PONZI SCHEMES and other
STOCKS & COMMODITIES INVESTMENT
SUBSECTION PAGE 2 OF 2
MORE THAN 15,000 EUROPEANS
DEFRAUDED BY GERMAN JEHOVAH'S WITNESS LEADERS
GERMANY v. ULRICH CHMIEL, GERMANY v. ALEXANDER CHMIEL, GERMANY v. CHRISTIAN CHMIEL, GERMANY v. OLIVER BRAUN, GERMANY v. JOHN DOE, and GERMANY v. JANE DOE. (Nearly all of the still existing webpages containing information about these old criminal prosecutions are published in the German language, thus the following best-effort summary likely contains unintentional inaccuracies. Readers should do their own research and translation of the original German language media reports.)
Ulrich Chmiel was the founder and Chairman of the Board of the now bankrupt AKZENTA AK, which was a German investment firm founded in 2002. Ulrich Chmiel purportedly was a prominent German Jehovah's Witness Elder, as were his two sons who worked with him in the business, and as was Oliver Braun, and as were many of the other employees and clients of the firm. AKZENTA AK reportedly had approximately 35,000 clients in Germany alone, plus more in Italy, Austria, and the Middle East, whom invested HUNDREDS OF MILLIONS OF DOLLARS with the firm.
AKZENTA AK was also the 49% owner of a travel agency located in Rosenheim, called PROSKE-REISEN. Until this scandal erupted, German Jehovah's Witnesses knew PROSKE-REISEN as the travel agency which the WatchTower Society required them to use for all travel to WatchTower Society conventions and other functions.
AKZENTA DUBAI was a Middle East subsidiary which attracted money from investors for never-constructed real estate projects, one of which was the underwater hotel project known as HYDROPOLIS.
In May 2006, investigators with both state and federal law enforcement agencies raided 25 offices around Germany. Financial records were seized, and the firm's bank accounts were frozen. Lavish and ostentatious assets totaling nearly $700,000,000.00 were seized all over Europe. The four listed defendants and others were arrested. In August 2008, reportedly, Ulrich Chmiel and his two sons were convicted on PONZI-SCHEME type fraud charges. Reportedly, Ulrich Chmiel and Oliver Braun were each sentenced to 81 months in prison. Alexander Chmiel, age 31, reportedly was sentenced to 60 months in prison, but all or part that term may have been suspended. Christian Chmiel, age 27, reportedly was sentenced to two years in prison, but he too may have received only probation. Reportedly, even after the above convictions, three employees, including a female, who continued to operate AKZENTA AK, and who continued to defraud clients were arrested and prosecuted in 2008-09.
By 2011, 15,000 clients had filed claims against the in-bankruptcy firm -- totaling nearly $150,000,000.00.
One can only wonder how many MILLIONS of dollars the schemers donated to the WatchTower Society in order to establish and maintain their "credibility" with victims and potential victims. Those donated MILLIONS should have been the target of any "claw back" actions every bit as much as the money paid back to early investors to establish and maintain the credibility of the Ponzi scheme. Both payouts served the same Ponzi scheme function.
MORE THAN 2500 EUROPEANS
DEFRAUDED BY SPANISH JEHOVAH'S WITNESS LEADERS
The quantity of the coverage by the Spanish media of this 13 year-old SCANDAL has ranged from nothing to sparse. Much of what has been published by the Spanish media is inaccurate. Many Spanish reporters could not even understand the difference between monetary amounts quoted in euros and pesetas. Many Spanish media reports were nothing but re-words of other Spanish reporters' poorly researched articles. Some media reports state that only 700 JWs were victims, while others relate (probably accurately) that practically all of the victims were Jehovah's Witnesses and their relatives. That number has been variously reported to be 2000, 2500, and more. Frankly, this Editor did not realize that Spain was such a backward, apparently third-world country. This scandal would have been better and more accurately covered by the media if it had occurred in Ethiopia, Honduras, or even Vietnam, and probably better investigated and prosecuted. Neither did I understand that the governments -- state and federal -- of Spain were so crime-ridden and ineffectual. We look forward to SOMEONE NOT A PERPETRATOR OF THIS CRIME, who is fluent in Spanish and familiar with the Spanish legal system, to provide the world with the full and accurate details of what all this FRAUDULENT SCANDAL entailed -- including the names of the 4 UNIDENTIFIED convicted criminals. (Nearly all of the webpages containing information about this criminal prosecution are published in the Spanish language, thus the following best-effort summary likely contains unintentional inaccuracies. Readers should do their own research and translation of the original language media reports.)
Back between 1998 and 2002 -- that's 13 to 17 years ago, as many as 2500 investors, or even more, in Spain, Portugal, Switzerland and Morocco were defrauded out of what has been estimated as much as EU 38,000,000.00. It was not until the December 2014 - February 2015 trial conducted at the Provincial Court of Barcelona that anyone had been convicted of any crime connected with this PONZI SCHEME. Although there were 17 or more perpetrators named as criminal defendants at various points in this prosecution, only two leaders of the Ponzi scheme and their two assistants (probably their wives) -- STILL UNIDENTIFIED -- were ultimately convicted and sentenced to prison -- only 42 months and 36 months respectively.
Here is what we believe to be the list of the original 17 criminal defendants when this prosecution started back in 2002. We assume that additional names were added as the investigation progressed. It is absolutely appalling that after nearly 13 years of investigation that the Spanish Prosecutor could get no more than four convictions. The first DEAD guy on the list is reportedly the Jehovah's Witness ringleader, and Stephen John Ross was his right-hand man and fellow JW. Many of the remaining males on the list were also fellow JW Elders, at least at one time they were -- despite claims to the contrary by online JW apologists in 2015. The females are JW wives and siblings.
The main Spanish corporation used in this PONZI SCHEME was Rural New Life S.A., which was located in Seville. There were also additional subsidiary corporations such as Mutua Mas Vida, which was located in Barcelona, and the Masvida Foundation, and even SL ATLANTIC AIR SERVICES. As best as we have been able to sort out of the Spanish media MESS, these corporations apparently sold life insurance and health insurance policies which were tailored specifically for Jehovah's Witnesses and their "NO BLOOD TRANSFUSIONS" religious beliefs, which covered and provided "bloodless" healthcare. Construction of "bloodless" hospitals and other medical facilities were promised for sometime in the future.
In addition to the sale of insurance policies which covered "bloodless" healthcare, money could also be invested with these corporations which was advertised to earn 8% - 13% interest, which apparently was higher than "market" in 1998-2002. It is unclear exactly how these corporations were otherwise using this invested money so as to be able to pay such high interest rates. Apparently, as typical in a Ponzi scheme, most of the invested money went into the pockets of the schemers, and to pay current liabilities in order to keep the Ponzi scheme going. Around latter 2001, the Ponzi scheme began to fall apart as invested funds was either mismanaged or misappropriated, and BANKRUPTCY was filed in 2002, with all the JW Investors losing their money.
NOTABLY, it has been reported that several of the Jehovah's Witness Elders involved in this PONZI SCHEME were also involved in a Spanish PONZI SCHEME involving companies named AFINSA and FORUM FILATELICO, and that many Spanish and other European Jehovah's Witnesses lost money in that scandal. WHY IS NOONE THOROUGHLY REPORTING THESE EUROPEAN JW-INVOLVED SCAMS????
The lack of public information regarding this 13-17 year-old PONZI SCHEME, plus the slow and ineffectual criminal prosecution, are likely attributable to the typical WATCHTOWER SOCIETY induced information cooperation BLACKOUT which always follows every public WatchTower Cult related scandal.
The XJW community should not smirk. There are many online XJWs in Spain and other affected parts of Europe, and apparently save a small handful of XJW website operators who apparently knew no more about this scandal than what the media reported, little or no additional info has come from the European XJW community despite the fact that this WIDESPREAD scandal has been around since 2002.
WHY? For the same reason that other JW-related crimes and criminals are poorly reported or not reported at all by the XJW community. There is a good reason WHY our two sister websites are more hated by the XJW community than by the JW community itself. Where do readers think that the hundreds and even thousands of exposed JW criminals -- thieves, rapists, murderers, child molesters, child pornographers, etc. -- and all their relatives, spend time online after they are DF'ed? Some operate their own websites. Some are prominent contributors and even moderators on SEWER websites -- where unidentified POSs of all species of JWs and XJWs gather together. Others ingratiate themselves to prominent XJWs who quickly compromise their integrity for the sake of additional contacts. All conspire to constrain exposure and disclosure of themselves and other JW criminals and their crimes. Which XJW websites? The XJW websites which proudly and loudly proclaim that they only fight against "The Watchtower Society" and what it does as an organization, but they do NOT fight against the individual Jehovah's Witnesses who carry out the directives of the WatchTower Society, nor the crimes of individual JWs. That makes as much sense as declaring that the individual Nazi soldiers who rounded up Jews and the individual Nazi concentration camp guards who gassed the Jews should not have been held personally responsible for their criminal actions. That ludicrous reasoning is nothing but a lame excuse attempting to justify those XJWs allying themselves with XJW criminals. Simply go to any XJW website and see if it links to our CRIME sections or even our HOMEPAGEs, or see if it itself reports the poorly reported or unreported JW criminals. Why would our two websites which have for years originated the newest and latest WATCHTOWER HISTORY not be linked by prominent XJW websites? Why would these two websites which have historically tracked down the less publicized JW Criminals not be linked by prominent XJW websites -- especially the SEWER websites where the owners explicitly forbid our links to be posted? Do not buy the lying excuses from those site owners for not doing what we do regularly and a few other "outcast" websites do occasionally. Also, do not assume that those who routinely post or allow the posting of the "already well-publicized" criminals/crimes or the "soon-to-be well-publicized" criminals/crimes are not co-conspirators in this international clique. Publicizing the "already well-publicized" is merely "bouncing the rubble" that someone else has already caused. Fools are those who fail to see how this international XJW "clique" operates behind the scenes. Do you really think that we and our two websites have never received offers to be accepted into the "clique"? We would only have to allow the content of our websites to be controlled by the "clique". We have even been approached personally with LARGE sums of money in hand -- if only we would agree to conform our editorial policy. No, we will close down before we will form alliances of convenience with unreformed and unrepentant child pornographers, thieves, pedophiles, rapists, murderers, and their prominent XJW co-conspirators -- whom are as BIG OF SCUMBAGS as are the scumbags they have protected for nearly two decades.
UNITED STATES v. MATTHEW BRIAN PIZZOLATO; COMMODITY FUTURES TRADING COMMISSION v. MATTHEW BRIAN PIZZOLATO, WILLIAM CHARLES GUIDRY, and CAPITAL FUNDING CONSULTANTS LLC.; NUNEZ, ET AL v. SHEREL J. PIZZOLATO, MATTHEW BRIAN PIZZOLATO, ET AL; GUILLORY v.SHEREL J. PIZZOLATO, MATTHEW BRIAN PIZZOLATO, ET AL; DESELLES v. SHEREL J. PIZZOLATO, MATTHEW BRIAN PIZZOLATO, ET AL; and other yet to be identified civil and criminal court cases.
Sherel Joseph Pizzolato, father, and Matthew Brian Pizzolato, son, age 26, of Tickfaw, Louisiana, are reputed to be members of an extended multi-generation family of JEHOVAH'S WITNESSES living in Louisiana. Sara [Crouch] Pizzolato, originally from Oregon and West Virginia, is wife of Sherel "Sonny" Pizzolato and mother of Matthew Pizzolato.
On November 20, 2009, Matthew B. Pizzolato, age 26, was arrested for allegedly running a $19.5 million Ponzi scheme. A federal grand jury in New Orleans returned a 64-count indictment against Matt Pizzolato for allegedly stealing investments from 160 elderly clients from the New Orleans and Baton Rouge areas. The indictment included 52 counts of mail fraud, two counts of wire fraud, seven counts of money laundering, one count of securities fraud, and one count each of witness tampering and obstruction of justice.
The 26 year-old Pizzolato was allegedly the head of 20 different companies in Baton Rouge, Covington, Hammond, and Lake Charles. Young Pizzolato allegedly had preyed on elderly clients since at least 2005 -- promising them steep returns on investments in certificates of deposit, U.S. Treasury bills, and other guaranteed and insured investments. Instead, Matt Pizzolato allegedly used his clients' money to bankroll a luxurious lifestyle -- purchasing or leasing a BMW, Mercedes Benz, Range Rover and Corvette. Matt Pizzolato also built a $600,000.00+ home in Ponchatoula, and allegedly bought a $35,000 engagement ring for his fiance. Pizzolato family members and their friends also allegedly benefited -- allegedly receiving millions of dollars in payments.
Of the $19.5 million he collected, Matthew Pizzolato distributed about $2.8 million back to his clients in the form of "lulling payments, " or supposed returns on their investments, in order to quell any suspicions that he was a fraud. Federal authorities learned of Pizzolato's business activities after receiving a tip from the Louisiana Office of Financial Institutions (LOFI), which oversees state-chartered banks and financial firms. LOFI issued a cease-and-desist order against Sherel J. Pizzolato, Matthew B. Pizzolato, and OTHERS in January of 2008, ordering them to stop selling securities through Gulf Region Guaranty Inc., Gulf States Guaranty LLC, Allegiance Financial LLC, and Cornerstone Wealth Management LLC. Other business entities alleged to be affiliated with Pizzolato include:
Acadian Guaranty Group, LLC; Annuity Presets, LLC; Annuity Recovery Services, LLC; Anova Marketing Systems, LLC; Anova Marketing Systems, LLC; Anytime Fitness of Sulphur, LLC; Global Assured Financial, Inc.; Green Pelican Group, Inc.; Gulf South Guaranty, Inc.; GRG Holdings, LLC; GRG I, LLC; GRG II, LLC; Matt P, LLC; National Insurance Advisors, LLC; Pelican Guaranty Group, Inc.; and Spectrum Lending Group, LLC.
In addition to the federal criminal court cases, four civil court cases, including one class-action lawsuit, were filed earlier in 2009 by investors seeking return of their investments. The defendants in the ongoing class-action lawsuit include alleged "principals" of the various business entities named above:
Matthew B. Pizzolato, Sherel J. Pizzolato Jr., and David Compton -- all of Tickfaw; Jeremy Jallans, of Laplace; Shana Morgan, of Denham Springs; Perry Dixon, of St. Amant; William Guidry and Sharon Dixon, both of Lacombe; Jeremy Rowe, of Gonzales; Jeremy Galaviz and Heath Huguet, both of Covington; and John Compton, of Ponchatoula.
In July 2010, then 26 year-old Matthew Brian Pizzolato "took the fall", and pleaded guilty to 21 federal counts, including mail fraud, wire fraud, money laundering, securities fraud, and witness tampering involving his operation of what federal prosecutors said was the "Largest Ponzi Scheme in Louisiana's History". Matthew Pizzolato was sentenced to the statutory maximum of 30 years in federal prison, and was ordered to pay over $15,000,000.00 in restitution to the 165 victims he defrauded. Subsequent appeals to the USCA and even SCOTUS have failed or been denied.
Although he had only a GED and an eighth-grade education, Matthew Pizzolato told clients that he was one of the top 10 financial planners in the country; possessed special training in investing; was a certified estate planner; and had graduated from law school.
Status of other civil and criminal cases against other family members and business associates is unknown.
SECURITIES AND EXCHANGE COMMISSION v. WILLIAM J. WISE, KRISTI M. HOEGEL, a/k/a KRISTI M. CHRISTOPHER, JACQUELINE S. HOEGEL, a/k/a JACQULINE S. HOEGEL, a/k/a JACKIE S. HOEGEL, MILLENNIUM BANK, ET AL and UNITED STATES v. WILLIAM J. WISE and JACQUELINE SUE HOEGELwere related federal civil and criminal prosecutions filed in Texas (2009) and California (2012). In 2012, the mastermind, William J. Wise, then age 62, pled guilty to operating a ponzi scheme selling fraudulent certificates of deposits which defrauded over 1200 investors across the United States of approximately $75 million between 1996 and 2009. Wise was sentenced to over 21 years in federal prison.
Using his bogus "Millennium Bank", Wise nationally advertised to pay CD rates three times and often more than the national CD average. Investors were directed to send their deposits to various banks in the Caribbean, which in turn forwarded their checks to Millennium Bank -- initially to Raleigh, North Carolina, but starting in 2004, to Millennium Bank's new office in Napa, California, which was staffed by Jackie Hoegel and her daughter, Kristi Hoegel. None of the deposited money was ever invested. Some was returned to investors as part of the ponzi scheme. During the Hoegel family's management and operation of the Napa office, Kristi Hoegel, age 34, had received $965,000.00 in salary. Jacki Hoegel had received $854,000.00 in salary. Father/husband, Daryl C. Hoegel, had received $130,000.00 for unknown reasons. Brother/son, Ryan D. Hoegel, had received $34,000.00 for data processing.
The vast majority of the unreturned deposits were retained/spent by William J. Wise. William Wise is a Canadian attorney originally from Ontario, who lived in Raleigh, North Carolina with his wife Lynn P. Wise. Jackie Hoegel stated that she had known Wise for sixteen years, and had worked for him since 2004, including traveling internationally on his behalf. However, Jackie Hoegel claimed that neither she nor her family members knew anything about the criminal activities of Wise or Millennium Bank. In 2012, Jackie Hoegel, age 55, also was indicted on 16 counts of fraud and conspiracy, 4 counts of filing false tax returns, one count of obstruction, and one count of giving a false statement. The Hoegel family eventually settled with the SEC. Three homes titled to Daryl Hoegel and Jackie Hoegel were seized and sold at auction for benefit of the victims. The Hoegels also had a property in Washington state seized, as well as personal collectibles and other assets seized. No additional indictments were sought against Hoegel family members, and the criminal charges against Jackie Hoegel were dismissed.
UNITED STATES v. KENNETH GEORGE NEELY was a 2009-10 Missouri federal criminal court prosecution. In February 2010, a St. Louis, Missouri area JEHOVAH'S WITNESS STOCKBROKER, named Kenneth George Neely, age 56, was leniently permitted to plead guilty to a single charge of "mail fraud", and was sentenced to a mere 37 months in federal prison. Sweet deal considering that Kenneth Neely and his JW Family lived like "royalty" off the ill-gotten, tax-free money for nearly a decade. Ken Neely's employers even were more heavily penalized by state fines and penalties, plus being ordered to pay restitution to Neely's victims.
Investigations by the Missouri Secretary of State - Securities Division, the F.B.I., U.S.P.S. Postal Inspection Service, and the Financial Industry Regulatory Authority, all concluded that Kenneth G. Neely had been operating a classic "Ponzi Scheme" for several years. Neely worked for a number of prominent investment/ brokerage firms from 1987 until July 2009, when Neely, was permanently banned from the industry by the Financial Industry Regulatory Authority. Neely reportedly voluntarily consented to FINRA's ban. FINRA reported that Neely started operating a Ponzi Scheme back in 2001 while Neely was employed at UBS PaineWebber Inc. Neely was thereafter employed by Stifel, Nichaus & Co., Inc. from 2002 until 2007, and finally AXA Advisors LLC, who fired Neely when he reportedly confessed to FINRA, in 2009.
Around 2001, to support his "lavish personal lifestyle" -- including expensive Country Club dues and personal entertainment expenses sometimes exceeding $4,000.00 per month -- Neely reportedly "invented" the "St. Louis Investment Club" and the"St. Charles Real Estate Investment Trust". Neely portrayed membership in the investment club as "exclusive" to his relatives, to eight other Jehovah's Witnesses, and a dozen or so others. (Interestingly, an online posting alleges that Ken Neely was one of most prominent Jehovah's Witnesses in the greater Saint Louis area before his fall. That poster alleges that Neely associated with SL's WatchTower Elite, and even once hosted a "50th - Golden Anniversary Party" for St. Louis's Assembly Hall Overseer at Neely's exclusive Country Club.)
Kenneth Neely took approximately $618,000.00 from 25 or more victims in Missouri, California, Florida and Maryland.. Using the Ponzi Scheme method of paying back some money to earlier investors using money from recent investors, Neely gradually returned about half of the money to some of his earlier investors. To conceal the scheme from the various employers and federal and state authorities, and avoid bank transaction reporting requirements, Neely reportedly instructed investors to make multiple payments to his wife, Jackie Nelly, in small increments of $2,000.00 to $3,000.00. Neely's mother's home address was the address of the St. Louis Investment Club. Only Neely himself was ever prosecuted.
Media reports indicate that UBS PaineWebber Inc. paid out more than $120,000.00 to settle four arbitration cases brought by Neely's investors. Stifel, Nichaus & Co., Inc. reportedly settled a lawsuit filed against it by the Missouri Commissioner of Securities for failing to properly supervise Neely by agreeing to pay a total of $1,100,000.00, including restitution to Neely's investors. AXA was fined $100,000.00 for failing to heed numerous red flags shouting Neely's dishonesty.
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 Griffin 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 and 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 2000-01, 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.
"Largest Theft in Montana History"
UNITED STATES v. ROBERT L. KNOWLES. In October 2002, a prominent millionaire Jehovah's Witness Elder, with ties throughout both his home state of Florida and the entire United States, named Robert L. Knowles, was convicted and sentenced to 57 months in federal prison, and three year probation, on 24 counts of mail, wire, and securities fraud. The victims of All Diversified Financial Services, Inc. were more than 50 of Knowles' own fellow Jehovah's Witnesses -- most of whom were elderly, widowed, or disabled. In 2003, a federal judge ordered Knowles to repay nearly $4,800,000.00 to his 50 victims. It is unknown how much money actually remained by that time.
Robert Knowles was a prominent Jehovah's Witness Elder, who had regularly delivered speeches at WatchTower Conventions over the years. Knowles reportedly had also served as a "missionary" in Africa. It is unclear whether Knowles was a graduate of the WatchTower Bible School of Gilead missionary school, which would make him an "official" WatchTower missionary, or whether Knowles was an "unofficial" missionary, or what is known as a "NeedGreater" within the Jehovah's Witness community.
A Jehovah's Witness Widow, named Elizabeth Morgan, of Fort Lauderdale, lost her deceased husband's life insurance and"medical malpractice lawsuit settlement", amounting to approximately $764,000.00. Morgan wound up having to sell her home and file bankruptcy. Rose McTygue, an elderly JW from New York, lost $85,000.00 that she had inherited. Rose McTygue's sister, Ann Marie Cozzubbo, of Florida, also lost the $85,000.00 that she had inherited. Vincent Romano, an elderly JW from Florida, lost $600,000.00. However, Romano related that even one of his own sons had sided with Robert Knowles, which is somewhat typical of JW operated scams. William Howison and Jeanette Howison lost $55,000.00 of the husband's $70,000.00 "heat stroke" Worker's Compensation settlement. Howison told a reporter that, "... the real judgment comes from God. And that comes soon."
UNITED STATES v. STEVEN C. ROBERTS was a 1998-2000 Texas criminal court case which involved a fraudulent investment scheme that eventually led to Roberts pleading guilty to seven counts of mail fraud. Roberts was sentenced to 27 months imprisonment, and ordered to make restitution of $3,373,000.00. Steven Roberts was not a Jehovah's Witness. However, Kerry R. Maiden, whose name and company, M.K.M. Marketing Inc., are referred to in this USDC decision, is a Jehovah's Witness Elder in the Houston, Texas area Garden Oaks Congregation of Jehovah's Witnesses. Without comment, or judgment, here are excerpts of those references:
"17. Beginning in the summer of 1996, Steven C. Roberts (Roberts) was introduced to an investment program operated by Randall L. Garrett (Garrett) by Kerry Maiden (Maiden). The Garrett program was a Ponzi or "pyramid" scheme. Roberts collected investor funds and Roberts forwarded those funds to Maiden, who forwarded the funds to Garrett. Roberts was allowed to recruit his own brokers to sell the investment program. ...
"19. Roberts and Maiden agreed that Roberts would receive some percentage as commission. All commissions were paid at the same time that the investors received their returns.
"20. The Garrett program stopped paying returns in February, 1997. The Garrett program ceased operations in May, 1997, when the F.B. I. executed search warrants at Garrett's business and arrested Garrett. Garrett was later convicted of wire fraud, mail fraud and money laundering ... . ... ...
"71. Initially, Roberts was working with Kerry Maiden of MKM Marketing. Roberts had approximately ten investors and Roberts placed their funds with Maiden. ... ...
"80. Burgess said that Roberts used investor money to pay Roberts' expenses. Burgess never saw money coming into Roberts' account from MKM Marketing, but Roberts continued to pay investors in the MKM Marketing program until June, 1997. Roberts "rolled" these investors into the Cord program. ... ." [The "Cord program" was another scam that was shut down by the F.B.I. in August 1997. Cord was also convicted of mail fraud, fined, and sentenced to 60 months in prison.]
Readers should read the linked USDC decision to place these excerpts into context. At some point, at least Steven Roberts understood the score with both Garrett and Cord. None of the $6,700,000.00 collected from investors by Roberts was ever legitimately invested by Garrett, Cord, or Roberts.
CROWN v. JAMES WHEELER, CROWN v. GILLIAN WHEELER, CROWN v. LAWRENCE WHEELER, CROWN v. ANTHONY KEMP, and NEW ZEALAND v. ANTHONY KEMP are related 2013-16 England and New Zealand criminal court cases. Lawrence Wheeler, age 71, of Tursdale, England, father of James Wheeler, pled guilty to conspiracy to commit fraud, and was sentenced to 9 years in prison. Reportedly Jehovah's Witness Husband and Wife Couple, James and Gillian Wheeler, both age 46, of Ferryhill, England, were prosecuted on charges of conspiracy and concealing criminal property after they both pled "not guilty". Gillian Wheeler was found "not guilty" via a directed verdict, but James Wheeler was convicted by jury on both charges and sentenced to 8 years in prison.
From 2001 until 2014, the Wheeler family operated a "Ponzi scheme" which eventually drew in nearly 400 investors, who lost roughly $14,000,000.00. Reportedly, this Ponzi Scheme was started in 2001 by Lawrence Wheeler and Anthony Kemp, and by 2003, James Lawrence was using his suntan shop and picture framing shop in Spennymoor to launder the scheme's proceeds. Other Wheeler family members were also investigated, but ultimately not prosecuted. The Wheelers used "word-of-mouth" to draw in "investors" who they knew personally -- specifically targeting the "elderly". James Wheeler used his status as a "Jehovah's Witness who was unable to break the law" to deceive his victims, who also included accountants, lawyers, and businessmen. Investors were warned and even threatened not to speak to outsiders about the various international "get-rich-quick" schemes which the Wheelers were operating for their supposed financial benefit. Little or nothing was ever paid back to the investors as the Wheelers told investors that their fortunes were continuing to be amassed off-shore.
During James Wheeler's three-week long jury trial, James Wheeler took the witness stand and denied that he and his wife were guilty of the two charges. At his sentencing, the Judge labeled Wheeler's testimony as a "nauseating and slippery performance". James Wheeler is not the first Jehovah's Witness to put their door-to-door soliciting experience and Theocratic Ministry School training to criminal use.
Anthony Kemp is currently in prison in New Zealand, and will be extradited back to England to face FRAUD charges there when he is released. Tony Kemp was charged in 2011 with befriending two elderly females and defrauding them of their life savings -- nearly $400,000.00. Anthony Kemp pled "Guilty" in 2014 to 10 counts of theft in a special relationship and even one count of making and using a false document -- which he had submitted in his defense to the Judge during proceedings. In 2015, Tony Kemp, by then age 58, was sentenced to 40 months in prison.
"Peterson is a chilling, colorful example of how career confidence men operate. Though the man remains shrouded in mystery, New Times pieced together much of his story through use of public records in several states and by numerous interviews.
"Able to cite Biblical and stock quotations at will, the physically imposing Peterson -- six foot seven, 265 pounds -- oozes charm and credibility. His promises of easy money are seductive, his invented track record impressive. He has a loyal, Scripture-quoting wife whose mere presence after three decades with him helped to convince potential investors of his stability and trustworthiness. ...
"The couple presented quite a contrast: Steve is a talkative bear of a man who can dominate a room; Mary is a tiny, somewhat passive woman with a passion for Scripture. The Petersons have no children."
FIREPOWER: THE MOST SPECTACULAR FRAUD IN AUSTRALIAN HISTORY is a book authored by a reporter for the SYDNEY MORNING HERALD named Gerard Ryle, which reveals the story of a Jehovah's Witness Minister named Tim Johnston, who essentially got away with what has been labeled as "The Biggest FRAUD in Australian Corporate History". Tim Johnston and his sham business called Firepower, which collapsed after investors lost nearly $100,000,000.00, marketed a fuel additive that was promoted as being able to increase fuel mileage while decreasing pollution. Many Australian Jehovah's Witnesses sold Firepower's products, and several Australian Jehovah's Witnesses were investors and employees. Johnston and Firepower did business internationally, including the United States, and it is only reasonable to believe that some Jehovah's Witnesses around the globe were involved in this scam.
In more than 60 newspaper articles, Ryle reveals that Tim Johnston moved to New Zealand in 1992 and started a company called Power Plan International, which marketed a fuel additive pill through a multi-level marketing network of about 3000 small distributors across Australia, New Zealand, South East Asia and China. That first fuel additive pill was purchased from CYI Techni Lube Company in California. One of Tim Johnston's business partners in that first venture was Ross Johnston (no relation), who just happened to also be a Jehovah's Witness. Ross Johnston was later presented to as one of the inventors of Firepower's products.
Power Plan International was closed in 1994, but between 1996 and 1999, Tim Johnston started several other companies to market a variety of automotive products, again including fuel additives. One of those entities was TL Chemplex, which sold automotive products made by a California company called Chemplex Automotive Group Inc. In 1999, Johnston formed TLC Manufacturing and Development Australia. TLC USA, TLC International, and U.S. Lubricants International were also companies claimed by Johnston. TPS Firepower was formed in 2000, while Firepower Holdings Limited was formed in 2004. There were a plethora of associated entities formed in other countries, with the names sometimes including the word "Firepower". Around 2008-09, after fleeing to London, England, Johnston founded a similar company there called Green Power Corporation.
Ryle's book suggests that Tim Johnston began his career of FRAUD after being mentored by a New Zealand Jehovah Witness named Graeme Clegg, who operated one of NZ's and Australia's largest and most successful MLM schemes called New Image International.
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v. GRAEME JEFFREY BOORER was a 2007-2010 Australia administrative action against Graeme Jeffrey Boorer, currently age 64, who is reported to be a high profile Jehovah's Witness Elder and Presiding Overseer, who then lived in Kirrabilli, New South Wales, Australia. Graeme J. Boorer was the major shareholder and Executive Chairman of Techontap International Limited, which was a public company founded in 2004 to offer telecommunications services to small businesses through a system of franchisees. After Techontap International Limited filed for bankruptcy in December 2005, the Australian Securities and Investments Commission (ASIC) launched an investigation of Graeme J. Boorer due to the fact that this was Boorer's third corporate "insolvency" since 2004 in which unsecured creditors were expected by the appointed liquidators to receive ZERO cents on the dollar. (Boorer's eldest son, Ruben Simon Boorer, was also a corporate Director of Techontap International Limited, but ASIC took no action against Ruben S. Boorer.)
After a Hearing conducted in May 2008, ASIC found that Graeme Boorer had failed to make sure that his two other failed companies -- Customer Strategies Pty Limited and Entrepo Pty Limited -- had maintained proper books and records, and that Boorer had allowed Techontap International Limited to trade while it was "insolvent". ASIC also found that Graeme Boorer had made a "false statement" when he authorized the filing of documents with ASIC regarding the appointment of two directors to Techontap International Limited -- Leonard Keith King and Brett Andrew King -- neither of whom had consented to be a corporate Director for Techontap International Limited. ASIC decided to disqualify Graeme Jeffrey Boorer from managing corporations in Australia for two years.
IN RE GRAEME JEFFREY BOORER and ASIC. On appeal, in May 2010, the Administrative Appeals Tribunaloverruled ASIC's decision that Graeme Boorer had made a "false statement" when Boorer authorized the filing of documents with ASIC regarding the appointment of Leonard Keith King and Brett Andrew King as corporate Directors for Techontap International Limited. The Administrative Appeals Tribunal reduced Boorer's disqualification from managing corporations in Australia from two years to one year.
GRAEME JEFFREY BOORER v. HLB MANN JUDD was a 2012-14 civil lawsuit in which Graeme J. Boorer sued his accountant in a failed attempt to place the blame for his disqualification from managing corporations and the resulting damages onto that accountant. Although this was a separate civil action which had no bearing on Boorer's previous partial success before the Administrative Appeals Tribunal, the Supreme Court of New South Wales was not so "believing" as was the Administrative Appeals Tribunal that the false "Directors" filing simply had been an "honest mistake". In fact, the Supreme Court of New South Wales - Trial Courtpublished the following condemnatory remarks concerning the "credibility" of Graeme Boorer and the "evidence" which Boorer had presented:
The plaintiff's evidence was contradicted on a number of occasions by contemporaneous documents. For example, he repeatedly denied knowing that Brett King had been listed as a director of Techontap with ASIC prior to 5 September 2005. He also gave evidence, in the ASIC hearing and before me, that he took action to correct ASIC's records as soon as he discovered that they were incorrect. Yet he did know that the ASIC records were incorrect by reason of the emails he had exchanged at the end of May 2005 with Brett King and did nothing to rectify them. I do not accept that he simply forgot this exchange. Rather, I consider that it was not convenient for him to try to find another director as at May 2005.
Whether the plaintiff was conscious that he was not telling the truth when he gave his evidence before me is questionable. He impressed me as a man who continually reconstructs the past to arrive at a version that portrays him in the best light. By reason of this practice, he may be simply unreliable, as distinct from dishonest. When confronted with contemporaneous documents which were inconsistent with his version, he made concessions, however, he did so only to the extent required by the contents of the document.
When he was asked about the circumstances of termination of the lease of premises from which he worked in the same building as the defendant's offices, the plaintiff said that he did not recall which company had the lease and did not recall being evicted. This is at the very least implausible, particularly given that the plaintiff was able to recall that the lessee was in arrears by an amount in the order of $26,000, payment of which he had personally guaranteed and $22,000 of which was covered by a bank guarantee.
As set out above, the plaintiff gave various versions of the number of documents with which he was presented to sign on 28 July 2004 when he met with Ms Von-Lucken. The number grew from 14 at the ASIC hearing to 80 in the proceedings before me. Whether this inflation was due to a conscious desire to mislead or arose from a subconscious tendency to make the case better from his point of view is a matter that need not be determined. However it is another indication of the plaintiff's unreliability.
In his affidavit the plaintiff deposed that he had caused Techontap to lease premises in the same building as the defendant in order to facilitate a closer working relationship. When presented with documents which established that the lease was entered into some months before Techontap engaged the defendant, the plaintiff conceded that his evidence was false.
Whether the defendant was in, or near, the premises occupied by Techontap is not particularly germane to the duty of care owed, or the scope of the retainer. Nonetheless, the plaintiff's evidence, which he ultimately admitted was false, indicates the extent to which he was prepared to distort his own evidence in the hope that it would improve his case.
By and large, the plaintiff's demeanour was calm and controlled. He was not easily flustered, even when presented with inconsistent prior evidence or documents which may have caused others to exhibit embarrassment.
In April 2014, the Supreme Court of New South Wales - Court of Appeal dismissed Graeme Boorer's appeal of the 2012 Trial Court decision which had dismissed Boorer's lawsuit against the accountant.
Notably, the various court decisons indicated that Graeme J. Boorer operates multiple other businesses in Australia, including but not limited to, the BOORER SUPERANNUATION FUND, LIQUIDITY FINANCIAL SERVICES PTY LIMITED, and the CORPORATE INVESTMENTS UNIT TRUST.
Interestingly, in 2009, while Graeme Boorer remained "disqualified" to be appointed to a corporate directorship in Australia, Graeme Boorer was named as a corporate "Director" in the United States, for a Nevada corporation headquartered in California, named ENTERCONNECT, INC. Graeme Boorer was listed as a "consultant" with a company performing CRM consulting for ENTERCONNECT, INC, namely Customer Strategies International Pty Limited, of New South Wales, Australia.
A Tipster reports to us what he believes to have been either a scam or just an extremely poor investment which was being promoted within the Jehovah's Witness Community back during the 1990s. Tipster relates that around 1995 several under-educated, middle-class JWs in his North Carolina Circuit were investing their money in what was then an already ongoing "investment" -- mainly because the investment's "increments" were very low -- either $3000.00 or $5000.00, as best as Tipster can now recall.
Tipster is "fuzzy" about most of the details because after receiving and reviewing the investment materials from the JW Investment Broker -- whom lived somewhere in the lower southeast "Gold Coast" Florida area -- and speaking with him by telephone, Tipster decided not to get involved. Admittedly not an investment expert, Tipster relates that he believed that the investment had little upside, but rather that the investment was structured such that the Investors were taking all the risk of failure, and would share very little of any unlikely success. The owner/operators of the television production company appeared to be using Investor's money to do what they would not do with their own money to make the company a financial success.
Tipster relates that after 1995 that he continued to occasionally hear this investment discussed amongst local JWs until such discussion stopped around 2000. Tipster relates that thereafter, when only asked specifically, many of the JW Investors admitted that they had lost every penny they had invested in this scheme. If any reader is familiar with this scheme, and can add details, please let us know.
As best as Tipster can now recall in 2015, the "investment" was supposed to eventually become a Christian children's television network. However, at the the time, the upstart television production company was simply producing individual television programs which the company was then attempting to have broadcast on any cable television network which would broadcast them. Video tapes of episodes of the individual television programs were available to investors. Otherwise, supposed airing of these television programs were only occasionally viewable on satellite television. Tipster now suspects that the programs were only being broadcast by satellite television stations which would air anything that didn't cost them anything, and that better stations were actually being paid with Investor's money to air the company's programs.
Tipster relates that he spoke once via telephone with the "too-slick" JW Salesman/Broker, who related that he also was an"Attorney". That Attorney/Investment Broker apparently truthfully related that the owners and operators of the television production company were not Jehovah's Witnesses. However, the JW Salesman insinuated that once there were sufficient JW Investors, he hoped to bring pressure to bear on the company to produce individual programs which were JW friendly, and which he hoped would eventually employ JW people. Meanwhile, JW Salesperson related that rarely if ever had there been any content in the Bible-based children's programs which Jehovah's Witnesses would find objectionable.
Finally, Tipster admits that he does not remember the name of that Florida JW Salesman with whom he spoke via telephone back around 1995. However, Tipster does find it extremely interestingly that this long-forgotten investment scheme instantly came to mind when he recently discovered on the internet that a certain ex-Bethelite JW Attorney had relocated to that same lower "Gold Coast" part of Florida after leaving WatchTower HQ in the mid-1990s.
UNITED STATES v. JAMES ALLEN RADER was the 1979-80 Missouri federal "pyramid scheme" prosecution of James A. Rader, then age 40, of Lamar, Missouri on multiple charges relating to multi-state SECURITIES FRAUD. Jim Allen Rader, a salesperson for Big Red Commodities Corp, was indicted along with four others -- Charles R. Scofield, age 44, of Leawood, Kansas, Larry D. Pinckney, age 33, of Piano, Texas, Gordon D. MacDonald, age 36, of Prairie Village, Kansas, and George R. Richardson, age 50, of Cape Fair, Missouri (status as fellow Jehovah's Witnesses unknown) -- on 47 counts of mail fraud, wire fraud, and interstate shipment of goods obtained by defrauding investors. Jim A. Rader eventually pleaded GUILTY to a single misdemeanor charge of securities fraud and was fined $5000.00.
The defendants were accused of using false and misleading statements to induce investors living in multiple states to join in commodity trading pools. Investors were incorrectly told that the defendants had been highly successful in commodity trading and the trading pools were risk-free because they were computer-controlled. Investors were also promised that monthly reports would be provided on their position in the market and that they could withdraw their funds with only 30 days' notice.
COMMODITY FUTURES TRADING COMMISSION v. JAMES ALLEN RADER was a 1982-85 federal administrative action in which Jim A. Rader was charged with two counts of Fraudulent Transactions -- with a Cease and Desist Order being issued.
Jim Rader quickly relocated to Branson, Missouri, and with the absence of a felony conviction was able to be licensed as a Real Estate Agent. James Rader died in 2015, and as an "exemplary" Jehovah's Witness received a Kingdom Hall funeral at the North Oaks Congregation of Jehovah's Witnesses.
COMMODITY FUTURES TRADING COMMISSION v. GERALD D. MIMS and FLORIDA v. GERALD D. MIMS were related 1992-96 federal and 1993-94 state court cases, which involved a Jehovah's Witness Ministerial Servant employed as a Commodities Futures Trader, named Gerald D. Mims, age 37 in 1994, of Largo, Florida. Interestingly, Gerald Mims was a son-in-law of Charles Wolfersberger, who was the most prominent Jehovah's Witness in the Tampa/St. Pete area, and whom served as the WatchTower Society spokesperson for the Tampa/St. Pete area before, during, and after the events relating to his son-in-laws' criminal/civil prosecution and incarceration for defrauding multiple fellow Jehovah's Witnesses.
In June 1994, Gerald Mims, pled guilty in state court to defrauding seven Tampa/St. Pete area Jehovah's Witness investors in 1991 and 1992. Mims was ordered to pay $266,000.00 in restitution, and was sentenced to 54 months in prison, followed by 25 years probation. The state prosecutor told the court that Mims has been under a federal court order to pay back 20 victims, for more than a year, but that only two victims had received any money -- $200.00 that very week. When sentencing Mims, the judge stated, "You are exactly the type of thief and liar and crook who belongs in prison." The ST. PETERSBURG TIMES wrote, in part:
"Three years ago, though, Mims seemed like the anything but a thief, say his victims. His luxurious house convinced them he knew how to make money, and his ability to quote the Bible convinced them of his honesty.
"'He's a Jehovah's Witness and he told us he was trying to become an elder,' said Janice Perry, one of the victims. 'He really used his religion as a front.' ...
"'Actually, less than half their money was ever invested in anything. Most went to support Mims' lavish lifestyle,' Kurash wrote in an affidavit.
"'Meanwhile he either handed his 'clients' fraudulent statements about their profits or else gave them no statements at all,' Kurash wrote. ...
"'When they began to figure out what had happened, Mims employed his religious knowledge to fend off discovery,' [John] Moore said.
"'He used the Bible Scriptures on me to keep me from going to the elders in his congregation,' [John] Moore told the judge. And when the elders did question him about it, [John] Moore said, 'he cried and everything.'
Unbelievably, the ST. PETERSBURG TIMES also reported that after the sentencing that victim John Moore went to make nice with his fellow Jehovah's Witnesses, Gerald Mim's wife, Virginia G. Mims, and her JW Father, Charles Wolfersberger , who had served as the Tampa, Florida area spokesperson for the WatchTower Society from the early 1980 to as late as 2007:
"[Charles] Wolfersberger told [John] Moore he would answer for what he had done to [Gerald] Mims, and Mrs. [Virginia] Mims waved a hand and told him, 'Get out of here!'"
Interestingly, Virginia G. Mims father, Charles R. Wolfersberger, attended to much of Gerald Mims' legal affairs while he was incarcerated -- as evidenced by signed documents relating to the federal civil prosecution. More interestingly, Charlie Wolfersberger was himself a career "salesman", who worked as a marketer for both other business owners as well as businesses he owned and operated himself.
Interesting to our readers is a November 1990 ST. PETERSBURG TIMES article about an investigation then being conducted by Clearwater Police of an unlicensed construction contractor, who had been recommended and authorized by certain officials at the City of Clearwater, Florida, who then was being accused of substandard and uncompleted workmanship by multiple Clearwater homeowners who had received Community Development Block Grant program rehabilitation loans from the City. The problem contractor specifically named in this newspaper article was Owen Hurd, who was listed as "President" of MERGER CONSTRUCTION on city contracts. Responsible city officials over the CDBG program had to do some fast talking when it was learned that neither Owen Hurd nor Merger Construction were licensed with the City of Clearwater. Upon investigation by Clearwater Police, it was learned that Owen Hurd was actually an employee of Charles Wolfersberger and a business that Charlie Wolfersberger owned, called CHARGER ENTERPRISES, and that Hurd was actually doing business on behalf of Charlie Wolfersberger and Charger Enterprises. One Clearwater city official even quickly resigned after it was learned that Owen Hurd and Merger Construction had been illegally pre-paid for work for one homeowner who found his uncompleted work so substandard that the homeowner had "fired" Hurd before the job even had been completed.
COMMONWEALTH v. DAVID A. McMILLAN was a 1992-93 Massachusetts criminal court case which involved a Jehovah's Witness named David A. McMillan, then age 48, of Lunenburg, Massachusetts. David McMillan was originally indicted on 36 counts of larceny, fraud, and securities law violations. McMillan used the typical fraudulent investment scheme of promising unrealistic investment returns to bilk five people out of $230,000.00 over a three year period. One or more of the victims were McMillan's fellow Jehovah's Witnesses, whom McMillan claimed had "loaned" him the money, rather than gave such to him to invest. McMillan was convicted of six counts of larceny by false pretenses, one count of larceny by a common scheme, and seven counts each of fraudulent sale of a security and selling securities without being registered as a broker or agent. David A. McMillan, who for some unknown reason had given up career as a schoolteacher before this "career",was sentenced to 5-7 years in state prison, plus five years probation. At the sentencing, the judge called McMillan "a common and notorious thief". McMillan reportedly collapsed and began hyper-ventilating after his sentence was read.
S.E.C. v. HERBERT M. KIRSCHNER was a 1986 Connecticut federal court case which involved a Jehovah's Witness named Herbert M. Kirschner. In 1982, Herbert Kirschner formed HMK Management Corporation. As HMK's sole stockholder, Director, and President, Kirschner managed, directed, and controlled its stock trading and other investment activities. Neither Kirschner nor HMK was licensed or registered as a stockbroker or investment advisor. In violation of state and federal law, Herbert Kirschner issued unregistered securities to Jehovah's Witnesses and other clients in exchange for cash. Kirschner then used the proceeds to "play the stock market" in hopes that he would make a profit over and above the interest payable on the worthless securities he had issued. Kirschner not only failed to make sufficient profits to pay the interest, but HMK went bankrupt, which resulted in the loss of the investors' principal. The exact ruling in this specific case is not known. It is also not known how many other civil and/or criminal cases may have been filed against Kirschner. The federal bankruptcy court case was litigated into the 1990s.
In August 2010, South African media reported the arrest of a German national named Michael Schreiber, age 65, who is allegedly an international con-artist. South African Police reportedly arrested Schreiber outside of a Capetown, SA Kingdom Hall of Jehovah's Witnesses where Schreiber and his family attended services. Michael Schreiber is alleged to be an internet savvy conman who used multiple aliases and multiple business names in the operation of multiple international cons. Schreiber reportedly is wanted by the German government on tax evasion charges, and by the governments of Liberia and Dubai on forgery and fraudulent diamond and gold dealing charges. Michael Schreiber reportedly also conducted business in Malaysia, U.A.E., and other countries through companies named Dubai Diamond Club, Knife Sharpening Company, Isorast Development and Properties, Isorast Construction, and Isorast SA.
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