For decades, the WatchTower Society has repeatedly portrayed its' Jehovah's Witness members as "the most honest people on earth" -- because Jehovah's Witnesses supposedly are members of "the only true religion". The following state and federal employment related criminal and civil court cases are not intended as evidence that Jehovah's Witnesses are more dishonest than other employees, but rather are intended to demonstrate that Jehovah's Witnesses are just as dishonest, or honest, as are other members of the human population -- whether religious or non-religious. Mounting evidence, however, seems to indicate that a higher than normal percentage of Jehovah's Witness Investment salespersons -- stockbrokers, commodity brokers, and others -- are turning to criminal behavior. Thus, we begin this website Section with 2 pages of Ponzi Scheme and other Stocks and Commodities Investments type court cases.
One can't help but wonder how many Jehovah's Witnesses and others have been ripped off by fellow JWs over the decades because JWs were taught NOT to report the crime to authorities in order to not harm the reputation of the WatchTower religion. I actually have personal experience of such occurring. In the mid 1960s, a Jehovah's Witness whom I recall as being described as a WatchTower Society "Special Pioneer" moved through our area selling a worthless stock investment to local JWs and to whomever local JWs would vouch for his honesty and integrity. My very poor father, grandfather, and one great-uncle (now all deceased) lost every single penny they gave to that Jehovah's Witness Conman to invest for them. None of my poorly educated relatives knew anything at all about investing in "stocks", but did so solely because they believed everything that the JW Pioneer told them, while also believing that someone in his position in the WatchTower Society would never deceive them. When they shortly discovered that they had been SCAMMED, the only ones to whom the JW Pioneer and Scam was reported were other WatchTower representatives -- who would promise to "do something about it", but never did. I personally recall the very last "sit-down" in the latter 1960s with a newly moved-in Congregation Servant, named Ralph Moore, who on hearing about such promised that he would get to the bottom of the matter. Like all of the others before him, after he left to investigate such, not only was nothing done, but you could not even get him to further discuss the matter.
(2012 UPDATE/KARMA ALERT. I only recently learned that the JW Elder/Special Pioneer -- now in his 70s -- whom I believe was the MAIN JW Elder to whom my relatives reported the JW Pioneer con man, and whom did little or nothing about it, and whom probably tainted later inquiries by other JW Elders, recently had his retirement interrupted, and has had to begin supplementing his Social Security as a part-time janitor. WHY? Elderly JW Elder's retirement fund was recently wiped out after he invested the assets with one of the JW con men listed below!!!)
Readers specifically interested in the topic of Jehovah's Witness Honesty and Integrity should be aware that related financial dishonesty court cases are scattered throughout this website -- specifically the JW BUSINESS OWNERS page and the JW DISABILITY page. Readers should also refer to the 20 PACKED webpages of other types of criminal court cases which are posted on our JW CHILDREN website linked from this website's Homepage.
CLICK THE FOLLOWING SUB-SECTION LINKS TO JUMP AHEAD IN THIS 12 PAGE SECTION:
WATCHTOWER LEADERS FINANCIAL COURT CASES
KINGDOM HALL CONSTRUCTION COURT CASES (2 Pages)
REALTORS & REAL ESTATE COURT CASES
EMPLOYEE THEFT & EMBEZZLEMENT COURT CASES
INSURANCE SALES & CLAIMS COURT CASES
GIFTS, WILLS, and ESTATES COURT CASES (2 Pages)
ACCOUNTING & BANKING COURT CASES
MISCELLANEOUS COURT CASES
PONZI SCHEMES and OTHER STOCKS & COMMODITIES INVESTMENT COURT CASES
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LITTLE LOAN SHOPPE SCAM
Nelson allegedly raised over $135,000,000.00 from approximately 660 investors from 1999 to 2008. Approximately 75 percent of investors were active Jehovah’s Witnesses from across Canada, the United States, and Mexico. Many of these Jehovah's Witness Investors were sucked into the scam by PAUL COOPER -- a prominent JEHOVAH'S WITNESS ELDER, who reportedly set up a separate investment business to fund Nelson's payday loan operations. Paul Cooper, who reportedly was originally from Idaho, initially set up operations in the Spokane, Washington area, but eventually relocated to Acapulco, Mexico. Paul Cooper allegedly obtained the "trust" of his fellow Jehovah's Witnesses by "funding charitable works", as a newspaper termed such, but what were likely actually large donations to the WatchTower Society. In fact, one of Cooper's JW victims, a Building Contractor from New Jersey who had retired to Mexico as a WatchTower missionary, named Russell Titmas, told a reporter that he "saw the investment as an opportunity to offer financial assistance to his faith and enhance its missionary work." Russell Titmas, who now claims nearly $500,000.00 in losses, started investing with Paul Cooper in 2006 after first checking out Cooper with several other Jehovah's Witnesses, who all praised Paul Cooper's investment recommendations. In fact, one newspaper reported that many of Paul Cooper's Jehovah's Witness Victims did NOT believe that JW Elder Paul Cooper had done anything wrong.
In this action, Washington's DOFI alleges that Doris E. Nelson told investors they could earn as much as 60 percent on money Little Loan Shoppe and its numerous affiliates used to make payday loans to consumers. More than 300 American and Canadian investors bought notes worth $29,000,000.00 in U.S. currency and another $26,000,000.00 in Canadian currency. Dee Nelson allegedly told investors that high returns were possible because short-term, high-fee payday loans allowed Little Loan Shoppe to turn their money over several times. However, investors received no payments after March 2009.
In July 2009, the company filed bankruptcy under the name LLS America, LLC. In documents filed with the U.S. Bankruptcy Court, investors claimed Doris Nelson operated the companies as a Ponzi Scheme that paid early investors with money from new investors. DOFI alleges that Doris Nelson is not currently registered to sell her securities in the state of Washington and has not previously been so registered. Also charged was Paul Cooper, who is believed to now be residing in Mexico. DOFI alleges that Paul Cooper facilitated securities transactions for Little Loan Shoppe, and that Paul Cooper is not currently registered as a broker-dealer or securities salesperson in the state of Washington, and has not previously been so registered. Although it is yet to be determined whether Paul Cooper, Doris Nelson, or some other individual(s) connected to the named entities is/are Jehovah's Witnesses, the court document states:
Most investors with LLS affiliated entities learned about the investment opportunity from friends or family members that had previously invested. A number of investors were Jehovah’s Witnesses that heard about the investment from fellow Jehovah’s Witnesses. Interested individuals were typically referred to Cooper or Nelson for details on the investment.
Washington's Department of Financial Institutions is also seeking a $150,000.00 fine from Doris Nelson, and a $30,000.00 fine from Paul Cooper. DOFI is also asking that Doris Nelson and Paul Cooper be jointly and severally liable for and pay its' Securities Division the costs, fees, and other expenses incurred in the conduct of the administrative investigation and hearing of this matter of not less than $60,000.00.
Several media and/or web articles report that separate civil actions have been filed by investors in Washington and Florida, and possibly in Nevada, Arizona, and Utah. Those lawsuits reportedly are alleging fraud, conspiracy, breach of contract, and violations of numerous Washington securities and consumer protection laws. Nelson and Gamble have reportedly denied any wrongdoing. One discussion board alleges that Doris Nelson's current husband, Dennis Foster, a son named Chris Foster or Christopher Foster, a daughter named Amanda Foster, and a step-son named Adam Nelson are/were high level employees of the various affiliates.
SECURITIES AND EXCHANGE COMMISSION v. FREDERICK ALAN VOIGHT, DAYSTAR FUNDING LP, F.A. VOIGHT & ASSOCIATES LP, RHINE PARTNERS LP, TOPSIDE PARTNERS LP, INTERCORE INC., and INTERCORE RESEARCH CANADA INC. is an ongoing 2015 Texas federal civil court case which names as Defendant the patriarch of a Greater Houston, Texas area family of Jehovah's Witnesses with connections to Texas, California, New Jersey, Nebraska, and Florida. JW family members not named in this lawsuit can be found named in numerous Texas corporate filings of other Voight family connected businesses located at the same Texas addresses but not named in this court case.
Frederick Alan Voight, age 58, of Richmond, Texas (not to be confused with son, Alan Frederick Voight), is alleged by the SEC with operating a $114.1 million Ponzi scheme dating back to 2004 that defrauded more than 300 investors in multiple different offerings of promissory notes issued by F.A. Voight & Associates LP and DayStar Funding LP. Approximately $22 million remains unaccounted for to date.
Frederick Alan Voight’s most recent offering, which promised investors returns as high as 30-42% per year, raised $13.8 million that Fred A. Voight said would be loaned to a startup company named InterCore Inc. to fund its deployment of a "Driver Alertness Detection System", or DADS. Frederick Voight allegedly knew the claims were false because he served on InterCore’s Board of Directors and was aware that the Delray Beach, Florida public company was financially troubled and had no means to pay back the loans. The SEC alleges that Fred Voight used funds from the DADS investors to make Ponzi payments to earlier investors with his companies, or funneled them to InterCore through two of his other partnerships, Rhine Partners LP and Topside Partners LP. The complaint alleges that InterCore sent the funds to its Montreal-based subsidiary, InterCore Research Canada, Inc., where the funds seemingly disappeared. By routing funds through Rhine and Topside, Fred Voight is alleged to have garnered benefits – including fees and InterCore stock warrants – that he never disclosed to the DADS investors.
The SEC’s complaint charges Frederick Voight and DayStar with securities fraud, and with conducting unregistered securities offerings. Fred A. Voight and Daystar, without admitting or denying the allegations, agreed to settle the SEC’s complaint by consenting to permanent injunctions against committing these violations in the future. They also agreed to asset freezes and other emergency relief, and to pay civil penalties and return allegedly ill-gotten gains with interest in amounts to be set later by the court. Frederick A. Voight also consented to being barred from serving as a public company officer or director and to be barred permanently from participating in the offer, purchase, or sale of any security except for his own personal account.
The SEC named F.A. Voight & Associates, Rhine, Topside, InterCore, and InterCore Research Canada as relief defendants for the purpose of recovering any allegedly ill-gotten gains they received from the fraud. F.A. Voight & Associates, Rhine, and Topside have agreed to asset freezes and other emergency relief and to return allegedly ill-gotten gains in amounts to be set by the court. The SEC will litigate its claims against relief defendants InterCore and InterCore Research Canada.
Additional Frederick A. Voight Biography: From June 1983 until August 1994, Fred Voight owned and operated a chain of retail lumber and home centers in New Jersey and Pennsylvania named Mohawk Lumber Home Centers. From May 1992 until October 1994, Fred Voight served as Chairman of the Board and Chief Executive Officer of Skylands Park Management, Inc., and led the company through two public offerings (IPO courtesy of infamous A.S. Goldmen & Co.) From December 2004 until March 2006, Fred Voight served as a director for Cell Robotics International, Inc., a publicly traded company that was a developer and manufacturer of bio-photonic technologies for clinical and medical research. Fred Voight also served as a director for the DesChutes Medical Products Co., an Oregon company specializing in the design, manufacture, and marketing of innovative products for the medical self-help market, from September 2006 until January 2009, when the company was sold. Fred Voight served as a director of EPV Solar, Inc., a Robbinsville, NJ manufacturing company, from June 1999 through 2010 and as Chairman of the Board from October 2006 until July 2009. Fred Voight also served from November 2010 until January 2013 as the Managing Director, Investments for InterCore Energy Inc. (aka Heartland Bridge Capital, Inc.), a publicly traded clean energy technology company. Frederick A. Voight has been the Chief Investment Officer of Tristar Wellness Solutions Inc. since February 2013.
IN RE ANTONIO PATRICK, JAG DISTRIBUTION, and SECTION 8 CREATIONS, INC. was a July 2014 State of Missouri "FINAL ORDER TO CEASE AND DESIST AND ORDER AWARDING RESTITUTION AND COSTS, AND IMPOSING CIVIL PENALTIES", in which Antonio Patrick and two of his corporate entities were ordered to cease and desist violating a number of Missouri "securities" laws, and all were ordered to pay a total of $45,430.00 in civil penalties and costs.
Antonio Oono Patrick, age 42, is a one-time WATCHTOWER BETHELITE who once worked as a Computer Analyst at WatchTower World HQ. Antonio O. Patrick's main area of operation is Los Angeles, California, but as seen in this ORDER, there was difficulty locating Antonio Patrick there and in other cities in California. The named corporate entities, which are owned solely by Antonio Patrick, were corporations which Antonio Patrick also has used for other business activities, such as Section 8 Creations which had been used for the purchasing and leasing of vehicles and auto parts.
According to this ORDER, despite the fact that Antonio Patrick was not registered as a securities broker or agent in the state of Missouri, Antonio Patrick offered to sell securities, which themselves were not registered as securities, in the state of Missouri. Patrick stated to prospects that the securities had "no risk", and would return 35%-50%. In October 2009, an investor living in the state of Missouri signed an investment contract with Antonio Patrick and wired $150,000.00 to him. In December 2009, that investor received the proverbial "two" payments from Patrick -- their FIRST and their LAST -- of $1200.00. Although not found, we are assuming that the aforementioned investor is "attempting" to file their own separate civil lawsuit against Antonio Patrick for return of their "investment".
Antonio Patrick, aka Angelo Patrick, also has numerous other business operations not involved in this ORDER, including but not limited to, J&P REALTY TRUST, J&P REALTY CORPORATION, MORELL SYSTEMS, and PATCO MORTUARY TRANSPORTATION SERVICE. Antonio Patrick also may have business connections in Wyoming and Nevada.
THREE VALLEYS MUNICIPAL WATER DISTRICT ET AL v. WILLIAM E. PARODI, SR. ET AL was a 1988-97 California federal civil court case, in which the aforementioned California Municipalities and governmental entities attempted to recover some of the $8,279,000.00 which they allegedly lost while doing business with the Parodi Brothers and their employers. The lawsuit also requested $16 million in punitive damages. Some entities managed to settle their cases. Other plaintiffs litigated their claims only to have the federal courts send their claims to arbitration -- the awards which some plaintiffs believed to be too small.
UNITED STATES v. RODNEY LEE HATFIELD and UNITED STATES v. LLOYD MYERS. In December 2009, brothers-in-law Rodney L. Hatfield, age 60, of Watsonville, California, and Lloyd Myers, age 52, of Rio Linda, California, were indicted on charges of "mail fraud" and "conspiracy to commit mail fraud" in connection with a company they founded and managed called Landmark Trading Co. LLC, of Salinas, California. Hatfield and Myers organized Landmark for the purpose of offering an "ownership interest" in Landmark, and using the proceeds generated from investors to engage in trading on the foreign currency exchange markets through the FOREX CURRENCY exchange. Most, if not all, of the targeted "investors" were fellow members of the Watsonville California Congregation of Jehovah's Witnesses. Between 2003 and 2007, Hatfield and Myers reportedly collected about $5,000.000.00 from investors with promises to invest in foreign currency exchange markets. Hatfield and Myers allegedly repeatedly told investors they were making money, when in fact they were suffering significant losses. While the investments were losing money, Hatfield and Myers allegedly diverted hundreds of thousands of dollars to real estate ventures they owned. They also allegedly diverted money from the fund to buy automobiles and pay personal expenses. "Some" of those JW Investors allegedly lost a total of between $1,000,000.00 and $2,500,000.00, while other JW Investors received all or part of their money back. In 2013, Rodney Hatfield pleaded "guilty" to the conspiracy charge only, and was sentenced to 30 months in prison. Disposition of the case against Lloyd Myers is unknown. Myers claimed that he knew nothing about the frauds, which he alleged were committed by Hatfield.
ELIZABETH F. MYERS v. RIO LINDA/ELVERTA COMMUNITY WATER DISTRICT was a 2010-12 federal civil lawsuit which was settled in November 2012 when Water District paid $30,000.00 to Elizabeth Myers -- wife of Lloyd Myers. In 2010, a former general manager of the Rio Linda-Elverta Community Water District terminated Elizabeth Myers as the District's accountant after the District's auditor reported that Elizabeth Myers had used a district credit card for personal expenses, including trips to South Africa and Hawaii. Myers thereafter sued the District in federal court for allegedly violating her right to "procedural due process", and her right to "privacy", after information about the "alleged embezzlement" was leaked to the public and the press before she had full opportunity to defend herself, and before all internal employment procedures had been completed. Reportedly, at some point, Myers reimbursed the District for the alleged personal charges.
UNITED STATES v. JOEL NATHAN WARD was a 2007-8 California federal criminal court case. In August 2007, a former Jehovah's Witness Elder, named Joel Nathan Ward, 50, pleaded guilty to 5 counts of wire fraud, 2 counts of mail fraud, and 2 counts of engaging in a monetary transactions in property derived from specified unlawful activity, a form of money laundering. In April 2008, Joel N. Ward was sentenced to 9 years in prison, and to serve 3 years of supervised release after the completion of his prison sentence. Ward must serve 85% of his sentence, or more than 7 1/2 years, before he is eligible for release. Joel Ward, who claimed that he had no money left, was also ordered to pay $11,275,501.53 in restitution.
Joel Ward, a well known commentator and seminar speaker on Forex trading, ran an elaborate Forex trading scam through two of his companies, the Joel Nathan Ward Forex Investment Group, of Turlock, California, and Learn:Forex, Inc., a Forex trading educational center based in Sacramento, California. Ward also allegedly defrauded investors in a Hurricane Katrina scheme, which involved a real estate investment project in Mississippi, in which Ward allegedly diverted investors' funds to his own use. Joel Ward admitted that he stole the investors’ funds, using the money for his own compensation and expenses, and to purchase the Learn:Forex School in Sacramento. He also admitted that, in order to conceal the theft, he made “Ponzi” payments using other investors’ funds, and that he provided his investors with altered account statements. In a handwritten personal journal, which was recovered during the execution of a search warrant, Ward described himself as a "financial serial killer" and "just another scumbag con artist bilking old people out of their retirement money."
After various federal agencies started investigating Ward in mid 2006, Joel Ward confessed the ongoing fraud to his JW Wife around November 2006, and Ward thereafter sent a series of emails to his victims admitting the theft, asking for their forgiveness, and purposing that if they would allow him to continue doing business legitimately that he could soon recoup the lost funds, and repay them all their money.
Many of Joel Nathan Ward's victims were JW family members and JW friends who publicly defended Ward to the authorities and media, including retired newspaper editor Edgar Spitzke, who was an Elder at the Monticello, Kentucky Kingdom Hall of Jehovah's Witnesses, in Wayne County, Kentucky, when he proclaimed:
"I find it hard to believe that he would purposely start a business that had no other purpose but to defraud, especially his closest friends and relatives," said [Ed] Spitzke, who said Ward is his wife's nephew. -- MODESTO BEE, 3/30/2008.
However, several of Ward's victims were in no mood for forgiveness. Ward's JW wife even eventually divorced him. She first showed Ward's aforementioned personal journal to her father, Oren Collett, who was Ward's partner, and Collett reportedly informed the federal authorities of Ward's confessions. Ward was eventually arrested by the F.B.I. in April 2007.
Even after his arrest and guilty plea, Joel Ward continued to plead with victims, prosecutors, and the federal judge to allow him to continue doing business legitimately, so that he could soon recoup the lost funds, and repay his victims all their money. Joel Ward's former mother-in-law, Barbara Collett, who, along with her husband, Oren Collett, lost nearly $100,000.00, told the Wall Street Journal that over half of Ward's victims wanted to forgive him and supported Ward's restitution plan (actually 44 of 79 victims who expressed their opinion). Joel Ward even told the Modesto Bee of his plan:
"Several friends who know my trading ability are willing to put up seed money so I can trade, and my commissions would go into a recovery fund. My former father-in-law and business partner, Oren Collett, would manage the fund and several victims have volunteered to sit on a board of trustees and act as auditors. I would have no direct access to the money."
Gene Myatt, purportedly a Jehovah's Witness businessman in Modesto, California, who lost $50,000.00, was quoted in that same 2007 Wall Street Journal article as supporting Ward's restitution plan: "If Joel goes to prison, no investor will be cared for." Russ Sharpe, who owns a marketing company in Oakdale, California, and who lost $480,000.00, stated, "I've watched him trade. He can exceed by vast measures what he has lost. ... I have no doubt that Mr. Ward has the capability of making whole this loss." Rohn Ritzema of Elk Grove, California , who lost $320,000.00, and Michael Mello of Sacramento, California, who lost $754,000.00, both urged the judge to give Joel Ward another chance.
However, David Rothell, an insurance broker in Bryan, Texas, who lost $15,000.00, told the WSJ that Ward needed to pay for his crimes. According to the Modesto Bee, Nancy Jones, an auditor from Dallas, Texas, who lost $50,000.00, stated, "If Joel had just come to my house and beat me up, I'd be a whole lot better off today."
Interestingly, the Commodity Futures Trading Association had a finance professor analyze Ward's business records, and he reported that of the $15,000,000.00 that Ward took in from investors, Ward only ever invested $2,000,000.00, and Ward lost $1,840,000.00 of that. In fact, of the two trading accounts in which no employee of Ward also traded, there was a profit of only about $1000.00. Yet, 44 of 79 of Joel Ward's victims still think that Ward is a financial genius. One can't help but wonder how many of those 44 people also believe that they are members of "the only true religion".
S.E.C. v. RONALD J. NADEL, JOSPEH M. MALONE, and RENAISSANCE ASSET FUND. In July 2006, a prominent African-American Jehovah's Witnesses Millionaire, with "Jehovah's Witness Connections" throughout both his home state of California and the entire United States, named Ronald Jay Nadel, of San Clemente, California, was charged by the Securities and Exchange Commission (SEC) with various financial civil illegalities which were alleged to have been committed between 1999 and 2004 while operating Renaissance Asset Fund, Inc.
Notably, a 1981 media article labels Ron Nadel as being musician Larry Graham's "personal manager", and quotes Nadel denying rumors that Larry Graham (now PRINCE's JW mentor) had been then recently "disfellowshipped". Nadel also updated the reporter regarding singer George Benson's status as a JW -- relating that Benson had been recently baptized. Ron Nadel's "connections" were especially tight amongst the "African-American" and the "entertainment industry" segments of the Jehovah's Witnesses communities in both California and Las Vegas. Indications are that Nadel's connections included certain "Circuit Overseers" and "District Overseers", including some who may have been conveniently transferred out of the area just in the nick of time -- including to work at WatchTower Society headquarters.
Included in the S.E.C.complaint was a second Jehovah's Witness named Joseph Michael Malone, of Newport Coast, California, who was Renaissance Asset Fund's "Investor Relations Representative". The SEC alleged that Ronald Nadel and Joseph Malone defrauded $16,000.000.00 from nearly 200 investors, many of whom were elderly, and most of whom were Nadel's and Malone's fellow Jehovah's Witnesses. Joseph Malone allegedly was Ron Nadel's "second-in-command", and knew nearly everything illegal that Nadel was doing behind the scenes. However, the S.E.C. could prove only that Joe Malone received a significant salary of $230,000.00 from Nadel for his efforts. Before working for Ron Nadel at Renaissance Asset Fund, Joseph Malone worked for fellow Jehovah's Witness, Kenneth Baum, at Senior Resources Asset Fund (see below).
The investment scam which first brought the SEC's scrutiny on Renaissance Asset Fund was a failed outlet mall development project located in Dacono, Colorado. Renaissance Asset Fund allegedly bilked at least $7,500,000.00 from 126 JW investors between 1999 and 2002. The California business entity filing for FIRST DACONO DEVELOPMENT, LLC lists two Members for this Limited Liability Company. One Member is Ron Nadel. The second Member, who is also listed as the Registered Agent, is Stephen K. Swanson. In addition to being a Ronald Nadel associate and employee, Stephen Swanson is alleged during this time period to have been a Presiding Overseer at one of the Santa Monica, California Congregations of Jehovah's Witnesses.
A second investment scam operated by Ronald Nadel and Renaissance Asset Fund was International Currency Exchange, Inc., which was a California corporation formed in January 2000. Little is known about its business operations, if any. However, the corporate filing lists a prominent Las Vegas Jehovah's Witness Elder, named Carmine J. Baccari, as both its "Registered Agent", and its "President". Carmine Baccari's relatives included "Bethelites" then but no longer working at WatchTower Society HQ. In the latter 1990s, Carmine Baccari was also the Principal or President of two now defunct Las Vegas corporations called Quest Funding, Inc., and Benchmark Financial Group, Inc.
In 2002-03, Joseph Michael Malone was also the Principal of another financial services operation located in San Juan Capistrano called "Ap Canopy Funds LLC". The "Manager" of Ap Canopy Funds LLC was officially listed as "Alan Long", who was an Elder at the San Juan Capistrano Kingdom Hall of Jehovah's Witnesses.
S.E.C. v. KENNETH E. BAUM and SENIOR RESOURCES ASSET FUND. In July 2006, the SEC also settled administrative cease-and-desist proceedings against Kenneth E. Baum, of Hemet, California, and his Senior Resources Asset Fund, LLC, based on his business relationship with Ron Nadel and Renaissance Asset Fund. With his "consent", the S.E.C. ordered Senior Resources Asset Fund and Kenneth Baum to cease and desist from selling unregistered securities, and ordered Kenneth Baum, to cease and desist from acting as an unregistered broker-dealer.
The S.E.C. alleged that between February 2001 and October 2002, that Senior Resources Asset Fund issued unregistered securities in the form of promissory notes. These notes purported to bear interest at rates ranging from 10% to 15% per year, and to mature two years from the date of issuance. Ken Baum, the manager and director of Senior Resources Asset Fund, offered Senior Resources notes and other unregistered securities to at least 28 investors and received transaction-based compensation in connection with his sales. As a result of this sale of unregistered securities, Senior Resources Asset Fund and Kenneth Baum willfully violated multiple S.E.C. regulations.
The Order directed Senior Resources Asset Fund and Ken Baum to cease and desist from committing or causing violations or future violations of the Securities Act, and ordered Baum to cease and desist from committing or causing violations or future violations of the Exchange Act. It ordered disgorgement and prejudgment interest against Senior Resources Asset Fund and Kenneth Baum. The Order further barred Kenneth Baum from association with any broker or dealer for a period of three years.
IN RE KELLY R. KONZELMAN and PACIFIC LENDING FUND LLC, KENNETH BAUM and SENIOR RESOURCES ASSET FUND LLC, RONALD NADEL and RENAISSANCE ASSET FUND INC, AND RONALD NADEL and ASSET LENDERS GROUP LLC was a State of California administrative action which preceded the above federal S.E.C. action. In August 2005, the California Department of Corporations issued a "DESIST AND REFRAIN ORDER" against these four JEHOVAH'S WITNESSES MINISTERS and their various co-conspiring business entities.
This ORDER identifies Kelly Robert Konzelman as not only the principal of Pacific Lending Fund, but also as the Vice-President of Renaissance Asset Fund. This ORDER requires that these four JWs and their companies to STOP selling unregistered securities, and for those individuals who were not even licensed security brokers, to STOP selling securities. They variously were also ordered to STOP making untrue statements of material facts, and STOP failing to make statements of necessary material facts. Most, if not all, of the illegalities of which the State of California complained related to the illegalities described above in the eventual federal complaint.
IN THE MATTER OF COOKE B. CHRISTOPHER, THOMAS H. SUNDERLAND, ERIK FISHER, SAN CLEMENTE FINANCIAL GROUP, and SAN CLEMENTE FINANCIAL GROUP SECURITIES was a 1996-97 "CEASE AND DESIST ORDER" and a "STIPULATION AND CONSENT TO ISSUANCE OF CEASE AND DESIST ORDER" obtained by the NATIONAL CREDIT UNION ADMINISTRATION BOARD and agreed to by the respondents.
The National Credit Union Administration conducted an investigation of the respondents' sales practices and alleged the following violations of federal law:
1. Sales to federally insured Credit Unions of Certificates of Deposit with unlawful maturity periods.
2. Orally misrepresenting to federally insured Credit Unions the maturity periods of Certificates of Deposit.
3. Engaging in unsafe and unsound sales practice when a salesman named Frank Chavez misrepresented on multiple occasions that his name was "Steve Miller".
4. Engaging in unsafe and unsound sales practice by attempting to place nonmember deposits federally insured Credit Unions.
The now defunct SAN CLEMENTE FINANCIAL GROUP was a San Clemente, California based Jehovah's Witnesses owned-operated investment firm in which many if not most lower level employees were also Jehovah's Witnesses. In addition to the individuals named above, the Order also mentions salespersons Bruce Carter and Russ Fowler (Russell Fowler) as having allegedly engaged in unlawful sales activities.
IN THE MATTER OF COOKE B. CHRISTOPHER, IN THE MATTER OF THOMAS H. SUNDERLAND, and IN THE MATTER OF SAN CLEMENTE FINANCIAL GROUP were three separate December 2000 "STIPULATION AND CONSENT TO ISSUANCE OF ORDER OF PROHIBITION" obtained by the NATIONAL CREDIT UNION ADMINISTRATION BOARD and agreed to by the respondents. The three Orders of Prohibition prohibited all respondents from further participation in any manner in the affairs of any federally insured financial institution, including but not limited to selling or placing investments with federally insured credit unions or providing investment advice to them.
TENNESSEE SECURITIES DIVISION v. SAN CLEMENTE SECURITIES, INC. was a 1998 Tennessee state administrative action against another SAN CLEMENTE FINANCIAL GROUP affiliate -- this one operating out of New York City, in 1996. The alleged "offending" salespersons were Peter Liounis, Oleg Feldman (aka Alex Feldman), and Shaun Douglas Neal. Tennessee alleged that the three named salespersons sold shares in Sports Vision Technology, Inc., which were not registered with the state, nor exempt from registration. It was further alleged that the three salespersons made false statements of material fact, and omitted necessary material facts, regarding the financial status of SVT, regarding potential risks associated with investment in SVT, and listing of the stock with NASDAQ. Cooke B. Christopher and SAN CLEMENTE SECURITIES, INC. consented to a $10,000.00 fine, three years probation, and cooperative monitoring of the firm's compliance with Tennesse law.
ARKANSAS SECURITIES DEPARTMENT v. SAN CLEMENTE SECURITIES, INC., COOKE B. CHRISTOPHER, THOMAS H. SUNDERLAND, DAVID ALAN MULLENAX, and ROBERT MABREY MULLENAX DBA MULLENAX FINANCIAL GROUP was a 1999 Arkansas state administrative action. This state Suspension of Registration Order mentions that the Christopher Family Trust owned 50% of SAN CLEMENTE FINANCIAL GROUP, while Tom Sunderland owned the other 50% share. David Mullenax and his brother Robert Mullenax were the local Little Rock, Arkansas agents of SAN CLEMENTE FINANCIAL GROUP, who did business under the name MULLENAX FINANCIAL GROUP.
Here is a summary of just some of the interesting allegations and findings made by the State of Arkansas in this Suspension of Registration Order which ordered the named parties to Cease and Desist doing business in the State of Arkansas:
Regulators in seven states and the National Credit Union Administration have initiated proceedings and entered orders against San Clemente Securities. Each of those proceedings involves allegations of violations occurring with the offer and sale of securities represented to be Bank CDs. Allegations include sales by unregistered representatives and sales of unregistered securities. Regulators have initiated seven disciplinary proceedings against Cooke Baille Christopher. Actions include allegations of sales of unregistered securities and sales by unregistered agents. Regulators have initiated six disciplinary proceedings against Thomas H. Sunderland. Sunderland has been named individually for sales of securities in Florida as an unregistered agent and in other jurisdictions for failure to supervise.
The named parties sold Certificates of Deposit in Arkansas which did not exist at the listed bank. Annual percentage yield figure customers were shown and offered did not accurately reflect the "APY" the actual issuing bank was offering. With every offer, the various employees of San Clemente Securities and Mullenax Financial Group inflated the APY shown to the customer.
Unregistered employees of San Clemente Securities effected transactions in Arkansas, including Christopher and Sunderland. In February and March 1999, Eddie Leon Dubar, an Arkansas resident, offered and sold CDs to Arkansas residents. At the time the transactions were effected, Eddie Dubar was not registered to sell securities in Arkansas. Mark Zerebny, of Hemet, California, also sold a CD to an Arkansas resident despite not being a registered agent in Arkansas. Other unknown California employees of San Clemente Securities sold CDs to Arkansas residents.
San Clemente Securities, Cooke Christopher, Tom Sunderland, Dave Mullenax, and Bob Mullenax made misrepresentations or omissions of material facts to and otherwise engaged in a course of business which operated as a fraud or deceit to residents of Arkansas. Such violations constitute grounds to suspend or revoke the registrations of San Clemente Securities, Dave Mullenax, and Bob Mullenax, and fine San Clemente Securities, Cooke Christopher, Dave Mullenax, and Bob Mullenax.
David Mullenax and Robert Mullenax misrepresented products they offered and sold, guaranteed customers they could not incur losses, and made untruthful representations that securities sold could subsequently be traded. San Clemente Securities, Dave Mullenax, and Bob Mullenax represented to customers they would not be charged commissions or fees when in fact commissions and fees were charged. San Clemente Securities, Dave Mullenax, and Bob Mullenax used advertising and sales material in such a fashion as to be deceptive and misleading.
HERITAGE SAVINGS BANK v. SAN CLEMENTE SECURITIES, INC., COOKE B. CHRISTOPHER, THOMAS H. SUNDERLAND, ET AL was a 2000 Texas federal court case in which Heritage Savings Bank, in Terrell, Texas, alleged that the named defendants had committed securities fraud and bank fraud resulting in a loss of $1,500,00.00 to the bank.
It was alleged that from 1994 to 2000, Cooke Baille Christopher and Thomas H. Sunderland schemed to defraud Heritage by inducing them to enter into investment contracts to purchase Certificates of Deposit and other securities issued by the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association which would be held and managed for the investors by another corporation owned and operated by Christopher and Sunderland called United Custodial Corporation. Christopher and Sunderland created and used SCS and UCC specifically to carry on this fraudulent scheme. The defendants also represented to Heritage that if it purchased these CDs and FHLMC and FNMA securities through SCS, that SCS would place a corresponding amount of below-market-rate CDs on deposit with Heritage. As part of their scheme, the defendants falsely and fraudulently failed to advise Heritage that SCS and UCC would subtract undisclosed fees and commissions of 20% - 50% of the amount invested; that only part of its investment in any CD was federally insured; that the investment confirmations and statements they sent to Heritage were false and intentionally misleading; that money paid to Heritage when it liquidated an investment prior to maturity was actually money invested by Heritage in another investment or by other persons; that Heritage had no ownership in any investment that would be purchased in UCC’s name and, that in 1997, SCS, along with defendants Cooke B. Christopher and Thomas H. Sutherland, had been banned by the National Credit Union Association from doing business with federally insured credit unions because of their deceptive practices. Outcome unknown.
NATIONAL ASSOCIATION OF SECURITIES DEALERS v. SAN CLEMENTE SECURITIES, INC., COOKE B. CHRISTOPHER, THOMAS H. SUNDERLAND, ET AL.
In February 2000, the National Association of Securities Dealers fined SAN CLEMENTE SECURITIES and Cooke B. Christopher $15,000.00 for failing to maintain sufficient net capital, and failing to report numerous customer complaints to the NASD.
In June 2000, SAN CLEMENTE SECURITIES filed to withdraw its membership from the National Association of Securities Dealers.
In July 2000, the NASD charged SAN CLEMENTE SECURITIES and its two owners and officers, Cooke Christopher and Thomas Sunderland, with fraudulent conduct in connection with the promotion and sale of the CDs. Salespersons Jeffrey Schwertfeger, Jeffrey Katz, and Gennaro (Jerry) Chiappetta were charged with fraudulent misrepresentations and omissions. Salespersons Douglas Eichenberger, Justin Irving, Randy Rondberg, and Jeffrey Vann were charged with making misrepresentations and/or failing to disclose information to investors in connection with CDs.
IN THE MATTER OF COOKE BAILLE CHRISTOPHER, THOMAS HENRI SUNDERLAND, DOUGLAS GRANT EICHENBERGER, and RANDY TRAGER RONDBERG was a December 2000 disciplinary action by the S.E.C., which was consented to by the name parties. San Clemente Securities was expelled from the N.A.S.D. Cooke Christopher was barred from association with any NASD member in any capacity. Tom Sunderland was censured, fined $40,000.00, and suspended from association with any NASD member in any capacity for two years. Doug Eichenberger was barred from association with any NASD member in any capacity, and required to disgorge $13,950.00 in commissions. Randy T. Rondberg was censured and fined $10,000.00, which included disgorgement of $481.63.
Cooke B. Christopher and Thomas H. Sutherland CLOSED up operations in April 2000 as federal regulators began close scrutiny of their operations. In June 2000, the F.D.I.C. sent a formal Alert Letter to banks across the United States, which asked bank to pay close attention to any transactions they have done with the firm. The F.D.I.C. suspected that the nation's banks may have lost TENS OF MILLIONS OF DOLLARS after SAN CLEMENTE SECURITIES took large hidden fees from the investments of its bank customers. Bank and securities authorities in nine states have taken administrative action against SAN CLEMENTE SECURITIES, the FDIC letter said.
In January 2001, SAN CLEMENTE SECURITIES filed Chapter 7 bankruptcy claiming Liabilities of 3.3 million and Assets of only $470,000.00.
UNITED STATES v. COOKE B. CHRISTOPHER, THOMAS H. SUNDERLAND, NILS GRIFFIN, and JEFFREY A. VANN was a 2003-07 Texas federal case. The two officers and two sales representative of San Clemente Securities, Inc. were accused in a June 2003 federal indictment of a total of 81 counts, including one count each of "Continuing Financial Crimes Enterprise", Conspiracy, "False Statement To Financial Institutions", Securities Fraud, and Investment Advisor Fraud, plus multiple counts of both Mail Fraud and Wire Fraud, committed against multiple Texas individuals, financial institutions, and even one Lutheran Church. Notably, this indictment alleged that the defendants had grossed $5,000,000.00 during just one 24 month period.
In March 2004, Nils Griffin pleaded guilty to "Obstructing Examination of a Financial Institution" and "Aiding and Abetting". Nils Griifin was fined $10,000.00, assessed $100.00, and was sentenced to 5 years probation.
Jeffrey A. Vann also pleaded guilty to one count in 2004/5, and received four years probation, 400 hours of community service, and was assessed $100.00.
In June 2007, Cooke B. Christopher and Thomas H. Sunderland pleaded guilty to 57 counts and were each sentenced to 60 months in prison, with two years supervised supervision thereafter.
STERLING BANK & TRUST v. SAN CLEMENTE FINANCIAL GROUP SECURITIES, INC
Sometime during the 1990s, William J. Abraczinskas had formed a business in Oregon called Globallink LLC, which conducted various domestic and international banking and other business operations under various subsidiaries using forms of the Globallink name. Abraczinskas' also conducted a wide variety of other business dealings through multiple other corporations, some of which are discussed below. At some point prior to 2001, the business operations of Globallink LLC and William J. Abraczinskas had caught the attention of the Federal Bureau of Investigation, and the F.B.I. set up a "sting" in Miami, Florida, to see what Abraczinskas would do when presented with the opportunity to "launder" drug proceeds for a Mexican Drug Cartel. Abraczinskas agreed to use offshore bank accounts belonging to Globallink LLC to launder the cartel's drug money for a mere 10% fee.
UNITED STATES v. ABRACZINSKAS. Limited details. Apparently, Bill Abraczinskas was sent to a minimum security federal "resort" for white-collar criminals, because sometime thereafter, he and another prisoner escaped. Both were eventually caught and prosecuted. Abraczinskas was sentenced to have an additional 15 months to be tacked onto his original sentence. However, Abraczinskas won this appeal to have the sentenced reviewed, which seems to make little sense given that the sentencing range was 12 to 18 months.
HAMBLETON BROTHERS LUMBER COMPANY v. BALKIN ENTERPRISES, INC. ET AL is a 2005 USCA decision, in which William Abraczinskas, his wife Kerrylee Harrington-Abraczinskas, and a corporation owned by Abraczinskas, called Financial Investments, Inc., are Defendants-Appellees. Here are some excerpts which refer to Abraczinskas and Financial Investments' role in the events that gave rise to this lawsuit:
"... [Jim] Ballinger was formerly the president of Balkin Enterprises, an Oregon corporation that had entered into a contract with Hambleton Brothers in 1994 giving Hambleton Brothers the right to all merchantable timber on a particular parcel of land for a period of just over three years. Before Hambleton Brothers could log the property, it was sold by one William Abraczinskas, an unauthorized individual purporting to be Balkin's agent, and then logged by another company. Hambleton Brothers, gaining nothing for the funds it had paid for the logging rights, brought suit ... ... ...
"On July 5, 1995, William Abraczinskas signed an unrecorded warranty deed transferring the Fruitland real estate from Balkin to Financial Investments, Inc. for ten dollars. Although Abraczinskas signed the deed purporting to be Balkin's vice president, he was not an employee, officer, or shareholder of Balkin. Ballinger and Kinsey knew Abraczinskas and had conducted business with him on a prior occasion, but neither authorized him to engage in any transaction on behalf of Balkin Enterprises. Financial Investments was Abraczinskas's own company. After several other rapid property transactions, Cascade Pacific Land & Timber bought a timber deed to the Fruitland real estate and logged the property. ... ... ...
"On July 7, 1995, Financial Investments deeded the Fruitland property to Sherry Miles for $129,000, for which Miles signed a promissory note. Financial Investments sold the note to Great Northwest Investments on July 12, 1995. Miles deeded the property to MGM Development, Inc. on February 16, 1996. On August 1, 1996, MGM Development granted a timber deed for all timber on the Fruitland property to Cascade Pacific Land & Timber for $32,000. ... ...
"... Ballinger was named as a defendant, along with Balkin Enterprises, Kinsey, Mr. and Mrs. Abraczinskas, Financial Investments, and Trevor Coxen, the president of Financial Investments. On October 24, 2001, the district court granted Hambleton Brothers's motion for entry of default against Balkin and Financial Investments. ... ... ...
"... Instead, the loss to Balkin caused by Abraczinskas, with his complex and covert scheme of fraudulent land transfers, cannot be viewed as reasonably foreseeable by the incorporators of Balkin.
Interestingly, sometime prior to 2001, William Abraczinskas also had started a business in Montana called The Bank Exchange. Sometime around 2000-1, Bill Abraczinskas sold The Bank Exchange to fellow Jehovah's Witnesses, Darryl K. Willis and Dale A. Erickson (see next summary). The State of Montana apparently closed down The Bank Exchange sometime in early 2002 (prior to Willis' and Erickson's arrests for the Anderson Swindle), because it allegedly was being used in a scam involving the formation and operation of offshore credit unions . However, Willis and Erickson (nor Abraczinskas) were ever prosecuted for any TBE dealings, possibly because the State of Montana did not want to expend the additional resources given the pending Anderson Swindle prosecutions, and possibly because any investigation of TBE would possibly embarrass or even implicate various Montana politicians and elected officials.
What is extremely interesting is the fact that in April 2000, Globalink LLC signed an exclusive contract with the Montana Department of Commerce to develop its Foreign Capital Depository Program. Under that deal, Globalink LLC was to conduct due diligence investigations of all persons or entities applying for a depository charter in Montana and make recommendations to the Commissioner of Banking and Financial institutions whether they should be approved. According to multiple webpages, the President of Globalink LLC was a man experienced in international banking operations, named Doug Hamilton, who lived in Whitefish, Montana. According to the October 2001 edition of the Northwest Financial Review, Doug Hamilton and Darryl K. Willis filed Montana's very first application for a depository charter -- First Depository of Montana Inc. -- using a San Diego, California attorney, according to another source. However, the Montana Banking Board kept asking Darryl Willis for additional information, which he never provided. The application for First Depository of Montana Inc. eventually went unprocessed, despite the unusually strong public support for Willis and Hamilton from a certain Montana State Senator.
Click HERE, and HERE for additional readings on some of William Abraczinskas' other domestic and international business dealings. (Use FIND to search "Abraczinskas" on each webpage.)
"Largest Theft in Montana History"
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