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Entries in commodities (2)

Saturday
Oct152011

Hawaii Woman "Bestowed by Jesus to Trade Commodities" Sentenced to Prison for $1 Million Ponzi Scheme

A Hawaii woman who told investors that she had been "bestowed by Jesus Christ to with the ability to trade commodities", but instead operated a Ponzi scheme, was sentenced to federal prison on Friday.  Kapua Keolanui, 36, was sentenced to thirty-three months in federal prison by United States District Judge David Ezra, who called her behavior callous and also ordered her to pay nearly $900,000 in restitution to her victims.  Keolanui, who had previously pled guilty to one count of wire fraud, was sentenced to the maximum sentence under federal sentencing guidelines.  Wire fraud carries a maximum sentence of up to twenty years in federal prison.  

The scheme derives out of Keolanui's association with Rachelle and Perry Griggs, who were recently sentenced to prison for masterminding the scheme.  Previous Ponzitracker coverage of the Griggs is here.  Perry Griggs became associated with Keolanui's husband when both were incarcerated; ironically, Perry Griggs was serving time for his role in a previous Ponzi scheme.  Through his relationship with Keolanui's husband, Perry Griggs convinced Keolanui to form Paradise Trading, LLC with Rachelle Griggs in late 2006.  Keolanui then solicited friends and family, telling them that she had been given the gift of finding money by Jesus Christ.  In total, six different individuals gave Keolanui over $1 million to invest.  Instead of using the money to invest, Keolanui funnelled some of the money to Aloha Trading, which was Perry Grigg's operation that he was running from behind prison walls.  When Grigg's scheme was uncovered, nearly all of the victims' money had disappeared.  

Keolanui was scheduled to report to prison on November 28, 2011.  She was also ordered to three years of probation upon release from prison.  

A copy of the Complaint filed against Griggs and Aloha Trading by the U.S. Commodity Futures Trading Commission is here.

Monday
Oct102011

Hip-Hop Promoter Accused of $4 Million Ponzi Scheme

Federal authorities arrested a former hip-hop mogul and accused him of operating a $4 million Ponzi scheme that purported to invest in derivatives of United States Treasury bonds.  Tyrone Gilliams Jr., 44, was arrested last week on federal wire fraud charges, which carry a maximum prison sentence of twenty years and up to a $250,000 fine.  If convicted, he may also be ordered to pay restitution to victims.

Gilliams, a former hip-hop promoter, is now an internet preacher, and maintains a page at StreamingFaith, a provider of internet broadcast services to faith-based corporations.  According to a bio on the site, Gilliams formerly worked with "music mogul Sean Puffy Combs creating Bad Boy Sports.  Tyrone was eventually called to collaborate with the ultimate mogul our Lord and Savior Jesus Christ."

According to a recently unsealed criminal complaint, Gilliams operated TL Gilliams, LLC, and held himself out as a successful investor in United States Treasury Strips. Treasury Strips are derivatives of Treasury bonds, and operate by separating each periodic interest payment and corresponding future return of principal into individual securities.  During the spring of 2010, an individual investor made a $4 million investment with Gilliams' company with the stated purpose of obtaining income to operate a charitable foundation.  Two contracts signed between the victim and an intermediary stated that the funds would be invested in "treasury strips, treasury bills [and] U.S government paper."  

Instead, Gilliams is alleged to have misappropriated at least $2 million of the original $4 million investment, using over $1 million to fund a black-tie gala called the 'Joy to the World' festival at the Philadelphia Ritz-Carlton.  Additionally, approximately $1.6 million was sent to Ghana in what Gilliams described as an investment in gold.  Funds were also used to sustain a lavish lifestyle that included international travel.  Gilliam represented himself in an earlier civil suit filed by the victim, and in a motion to dismiss, alleged that the original contract called for an investment in gold and commodities in West Africa, specifically Ghana.  

Gilliams was arrested on October 5th, and was scheduled to be arraigned later that day.  

A copy of the Justice Department's press release is here.

A copy of the unsealed criminal complaint is here.