Navy Grad Pleads Guilty To $1.2 Million Ponzi Scheme

A Naval Academy graduate who fled to Colombia after authorities began investigating his failing hedge fund has pleaded guilty to operating a Ponzi scheme that fleeced victims out of at least $1.2 million.  Bryan Caisse, 50, entered his guilty plea last week after being indicted on four counts of Grand Larceny in the Second Degree, six counts of Grand Larceny in the Third Degree, and one count of Scheme to Defraud in the First Degree. Under the plea agreement, Caisse faces a minimum 1.5-year sentence and must pay restitution of approximately $1.4 million to his victims.

According to authorities, Caisse began soliciting family and former classmates in April 2008, telling them he was starting a hedge fund, Huxley Capital Management, and was seeking so-called working capital loans to cover short-term expenses until larger investors filled that void.  These were short-term loans ranging from one to two years, and promised annual rates of return of 8%.  Investors were drawn to Caisse as a result of his history as a former bond salesman and trader with now-defunct Bear Stearns.  In total, Caisse raised approximately $1.2 million from at least 20 family members and former classmates.  

However, Caisse's promises of forthcoming deep-pocketed investors soon fell through.  After the New York District Attorney’s Major Economic Crimes unit conducted an investigation, authorities alleged that instead of using the money to pay hedge fund expenses, Caisse spent investor funds on a variety of personal expenses that included rent, car services, tuition for his daughter's private school, and even $10,000 on a dating service.  

Investors that attempted to recoup their investment from Caisse encountered a variety of setbacks in their quest.  This included:

• Claims that Caisse's bank, HSBC, could not wire funds except to another HSBC account;
• Communications with Caisse's assistant, Kristy Smith, who would not speak on the phone because of her poor English;
• Communications with another assistant, Christine Woo, who also refused to speak on the phone and eventually stopped communicating;
• Representations to investors that Caisse had been in a horrific car accident that caused him brain damage and a broken hip; and
• Numerous checks being lost in the mail.

A sentencing date has not yet been set

Tennessee Man Gets 14-Year Sentence For $18 Million Ponzi Scheme

A Tennessee man was sentenced to serve the next fourteen years in federal prison after pleading guilty to masterminding an $18 million Ponzi scheme.  Terry Kretz, 61, received the sentence from U.S. District Judge Todd J Campbell, and was also ordered to pay nearly $15 million in restitution to defrauded investors.  Kretz received the sentence after pleading guilty earlier this year to securities fraud, money laundering, conspiracy to commit securities fraud, wire fraud and mail fraud.

Kretz was the former chief executive officer of Hanover Corporation ("Hanover"), an investment firm that purportedly traded stock options, equities and other securities largely through the offering of promissory notes to potential investors.  In return, the client was promised lucrative regular interest payments and the return of their principal at maturation of the promissory note.  In total, Hanover raised more than $18 million from investors during the time period of January 2004 to August 2006.

However, authorities alleged that Hanover's representations to investors were false and that the handsome returns paid to investors were instead derived through a massive Ponzi scheme.  In addition to suffering consistent losses using investor funds, Kretz and other individuals used investor funds for their own personal use that included the payment of salaries and other luxury purchases such as a $600,000 residential building lot, a $176,000 donation to a church, and golf memberships.  Kretz and Robert Haley, Hanover's former chief financial officer, were indicted in November 2009.

Notably, Tennessee state securities regulators reportedly attempted to shut down Hanover in 2005, but their attempt was ultimately rejected by a Davidson County judge.  As a result, Hanover was able to raise an additional $7 million from investors before Hanover was placed into involuntary bankruptcy in October 2006.

Accused of $100 Million Ponzi Scheme, Utah Man Walks Free On Technicality

A Utah federal judge dismissed criminal charges against a Utah man accused of operating one of the largest Ponzi schemes in Utah history, ruling that prosecutors' failure to timely pursue the case was a violation of federal law and warranted dismissal.  Rick Koerber was originally indicted in 2009 on multiple tax, money laundering, and fraud charges and accused of duping investors of tens of millions of dollars. However, at a hearing earlier today, U.S. District Judge Clark Waddoups ruled that a dismissal with prejudice was warranted, meaning that prosecutors could not refile in the future and that Koerber would forever avoid prosecution on the charges. 

Background

Back in the mid-2000's, Koerber called himself a "Latter day capitalist," enjoying significant fame and recognition for his purported real estate investing prowess.  Koerber was well known in the community, owing not only to his membership in the Latter Day Saints church, but also his own radio show and regular hosting of real estate seminars that commanded 4-figure attendance fees.  Through his companies, Founders Capital and Franklin Squires, Koerber touted his "equity milling" program that promised lucrative returns through buying and selling residential real estate.  Investors came in droves, entrusting tens of millions to Koerber's operations.  Even Koerber's radio show changed its opening theme song to, "Money, Money, Money" by Abba.  Koerber also appealed to listeners' religious beliefs, even remarking to one listener who questioned his motives that "God is a capitalist."  In total, Koerber raised approximately $100 million from investors.  

However, the collapse of the real estate bubble in 2007 was catastrophic to Koerber's operations, as the majority of FranklinSquires's assets were in the form of real estate that quickly erased any equity as housing prices declined.  He was indicted in May 2009, and a superseding indictment handed down six months later included twenty-two charges including wire fraud, money laundering, and tax fraud.  

Koerber Seeks Dismissal

In April 2014, nearly five years after the first indictment was handed down, Koerber filed a Motion to Dismiss for Impermissible Delay citing multiple grounds, including the violation of Koerber's right to a speedy trial.  The Speedy Trial Act (the "Act"), codified at 18 U.S.C. § 3161, requires that the trial of a defendant entering a plea of not guilty was to start within 70 days of the later of the filing of the indictment or appearance by the defendant in front of a judicial officer.  While the Act also allows for certain exemptions, Koerber's motion argued that at least 125 non-exempt days had passed without a trial or other resolution.  

At a hearing, the Government conceded that a "technical" violation of the Act had occurred, but urged the Court to "cure" the violation by entering an Order pursuant to the Act essentially making a finding that the "ends of justice" warranted a retroactive continuance and outweighed the best interests of the public and Koerber.  However, the Court cited precedent standing for the proposition that such a retroactive mechanism was prohibited and that a violation of the Act would have occurred even of such actions were taken.  In deciding whether or not to allow prosecutors to refile the charges, the Court noted not only the seriousness of the offenses but also the "Government's problematic conduct in prosecuting this case."  Further evaluating this latter factor, the Court made a series of observations supporting its conclusion that the Government's conduct suggested a "pattern of neglect":

But in addition to this administratively dilatory conduct and  pattern of neglect, the court has already found significant problems with the substantive prosecution of this case essentially amounting to “a pattern of widespread and continuous misconduct.

...

The court agrees that the discovery practice of the Government in this case has been puzzling and raises a strong inference of tactical delay on the part of the Government in its prosecution of the case. 

...

The court also acknowledges that it has found that the Government had inappropriately based the superseding indictment in substantial part on attorney-client privileged information... The court found this troubling at the time but viewing it now in the context of this case’s five-year prosecution history, it fits into a larger pattern justifying dismissal with prejudice.

...

Finally, and most egregiously, the court has already written at length about the Government’s tactic of illegally planning and conducting impermissible ex-parte interviews with Defendant in February 2009 when he was represented by counsel, thus violating his due process rights, interfering with his attorney-client privilege, and inquiring into or attempting to interfere with his advice of counsel defense, though he was as yet unindicted, resulting in the suppression of those interviews and all fruits derived therefrom.

Noting that it would be impossible to reprosecute the case and that prejudice to Koerber was presumed, the Court granted the Motion and ordered that the case be closed.

It is unknown whether the government will pursue an appeal.

A copy of the Order granting the Motion is below:

236850730 Dismissal of Charges Against Rick Koerber

Feds: Ponzi Schemer Hid $400,000 In Gold, Silver, And Cash With Wife And Brother

Federal authorities announced criminal charges against a convicted Ponzi schemer, as well as his wife and brother, for conspiring to hide more than $400,000 in gold, silver, and currency in ammunition canisters out of the reach of authorities.  Ronnie G. Wilson, Cassie Wilson, and Tim Wilson each face a single charge of conspiracy to obstruct justice.  Ronnie Wilson, who is currently serving a 19.5-year prison sentence after pleading guilty to a $58 million Ponzi scheme, also faces an additional charge of making false statements to an agent of the U.S. Secret Service.  

Wilson was arrested by authorities in early April 2012 on accusations that his company, Atlantic Bullion and Coin, Inc. ("ABC") was operating a massive Ponzi scheme that promised above-average returns to investors through the purchase and sale of silver futures contracts.  While the contracts entailed the purchase of significant amounts of silver, Wilson told investors that he would manage and store the silver on their behalf at a Delaware depository.  From 2001 to 2012, the scheme raised more than $90 million from approximately 1,000 investors.  Wilson subsequently pleaded guilty to two charges of mail fraud and received a 19.5 year sentence.

Around the time of his arrest in April 2012, authorities now claim that Wilson gave his brother, Timothy Wilson, an ammunition canister containing gold, silver, and U.S. currency to hide from authorities. Later that summer, Wilson allegedly gave another ammunition canister full of bullion and currency to his wife, Cassie Wilson, who would later conceal this fact from the court-appointed receiver testify tasked with recovering assets for victims.  In total, the bullion and money totaled over $400,000.

In an announcement, court-appointed Receiver Beattie Ashmore indicated that the assets had been recovered for the benefit of Wilson's victims, and promised that:

This indictment will be followed by a number of lawsuits to be filed by the Receiver against those that profited from the Ronnie Gene Wilson Ponzi scheme.    

The Receiver's website is here. 

The indictment is below:

Wilson Indictment

California Man Fires Lawyer; Claims He Was Forced To Plead Guilty To $125 Million Latex Glove Ponzi Scheme

Due to be sentenced for masterminding a $125 million Ponzi scheme, a California man instead told a federal judge that he wanted to fire his lawyer, claiming he had been "intimidating" him and had coerced his guilty plea.  Deepal Wannakuwatte, 63, had previously pleaded guilty to a single count of wire fraud and was set to receive a prison sentence no longer than the statutory maximum of 20 years.  In a handwritten note provided to U.S. District Judge Troy Nunley, Wannakuwatte indicated that he had hired a different attorney and wished to fire his current lawyer.  Judge Nunley postponed sentencing indefinitely, and a status hearing is scheduled for this Thursday.

Wannakuwatte operated International Manufacturing Group ("IMG") and RelyAid Global Healthcare Inc. ("RelyAid") (collectively, the "Companies"), telling potential investors that the Companies had lucrative contracts providing surgical gloves to various government agencies.  Investors were told that the Companies had annual sales exceeding $100 million, including more than $125 million in contracts from the U.S. Department of Veteran Affairs ("VA") alone.  Based on these representations, Wannakuwatte and the Companies took in more than $200 million from at least 100 victims.  

However, authorities allege that Wannakuwatte grossly overstated the extent of the Companies' dealings with the VA - indeed, rather than $100 million in sales from the supply of medical gloves, authorities claim that the actual amount of the contracts were $25,000, and the Companies; total 2013 sales were just $5 million.   The scheme began unraveling late last year when Wannakuwatte, his wife, and the Companies were sued by a creditor, General Electric Capital Corp. ("GE Capital"), who claimed that RelyAid had defaulted on a loan it had taken out to purportedly build a latex glove factory.  Wannakuwatte was ordered to turn over a $3 million King Air private plane that had been pledged as collateral on the loan, and multiple government agencies began investigating Wannakuwatte and the Companies shortly thereafter.

After being arrested in February on mail fraud, wire fraud, and bank fraud charges, Wannakuwatte pleaded guilty several months later to a single count of wire fraud.  As part of that plea agreement, prosecutors agreed to seek a 20-year sentence - the maximum allowed under a wire fraud charge.  After accounting for distributions received by victims, total losses are estimated at approximately $108 million.

However, at the sentencing hearing, Wannakuwatte's lawyer presented Judge Nunley with a note claiming that his current lawyer, Donald Heller, had been "intimidating" towards him and that he had retained another attorney.  Heller, a well-regarded criminal defense attorney and former federal prosecutor, later denied the accusations to a reporter and stated that it was in Wannakuwatte's best interests to plead guilty given the "overwhelming" case against him.  

Wannakuwatte faces an uphill battle in his quest to undo his guilty plea.  Prosecutors will focus on his appearance before Judge Nunley to enter his guilty plea, known as his plea colloquy, which would have consisted of a lengthy and detailed exchange between Judge Nunley and Wannakuwatte as to the charge in the plea agreement.  Wannakuwatte would have testified under oath that he was pleading guilty voluntarily and because he was, in fact, guilty.  Further, Wannakuwatte's plea agreement would have included an affirmation that he was pleading guilty on his own accord and that he was not being forced or coerced.  

A Washington woman recently had a similar request denied after she entered a guilty plea to all 110 charges she was facing for an alleged $128 million Ponzi scheme.  Doris Nelson had asked a Washington federal judge to grant her request to withdraw her guilty plea on several grounds, including her discovery that she could retain private counsel and the discovery of new evidence.  In denying her request, the court noted her acknowledgement of her guilt in her plea colloquy and observed that her claims were simply not believable.