximately $3.3 million.

The SEC’s complaint further alleges that in addition to misrepresenting to investors that the trading was highly successful and making huge profits, Forte and Forte LP misrepresented the use of investor funds. Although Forte claimed that he raised approximately $50 million from investors for the purpose of participating in the trading program, Forte deposited only $25.8 million in the trading account between January 1998 and October 2008, and during that same time period withdrew $23.1 million. Forte claims that he took at least $10 to $12 million in so-called fees for his personal use based on the falsely inflated value of Forte LP. But Forte LP statements provided to investors reflect fees charged of $28.7 million between March 1995 and September 2008. He also claims he used approximately $15 to $20 million of investor funds to repay other investors — the hallmark of a Ponzi scheme. The SEC’s complaint alleges that Forte and Forte LP also lied to investors about the value of the partnership portfolio. For example, in September 2008, they reported to investors that the Forte LP portfolio had a value of more than $150 million. In fact, Forte LP’s trading account at that time had a balance of only $146,814.

The SEC’s complaint alleges violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to the emergency relief, the Commission’s complaint seeks disgorgement of the defendants’ ill-gotten gains plus pre-judgment interest, financial penalties, and permanent injunctions barring future violations of the antifraud provisions of the federal securities laws.

The SEC’s investigation is continuing.

The SEC acknowledges the assistance of the Commodity Futures Trading Commission. The CFTC has filed a related action against Forte.

# # #

For more information, contact:

Daniel M. Hawke, Regional Director
Elaine C. Greenberg, Associate Regional Director
David S. Horowitz, Assistant Regional Director
SEC’s Philadelphia Regional Office
215-597-3100

http://www.sec.gov/news/press/2008/2009-5.htm

Scam took at least $62 million from victims

A Norwalk man who owned and operated Best Diamond Funding, a real estate brokerage and mortgage lending company, was arrested this morning on federal charges for allegedly running an investment fraud, also known as a ponzi, scheme that lured more than 2,000 victims into investing more than $62 million. Milton Retana, 43, was indicted on December 12, 2008, on seven counts of mail fraud, one count of wire fraud, and one count of making a false statement to federal law enforcement agents. The El Salvadoran national made his initial appearance this afternoon in United States District Court in Los Angeles.

According to the indictment, Retana began soliciting investors in late 2006 to invest with Best Diamond Funding by telling them that their money would be used to buy and sell real estate.

Best Diamond Funding advertised in Spanish-language magazines, on the Internet, and held weekly investment seminars at several locations in Los Angeles.

The indictment alleges that in these advertisements, at investment seminars, and in personal meetings with potential investors, Retana, and others at Best Diamond Funding, told potential investors that the company's success in buying, renovating, and selling properties allowed it to pay investors returns as high as seven percent of their invested principal each month, for a total guaranteed return of 84 percent each year. Potential investors were also encouraged to use the equity from their homes to fund their investment with the company. The indictment also alleges that investors were told that Best Diamond Funding employed as many as 60 real estate agents and often purchased as many as 50 to 60 properties at one time.

The indictment alleges that, in reality, Best Diamond Funding used only a fraction of the money that it received from investors to purchase and sell real estate. The indictment also alleges that most, if not all, of the monthly "profit" payments to investors did not come from real estate activity, but instead was siphoned from money invested by other investor victims, and in some cases, from the investor victims' own principal. Finally, Best Diamond Funding is alleged to have employed fewer than five licensed real estate brokers and purchased fewer than 50 properties from late 2006 through October 2008.

"By perpetrating this giant Ponzi scheme, the defendant stole tens of millions of dollars from thousands of innocent investors, depriving them of their hard-earned life savings and financial security," stated United States Attorney Thomas P. O'Brien. "The United States Attorney's Office will prosecute him and others who steal investor money to the fullest extent of the law."

The scheme was disrupted in October when inspectors from the United States Postal Inspection Service and agents from the Federal Bureau of Investigation executed a federal search warrant at the business offices of Best Diamond Funding Corporation in Huntington Park, as well as the religious bookstore Libreria del Exito Mundo, which was located in the adjacent building and was owned by Retana's wife. During the search, agents seized nearly $4 million in cash. The FBI also froze approximately $8 million in funds from Best Diamond Funding and Retana's bank accounts.

"Thousands of victims were lured by what appeared to be legitimate investments in the real estate market," said Salvador Hernandez, Assistant Director in Charge of the FBI in Los Angeles. "The FBI is increasingly concerned with alleged scam artists who prey on individuals affiliated with certain religious or community groups and exploit their trust." The FBI and its partners, while committed to investigating fraud, encourage citizens to be cautious before investing their hard-earned money."

"The devastation to one's emotional well-being is immeasurable, when the trust they have placed in another is violated. The Postal Inspection Service is committed to these investigations to ensure public trust in the mail," said B. Bernard Ferguson, Inspector in Charge of the Los Angeles Division of the United States Postal Inspection Service.

Rentana faces a statutory maximum penalty of 165 years in federal prison.

This case was investigated by the United States Postal Inspection Service and the Federal Bureau of Investigation.
Contact: Assistant United States Attorney James A. Bowman
(213) 894-2213
Release No. 08-155

Litigation Release No. 20834 / December 19, 2008

Securities and Exchange Commission v. Bernard L. Madoff and Bernard L. Madoff Investment Securities LLC (S.D.N.Y. Civ. 08 CV 10791 (LLS))

SEC Obtains Preliminary Injunction, Asset Freeze, and Other Relief Against Defendants

The United States Securities and Exchange Commission announced that on December 18, 2008, the Honorable Judge Louis L. Stanton, a federal judge in the Southern District of New York, entered a preliminary injunction order, by consent, against Bernard L. Madoff and Bernard L. Madoff Investment Securities LLC ("BMIS"). The preliminary injunction continues to restrain Madoff and BMIS from violating certain antifraud provisions of the federal securities laws. Also, by consent, Judge Stanton ordered that assets remain frozen until further notice, continued the appointment of a receiver for two entities owned or controlled by Madoff in the United Kingdom (while defendant BMIS remains subject to oversight by a SIPC trustee), and granted other relief. The preliminary injunction order continues the relief originally obtained on December 12, 2008, in response to the Commission's application for emergency preliminary relief that sought a temporary restraining order, an order freezing assets, and other relief against Madoff and BMIS based on his alleged violations of the federal securities laws.

The SEC's complaint, filed on December 11, 2008, in federal court in Manhattan, alleges that the defendants have committed a $50 billion fraud and violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act of 1940. The complaint alleges that Madoff last week informed two senior employees that his investment advisory business was a fraud. Madoff told these employees that he was "finished," that he had "absolutely nothing," that "it's all just one big lie," and that it was "basically, a giant Ponzi scheme." The senior employees understood him to be saying that he had for years been paying returns to certain investors out of the principal received from other, different investors. Madoff admitted in this conversation that the firm was insolvent and had been for years, and that he estimated the losses from this fraud were at least $50 billion.

The Commission continues to seek, among other things, a permanent injunction, disgorgement of ill-gotten gains plus pre-judgment interest, and civil money penalties.

http://www.sec.gov/litigation/litreleases/2008/lr20834.htm

Check out this release today (December 11, 2008) from the Security and Exchange Commission:

"SEC Charges Bernard L. Madoff for Multi-Billion Dollar Ponzi Scheme

FOR IMMEDIATE RELEASE 2008-293

Washington, D.C., Dec. 11, 2008 — The Securities and Exchange Commission today charged Bernard L. Madoff and his investment firm, Bernard L. Madoff Investment Securities LLC, with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The SEC is seeking emergency relief for investors, including an asset freeze and the appointment of a receiver for the firm.

The SEC's complaint, filed in federal court in Manhattan, alleges that Madoff yesterday informed two senior employees that his investment advisory business was a fraud. Madoff told these employees that he was "finished," that he had "absolutely nothing," that "it's all just one big lie," and that it was "basically, a giant Ponzi scheme." The senior employees understood him to be saying that he had for years been paying returns to certain investors out of the principal received from other, different investors. Madoff admitted in this conversation that the firm was insolvent and had been for years, and that he estimated the losses from this fraud were at least $50 billion.

"We are alleging a massive fraud — both in terms of scope and duration," said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement. "We are moving quickly and decisively to stop the fraud and protect remaining assets for investors, and we are working closely with the criminal authorities to hold Mr. Madoff accountable."

Andrew M. Calamari, Associate Director of Enforcement in the SEC's New York Regional Office, added, "Our complaint alleges a stunning fraud that appears to be of epic proportions."

According to regulatory filings, the Madoff firm had more than $17 billion in assets under management as of the beginning of 2008. It appears that virtually all assets of the advisory business are missing.

Madoff founded the firm in 1960 and has been a prominent member of the securities industry throughout his career. Madoff served as vice chairman of the NASD, a member of its board of governors, and chairman of its New York region. He was also a member of NASDAQ Stock Market's board of governors and its executive committee and served as chairman of its trading committee.

The complaint charges the defendants with violations of the anti-fraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940. In addition to emergency and interim relief, the SEC seeks a final judgment permanently enjoining the defendants from future violations of the antifraud provisions of the federal securities laws and ordering them to pay financial penalties and disgorgement of ill-gotten gains with prejudgment interest.

The SEC's investigation is continuing.

The SEC acknowledges the assistance of the U.S. Attorney's Office for the Southern District of New York.

# # #

For more information, contact:

Andrew M. Calamari
Associate Director, Enforcement
SEC's New York Regional Office
(212) 336-0042

Alexander Vasilescu
Chief, Trial Unit
SEC's New York Regional Office
(212) 336-0178"

Take THAT ASDCashGenerator! Now, Site Down and Shut Up!

P.S., ASDCashGenerator indictments may be coming soon.

"Litigation Release No. 20798 / November 3, 2008

Securities and Exchange Commission v. Frank J. Russo et al. (United States District Court for the District of Massachusetts, C.A. No. 06-10984-RGS)

MASSACHUSETTS FEDERAL COURT ENTERS JUDGMENT AGAINST CALIFORNIA BASED RELIEF DEFENDANT IN SEC ENFORCEMENT ACTION, ORDERING IT TO PAY OVER $14 MILLION

The Securities and Exchange Commission announced today that on October 28, 2008, a final judgment by default was entered by the federal court in Boston, Massachusetts, against relief defendant Veritasiti Corporation d/b/a MediaData Corporation ("Veritasiti") in an enforcement action filed in the United States District Court for the District of Massachusetts. Veritasiti was ordered to pay over $14 million in disgorgement and prejudgment interest.

On June 6, 2006, the Commission filed a complaint alleging that Frank J. Russo, formerly of Wakefield, Massachusetts, operated a fraudulent ponzi scheme through his investment advisory corporation FJR Corporation. Russo, the Commission alleged, raised at least $15 million from at least 160 investors in 12 states to invest in two limited partnerships he controlled: Russo Associates Limited Partnership and Eliot Partners. On June 28, 2006, the Commission filed an amended complaint in the action naming Veritasiti, a California corporation, as a relief defendant based on its receipt of proceeds from the alleged fraud perpetrated by Russo.

The amended complaint alleged that while Russo told investors that their funds were being invested in bonds and other investment securities, and that the investments were safe and conservative, he diverted at least $11.5 million in investor funds to Veritasiti, a corporation that Russo formed with a college acquaintance. The amended complaint further alleged that Russo was Veritasiti=s chief financial officer and that he was one of two directors. According to the amended complaint, Russo did not disclose the purported investment in Veritasiti to investors in the limited partnerships. To the contrary, the amended complaint alleged that he sent false and misleading account statements to investors reporting fictional returns in excess of 10% and making false statements concerning the investment strategies of the limited partnerships. The amended complaint alleged that Veritasiti has no legitimate claim to the funds and that it was unjustly enriched by its receipt of those funds. The amended complaint sought disgorgement of all funds diverted to Veritasiti. The default judgment, entered on October 28, 2008, orders Veritasiti to pay disgorgement of $11.9 million plus prejudgment interest of $2.2 million for a total of $14.1 million.

In a parallel criminal proceeding, Russo pled guilty to federal charges of investment fraud and mail fraud. On February 25, 2008, he was sentenced to 18 years in prison to be followed by 3 years of supervised release and ordered to pay $20 million in restitution and a $500,000 fine. Russo has also been barred by the Commission from any future association with any investment adviser based on his criminal conviction. The Commission's civil action is still pending against Russo and his entities (FJR Corporation, Russo Associates Limited Partnership, and Eliot Partners).

For further information, see Litigation Release Nos. 19718 (June 6, 2006), 19744 (June 28, 2006), 20103 (May 3, 2007), 20468 (February 27, 2008) and Investment Adviser Release No. 2720 (March 12, 2008)."

"What is a "Ponzi" Scheme?

A Ponzi scheme is essentially an investment fraud wherein the operator promises high financial returns or dividends that are not available through traditional investments. Instead of investing victims' funds, the operator pays "dividends" to initial investors using the principle amounts "invested" by subsequent investors. The scheme generally falls apart when the operator flees with all of the proceeds, or when a sufficient number of new investors cannot be found to allow the continued payment of "dividends."

This type of scheme is named after Charles Ponzi of Boston, Massachusetts, who operated an extremely attractive investment scheme in which he guaranteed investors a 50 percent return on their investment in postal coupons. Although he was able to pay his initial investors, the scheme dissolved when he was unable to pay investors who entered the scheme later.

• As with all investments, exercise due diligence in selecting investments and the people with whom you invest.
• Make sure you fully understand the investment before you invest your money"

Click here to read more about Ponzi Schemes and other common fraud schemes at the FBI website