Ponzi schemers in court

[Demosthenes]

Trio who promised 500% returns grilled in federal court
By Associated Press
November 11, 2009

Three South Carolina men accused of bilking investors out of millions made anyone with ties to law enforcement or attorneys leave their seminars, and threatened investors with $1 million in fines if they told anyone about the massive returns they were making, a former bookkeeper testified Tuesday.
"If you are affiliated with any legal entities ... would you please leave?" Somera Samuels said one of her bosses, Timothy McQueen, said at seminars he hosted with his two business partners.
The trio called themselves the "3 Hebrew Boys" after the biblical tale of brothers who survived an inferno because of their faith. They are on trial in federal court on nearly 60 federal charges, including mail fraud and money laundering, and face decades in prison and millions in fines if convicted.
Prosecutors say McQueen, Joseph Brunson and Tony Pough preyed on debt-plagued investors, luring church congregants and even U.S. soldiers serving overseas to invest a total of more than $80 million with their group. They promised daily returns up to 500 percent.
"These men have no financial training or background, but they claim to have figured out how to make all this money," Assistant U.S. Attorney Winston Holliday said in opening statements in Columbia. "The problem is, none of it turned out to be true."
The men with no business expertise promised to help clients get out of debt, telling clients their money would be invested in foreign currency markets.
But Samuels — the trio's only employee — said she never spoke with a foreign currency trader or saw any evidence money was being invested with one. And prosecutors say the men kept millions for themselves, spending it on items like a Gulfstream jet, vacation homes and limousines, as well as luxury boxes at professional sports arenas, making some payouts to their initial customers using funds given to them by later clients.
"This wasn't an investment program," Holliday said. "This was a Ponzi scheme."
Her bosses were so concerned that authorities would find out about their investment plan that they threatened investors with $1 million in fines if they spoke with anyone in law enforcement about the program, Samuels said. The three also required that she use private shipping companies instead of the U.S. Postal Service to ship documents "so the government couldn't look at them," she said.
Samuels said she left the 3 Hebrew Boys in 2007 after they refused to answer her questions about why none of them paid income tax for the money they were making.
"I did not like the way that things were going," Samuels said. "They would say one thing in front of the people (at the seminars), but behind closed doors, they was doing different things."
Defense attorneys argued during their opening statements Tuesday that their clients didn't defraud anyone, saying they used the money to buy investment properties and pay out more than $30 million to their investors.
"He has gone through the trials that we all go through in life ... and he set out to assist people just like him," said Louis Lang, who represents McQueen. "My client never intended to cheat or steal or deceive anyone."
For a year after their arrests, the three defendants unsuccessfully argued that they be allowed to represent themselves at trial. Several judges repeatedly shot down their rambling motions.
The trial is expected to last three weeks and attorneys have not said if the defendants will testify. Testimony is set to resume Thursday, after a one-day recess for Veterans Day.

[bmielke]

"If you are affiliated with any legal entities ... would you please leave?" Somera Samuels said one of her bosses, Timothy McQueen, said at seminars he hosted with his two business partners.

Assuming I didn't work for a law firm and I heard this statement, that would be my first clue that something isn't right, it would also be my last because I would walk out. Anyone afraid of Law Enforcement and Lawyers is probably not someone you want to invest with.

[Pottapaug1938]

"If you are affiliated with any legal entities ... would you please leave?" Somera Samuels said one of her bosses, Timothy McQueen, said at seminars he hosted with his two business partners.

Assuming I didn't work for a law firm and I heard this statement, that would be my first clue that something isn't right, it would also be my last because I would walk out. Anyone afraid of Law Enforcement and Lawyers is probably not someone you want to invest with.

I'd go further than "probably". I'd rather start using "Cracking the Code" before investing with anyone who said anything like this to me.

[Brandybuck]

They promised daily returns up to 500 percent.

Well that's the problem right there, they weren't offering a high enough return!

[bmielke]

"If you are affiliated with any legal entities ... would you please leave?" Somera Samuels said one of her bosses, Timothy McQueen, said at seminars he hosted with his two business partners.

Assuming I didn't work for a law firm and I heard this statement, that would be my first clue that something isn't right, it would also be my last because I would walk out. Anyone afraid of Law Enforcement and Lawyers is probably not someone you want to invest with.

I'd go further than "probably". I'd rather start using "Cracking the Code" before investing with anyone who said anything like this to me.

Well Drugrunners might be a decent investment if you didn't mind the high risk, they wouldn't want the legal types around.

[bmielke]

They promised daily returns up to 500 percent.

Well that's the problem right there, they weren't offering a high enough return!

I know I don't get involved with suspect foregin curency traders for less then 1000% returns.