ATM LEASEBACK SCHEMES-- any insight?

[Gregg]

Your're not considering their age, because at their age even a six year prison sentence could kill them (assuming an angry investor doesn't do that before they reach prison). So meantime the crooks continue living life and enjoying plenty of time to get their financial affairs in order, while the Receiver earns money struggling to retrieve any meaningful monies for investors, and all the legal people involved earn money the longer the obvious drags out. All for what, to ensure a couple old farts with serious heath problems get a long prison sentence...big deal.

I am almost uncomfortable with your tone, unlike the normal mockery and joking in the forum, you're starting to sound a little too close to considering it, if you are please get some help.

As far as getting their affairs in order, yes, they are, but they're also somewhat supervised in their spending and not in a position to be hiding stolen funds.

If you have an idea you think works better than The Bill of Rights, I'm all ears, sparky.

Really, let up on suggesting someone just go ahead and kill 'em. It makes a terrible mess....

[The Observer]

Not to mention that if some other person decides to take matters into their own hands and administer some home-grown justice, the posters who are making these suggestions might be seen as inciters of such violence. You really don't want to flirt with that kind of statement in public.

[Lost Income]

Like I said....just watch this end with the crooks families finding money to live well off, the crooks finally going to jail when they have little life left to live in there, while the legal people involved earn money.

[Judge Roy Bean]

Like I said....just watch this end with the crooks families finding money to live well off, the crooks finally going to jail when they have little life left to live in there, while the legal people involved earn money.

I don't think any of us have enough knowledge of the familial relationships to speculate on their relatives' ability to "find" money to live "well off."

History demonstrates that the families of prisoners rarely prosper.

[Lost Income]

They certainly aren't living in poverty now and the crooks also have money to retain lawyers, while the Receiver can't figure out where the money went to. Whats going to change?

[worried]

They certainly aren't living in poverty now and the crooks also have money to retain lawyers, while the Receiver can't figure out where the money went to. Whats going to change?

This isn't meant to be political, to me this is common sense...
I live and work near a small, clean, quaint and somewhat rustic, but still urban, town in inland Southern California. The downtown part of this town is full of thriving little businesses. There are all kinds of people walking, riding, driving back and forth going to schools, jobs, shops, etc. Strikingly, many of the people walking/riding (sometimes in motorized chairs) appear to be lower income to me and are definitely 'vulnerable' (handicapped people, young mothers with children, etc.). Yet, they're all freely and happily going about their daily business. Several other striking things: there are no panhandlers (they're all in the neighboring town where I work) and you can't go 30 secs without seeing a cop car or cops on bikes, and there are signs at the edge of town warning that the whole place is under 24 hr video surveillance...I'm told that a large portion of the residents of this town are retired people who are very vocal in their local government, not exactly a typical California 'liberal enclave'. My point is this: the people in this town pay for law enforcement FIRST before anything else. This has resulted in a thriving little economy that supports a clean, well-kept, attractive town where all kinds of people feel safe enough to engage in their daily lives free from the pressures of neighborhoods in the neighboring town (which I've learned to avoid even during the day). These people don't need 'help' from the government, all they needed was a fair chance provided by law enforcement.

What's the connection?
Well, I would argue that one of the root causes of your present problem is a lack of law enforcement to help prevent you from being victimized in the first place. I truly feel bad for you, as I've posted many times before, your 'human-ness' was taken advantage of by those sociopaths and I want to see them pay for it as well. But, the legal system is doing the best it can with what we've given it. If we want it to do better, we've got to give it more to work with, especially for preventing crimes in the first place. I consider myself a 'conservative', but I don't buy into the mindless, droning, conservative mantra of 'less regulation' because that just results in less law enforcement and protection where its badly needed. I would hope that everyone in your situation can see this connection.

I'm sorry if I've gone too far with my ranting... I feel for you. But, we've got to LEARN something from all this or its been a waste of time. It's also the only way we're going to get the 'change' you're asking about.

[Lost Income]

Thanks Worried.

I can accept the risk of investing in a small biz that goes under due to money mismanagement, etc. Whats frustrating here is that Joel purposely lied to my wife & I when we met with him then purposely backed it up false contracts, atm locations, etc which resulted in significant damage to our retirement as well as the financial situation of many others....and now while he is still on the street spending money, the system can't find a way to retrieve more stolen money from him and Ed. This makes no sense to me, but your're right that we still have to hope for the best from our system.

[worried]

I'm glad if I'm of any help...

In general: "hope for the best, plan for the worst"...

but to get the 'change' you'd like to see (not for this particular crime I'm afraid, it's a little late), we have to do MORE than just HOPE, we have to DO something. We have to change our collective mindset and consider how law enforcement benefits EVERYBODY, most especially the most vulnerable, and how it enables so many other GOOD things while stopping bad things. We have to be willing to make it the absolute highest priority. There's no point in paying for social programs to help people if their homes are being burglarized while they're out getting their 'help', or they're being carjacked in the parking lots. .. We need more people sniffing around for (or at least able to respond in a TIMELY manner to reports of) people like Joel and Ed (they were reported LONG before they were busted). Because no matter how careful you are, you are ultimately only 'human' and have some sort of weakness that can be exploited criminally. I have no illusions, I don't think I'm better than anybody else because I didn't fall for their scam, I'm only human too, I could just as easily be victimized some other way. That's why we invented law enforcement in the first place. ... If you think about, law enforcement IS a (the most important) social program that enables a society to get to a place where it can afford other social programs.

I can't wait to hear that Tednewsom's friend/acquaintance has released his documentary on this scam. I hope he finds a way to incorporate a little of this lesson (if he agrees ). This is not a 'liberal' vs 'conservative' argument, this is a common sense issue that we've been getting wrong by de-prioritizing law enforcement over other things. Think about it. Police are getting SHOT almost every damn day now and yet I STILL see them riding around by themselves! That to me is criminally unfair to the police to put them in that situation and we're only hurting ourselves by not paying for them to be able to ride at least in pairs like they should. Law enforcement funding should increase all the way up the chain to the SEC, FBI, etc., to help prevent (or least mitigate) this situation we're in.

I've developed the opinion since a long time ago that one of the most unfair things we can do to ourselves is have rules but not enforce them. If we don't enforce our rules, we don't even know which rules are bad rules for one thing. And we can't get anything else done anyway because half the people are breaking the rules... I've got to stop ranting... but it's so much fun thinking anybody cares what I say

[Tednewsom]

I don't think there's anyone here who doesn't care. Or, for that matter, doesn't agree with you, in their own way.

I haven't heard from the guy doing the documentary, but I hope he does finish it. My whole take on it was to make it clear what happened in this case so fewer people get taken to the cleaners down the line. It's human nature to be trusting, and it's human nature to be greedy. And it's subhuman nature to think of people as sheep to be fleeced.

[worried]

This isn't anything particularly new but... I just sauntered over to the FBI website and looked over some recent busted ponzi scheme stories...
I don't think there's any doubt G&W will spend the rest of their conscious days in prison (once they get there), and it has to be obvious to at least their lawyers (if not themselves) that all their efforts to argue the 'loss analysis', etc., are going to have a nanoscale effect on the sentence. The only benefit to them is the delaying of the sentence.

The first two stories on the FBI webpage pretty much make it clear:
6 years for defrauding ONLY 25 investors for ONLY $2.5M....
40 years for a $40M scam with 400 victims...

NASI: 2400+ victims with total scam somewhere between $400M and $500M, but they may only count the published number of $100M, or whatever they determine the 'loss' to be, but still it's still bigger than the cases above... Madoff got 150 yrs... so I think G&W can bet on something between 40 and 150 yrs...


**************************************************************************************************************************************************
https://www.fbi.gov/charlotte/press-rel ... ud-charges:

Ponzi Scheme Operator Sentenced to More Than Six Years on Securities Fraud Charges
U. S. Attorney’s Office
July 23, 2015

Western District of North Carolina
(704) 344-6222
Claude Darrell McDougal, 56, formerly of Charlotte, was sentenced today to 78 months in prison for orchestrating a Ponzi scheme that defrauded his investor victims of over $2.5 million, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. U.S. District Judge Max O. Cogburn, Jr. also ordered McDougal to serve two years under court supervision after he is released from prison and to pay $2,020,078.26 as restitution to the victims of his fraud.

North Carolina Secretary of State Elaine F. Marshall and John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division join Acting U.S. Attorney Rose in making today’s announcement.

According to court documents and today’s sentencing hearing, from 2006 to 2010 McDougal induced over 25 investors in Charlotte and elsewhere to invest more than $2.5 million,


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https://www.fbi.gov/news/stories/2015/f ... -collapses
A Ponzi Scheme Collapses
Financial Crime Ring Uncovered, Criminals Brought to Justice

02/23/15

Nearly a dozen fraudsters who conspired to operate a $40 million Ponzi scheme will be spending plenty of time behind bars after a joint effort by the FBI, the Internal Revenue Service, and the U.S. Attorney’s Office in the Western District of North Carolina. Among those now serving time is the scheme’s mastermind, Keith Franklin Simmons, who was sentenced to 40 years in prison late last year. And just last month, the 11th and final defendant in the conspiracy—Jonathan D. Davey—was sentenced to more than 21 years.

The federal judge who sentenced Davey said the term handed down reflected the effects of the fraud on its 400 or so victims—

[Gregg]

Or, on the other hand, Paul Burkes, CEO of Rex Venture Group, the largets, by number of participants, ponzi scheme for which anyone has gone to prison so far, 800,000 victims, just shy of a billion with a B dollars,

oh, that's not right, I'm confusing him with Andy Bowdoin...but Paul is gonna do some time..

Andy Bowdoin, head honcho at ASD Cash Generator etc....

$120 million, 96,000 accounts (some investors obviously had more than one account)

Andy got 78 months, 3 years supervised release, and when he got caught for this one was actually under a consent decree from an earlier scam, so he should have, well, got smacked a little harder...or at least I think so.

[webhick]

Joel filed a rebuttal to the pre-sentencing report. It was on 9/18. I've been working on a post about it, but it's like 250 pages, so it's taking a while to get my ducks in a row. The bulk of it are exhibits, like pictures of Joel's house, chopped up trial balances (pages missing) and a rather complete loss analysis from May of this year. Oh and 30 or so letters from friends and family basically saying what a great guy Joel is. Some are in still in denial that he perpetrated this crime, despite his confession and most want him to stay out of jail because he's, from what I gather, a model citizen ::COUGH::. There's also a letter from a shrink which explains his behavior. He blames it all on Daddy. Daddy made him practice the violin for hours. Daddy only ever called him "meatball." Joel has a gambling problem. I call the baby next door "thunder-butt" and I will continue to do so for as long as I know him. It's cute now, but it's going to be really awkward for him when he's 35. I doubt that he's going to grow up to perpetrate a $125m ponzi scheme. But if he does, we're going to see a court filing like 75 years from now that says he's a terrible person because someone called him "thunder-butt" in front of his future wife. Hey, I'm probably not going to live that long so never seeing "thunder-butt" in a court filing will be the one great regret in my life.

A couple of points, since I'm here:

He's at a level 28 offense, so it's supposed to be 78-97 months in prison, which is about 6.5 to 8 years. Joel wants much less time because he feels as though he's accepted responsibility and cooperated, he never meant to be malicious, he's damaged, he's devoted to his family, he's charitable, a good friend, and he's old and sick (namely COPD, glaucoma, a herniated disc, kidney stones and a major surgery like 10 years ago). He wants only two years in prison, three years of supervised release and 1000 hours of community service. Yeah, Joel's too old to do the time for the 13 year crime, but he wasn't too old to continue scamming and likely would still be doing it if a) the scheme wasn't collapsing or b) the government hadn't stopped him. And bitch please, I wish my grandparents were as healthy as you. Ugh.

Joel also claims to have had a legit business in the beginning, but they raised $11 million for a big contract and then the contract fell through. Joel was too "embarrassed" to do the right thing and instead they both chose to play Ponzi scammers. The document makes mention of Joel gambling with the $11m, but I'm not sure if they meant gambled as in "started a Ponzi with it" or gambled as in "walked into a casino and had a really great time with someone else's money."

Joel's new math is interesting. He thinks that if you re-invest your ill-gotten gains, it shouldn't decrease the amount of your loss. I have a really great exercise which demonstrates how bullshit that is for those who need a visual (it also demonstrates how Ponzi's work). But the basic math is, if Peter invests $12k, gets his investment back and re-invests, he's a net winner by $12k. No Joel, you still have $12k of his money. Dipshit.

Joel wants them to not look at how much money people actually lost, but how much Joel and Ed benefited. They're calling it "intended loss." So, their "modest" salaries, plus any monies they transferred out of NASI for themselves. I thought there was mention of the original $11m, but I my notes are at home.

It also states that 90% of investor funds were used to pay investors, that Joel lived a modest lifestyle and earned a modest salary. Let's really look at this. Their "modest" salaries consisted of $300k a year. EACH. Apparently, the probation officer stated that Joel lives in a gated community nestled in the hills. Joel disagrees It was easy to find out where Joel lives ([address redacted]) The house is 12 rooms (4 bedrooms, 3 baths), 3000 square feet with a pool and worth over a million. Looks like they bought it in 2001 for $750,000. Many houses in the neighborhood do have gated driveways, like you find in the ritzy neighborhoods (where they name their properties like terrible retirement homes). Also, California tends to name towns appropriately. Up here, Woodland Hills would be made of flat swampland, but over there, it really is nestled in the hills. JOEL'S HOUSE IS ON A FUCKING HILL. Also, let's factor in how much money they may have sunk into Fuel Doctor. I think it was worried who posted many pages back a financial filing for FD. In it, it shows that combined J&E own 30% of the company for a total of 4000 shares. There's also a number of mentions of loans from related parties to FD and a specific mention of Nationwide (just "Nationwide," not the full company name). It looks like over a million dollars in loans from J&E and NASI were forgiven or transferred to invested capital. Let's also remember that Oasis was funded entirely by NASI, and the Receiver is discovering other companies that have assets which are essentially NASI's.

The monthly ATM profit may have covered one of their salaries, but I think I last heard that it was averaging $20k/month, which is shy of one salary. And between Joel and Ed they sucked a ton of money out of the company in the last year and a half. Hell, Ed cut himself checks as the checks were bouncing.

Hmm, that was longer than I thought it would be. Anyway, I have the file uploaded to my Drive account (it's not in the blog's library yet.

[webhick]

Oh, and there's a repeated sentiment in the filing that Joel had one error in judgment. ONE. Because I guess 13 years of lying to people's faces, robbing Peter to pay Paul and siphoning money to other companies doesn't count. Joel is bizarre.

[The Observer]

Joel has a gambling problem.

Not surprising, and probably explains where some of the lost money went to. In my career of chasing down money, this was an alley you always have to check for possible leakage. Of course, Joel may be lying about his gambling problem, but the court could demand proof of that.

The document makes mention of Joel gambling with the $11m, but I'm not sure if they meant gambled as in "started a Ponzi with it" or gambled as in "walked into a casino and had a really great time with someone else's money."

Why not both? Hey, when you have $11 mil burning a hole in your pocket, everything is a possibility.

It also states that 90% of investor funds were used to pay investors,...

Probably the only thing that Joel is remotely accurate about.

DO NOT HARASS HIM.

I think that is only waving a red flag. I am not sure the address should have been published here.

Looks like they bought it in 2001 for $750,000.

About 3 or 4 years into the scheme. With a $300K annual "salary" Joel probably had no problems with putting down a considerable down payment to get into the house. The loan documents are probably long gone, but it would have been interesting to see how Joel documented his income for the loan approval - unless he paid cash for the property. Of more import to the victims would be see what the equity position is in that property now and what can be recovered by the trustee.

[worried]

...He's at a level 28 offense, so it's supposed to be 78-97 months in prison, which is about 6.5 to 8 years. ...

Wow, that would be an insult to 2400+ victims... but it occurred to me that no matter what they get, they win. They achieved their goal. They, while in their mid-50's, DELIBERATELY started a Ponzi scheme RIGHT at the same time that it became legal to make a profit running ATM machines. They filed paperwork with the SEC detailing the Leaseback scheme the same year, and promptly jumped into ripping people off. Ed is an accountant, he knew enough math to know that, if done right, they could run the scam for 20 years and live large until they got old enough to not really care anymore.

I have to admit I was surprised that they actually had over 200 machines (and many of them ARE at Hiltons, and they probably WERE a 'preferred supplier/vendor'), I thought it would be more like 20. But, that number of machines would make the magnitude of the paperwork, and phone call activity involved in managing them, look realistic enough to fool anyone (like BeverylyHillsMan) who did SOME checking but didn't go for the ABSOLUTE proof that you're supposed to get.

They won, people, that's it. 'Investors' became victims the moment they handed over a check. If they had gotten busted much earlier, it would be a different story, not nearly as many victims, they would have gone to jail for a few years, got out in their 60s with crap for retirement and a conviction record.... but they didn't... They won... I should just quit thinking about this. I think things have at least stabilized for my family member, so any further interest in this on my part is just morbid vindictiveness...

Thanks for all the work webhick

[webhick]

DO NOT HARASS HIM.

I think that is only waving a red flag. I am not sure the address should have been published here.

The address is public knowledge. I'm honestly telling people not to harass him. There's no point in it. If you give him a heart attack at home before he serves a day in prison then justice is not served.

But I don't disagree with you. I'm redacting.

[webhick]

About 3 or 4 years into the scheme. With a $300K annual "salary" Joel probably had no problems with putting down a considerable down payment to get into the house. The loan documents are probably long gone, but it would have been interesting to see how Joel documented his income for the loan approval - unless he paid cash for the property. Of more import to the victims would be see what the equity position is in that property now and what can be recovered by the trustee.

The property was shifted into an family trust in 2003. Isn't that meant to protect the asset from exactly this kind of thing?

[webhick]

Does anyone know that Joel's wife does/used to do for work? I'm not going after her or anything (since we've seen no sign that she was in on it), but I'm curious as to how much her income could have supplemented what Joel was bringing in.

[The Observer]

The property was shifted into an family trust in 2003. Isn't that meant to protect the asset from exactly this kind of thing?

On the face of it, yes. But there are basically two types of trusts, revocable and irrevocable. The point of the revocable trust is so that the owners can reclaim the asset that was placed there in the future. These tend not to do so well with the courts if it can be proven that the intent of the owner was to place the asset out of harm's way due to their criminal/fraudulent activity and/or if they have moved the asset out of the trust before. With the irrevocable trust, the requirement is that the trustee will never deliver the property in the trust back to the owners, but to the named beneficiaries once the trust is dissolved. So three questions to ask are (1) revocable or irrevocable (2) who is the trustee, and (3) who are the beneficiaries?

Does anyone know that Joel's wife does/used to do for work? I'm not going after her or anything (since we've seen no sign that she was in on it), but I'm curious as to how much her income could have supplemented what Joel was bringing in.

It is an excellent question and one that I posed early on in this thread. It is entirely relevant if Joel's wife put her own separate money into the property, money that can be shown did not come from the Ponzi scheme. If she put her own money in, then she should be able to make a convincing case to the court that her equity position in the property should not be subject to any forfeiture.

[worried]

... Anyway, I have the file uploaded to my Drive account (it's not in the blog's library yet.

I've only partially read the doc that webhick uploaded. At first I was heartened to see that the Probation Officer came up with a calculated sentencing recommendation of 19.5 to 24.5 years (that's still not as much as I thought it would be), but as I read on, my blood started to boil as I read all the fantasy-drivel about Joel's angelic intentions... bulllSH____!!...

They BROKE LAWS when they transferred "investor"'s money out of NASI to 'invest' (launder) in other ventures. Those stupid Oasis firms were starting to "leaseback" the trailers (that was going to become another ponzi if it didn't already)!...

The story about starting legally selling/leaseback'ing is in direct contradiction to the reports from the Receiver that 'investors' NEVER actually owned any REAL machines. They were ALL only ever owned by NASI!!! Total bullSH___!!! IT STARTED AS A CRIME!!!

THEN!! Those sociopathic demons KEPT TAKING MONEY (in the MILLION$) AFTER THEY KNEW THEY WERE BUSTED and started transferring assets.... I don't see ONE objective shred of evidence of ANY goddamn little speck of innocent intent in those bastard's bodies!!....

Sorry for the rant... but I guess that's partly what these forums are for... I feel a little better.. I haven't even read the whole doc yet.... I really hope we see a rebuttal from the prosecutor that mentions at least some of what I see as reality...

oh wow... I'm reading a few more pages (it really IS 250 pages!). Joel's lawyer is REALLY earning his pay. He has fabricated 250 pages of fantasy and distortions of truth hoping that the prosecutor and his team are befuddled by simple bookkeeping math. Next, I'm willing to bet Joel's lawyer is going to ask for delay of sentencing because his rebuttal is too long for the prosecution to possibly be able to fully respond to in the next few weeks...

.... god... more crap:
from page 10:
*************************************************************************************************************
C. The Sophisticated Means Enhancement Does Not Apply

As set forth in Mr. Gillis’s objections to the PSR, the two-level

enhancement for sophisticated means under U.S.S.G. § 2B1.1(b)(10)(C) does not

apply. For the sophisticated means enhancement to apply, the offense conduct

must be “especially complex or especially intricate” with respect to execution or

concealment of the offense. U.S.S.G. § 2B1.1 cmt. n.9(B). The Application

Notes provide that “[c]onduct such as hiding assets or transactions, or both,

through the use of fictitious entities, corporate shells, or offshore financial

accounts also ordinarily indicates sophisticated means.” Id.

*************************************************************************************************************
I hope the prosecutor has really taken note of the Fuel Doctor connection AND especially the fact
that it was bought by a SHELL corporation ('SilverHill Management'!, I pointed this out a long time
ago!)

last edit I swear:
*************************************************************************************************************
describe Mr. Gillis’s generous,

devoted and honorable character, as well as his commitment to his family, friends,

and his wider community. Below is just a sampling of portions of those letters

submitted on Mr. Gillis’s behalf. Mr. Gillis respectfully requests that the Court, in

JOEL BARRY GILLIS’S SENTENCING BRIEF

Case 2:14-cr-00712-SJO Document 78 Filed 09/14/15 Page 32 of 249 Page ID #:315

fashioning an appropriate sentence under 18 U.S.C. § 3553(a) consider Mr.

Gillis’s overall character, and the significant efforts he has made over his lifetime

to take care of his family, his friends and devotion to various charities.
*************************************************************************************************************
more BS... he was enjoying pretending to be, and being treated like, a saint, when
he was using OTHER PEOPLE'S money to give to charities, etc.... this is making me sick