thedrifter
06-13-07, 05:58 PM
Investment scam targets troops, officials say
By Karen Jowers - Staff writer
Posted : Wednesday Jun 13, 2007 15:33:35 EDT
State and federal agencies are investigating an allegedly fraudulent investment scheme targeting military members and church congregations that has apparently spread its tentacles to 23 states — and to troops in Iraq and Afghanistan, officials said.
South Carolina officials have frozen $17 million in bank accounts belonging to Capital Consortium Group Inc. and 3 Hebrew Boys, LLC, after obtaining a court order, said Mark Plowden, spokesman for the office of South Carolina Attorney General Henry McMaster.
“But we hear the total investments could be as high as $50 million,” Plowden said.
Although the companies are based in that state, with bank accounts there, officials believe most of the alleged victims were in North Carolina and other states, Plowden said. The two companies share the same address and phone number in Columbia, S.C.
The information has been referred for possible criminal prosecution in South Carolina, he said.
The attorney general alleges that the companies have violated state securities laws “by engaging in fraudulent sales practices” and by selling securities without properly registering them. None of the funds have been invested as investors were promised, authorities said. Instead, bank records indicate the money has gone into the pockets of the three company officials — Tony Pough, Tim McQueen and Joseph Brunson, who are named in court documents. They did not immediately return phone calls. Their representative, Sakima Bey, said, “I have nothing to say,” before hanging up the phone.
At Fort Benning, Ga., the installation commander has placed the two businesses off limits to service members in the Columbus, Ga., area, by authority of the installation’s Armed Forces Disciplinary Control Board. The staff judge advocate’s office has initiated an investigation with the Army Criminal Investigation Division, said Capt. Timothy Sers, an attorney with the administrative law section of the staff judge advocate’s office.
Plowden said complaints are not limited to the Army; service members of other branches are also affected. He said in addition to the Army CID, the South Carolina attorney general’s office is working with the Department of Justice, the U.S. attorney’s office, and the Internal Revenue Service.
Officials are investigating whether the investment programs offered by the companies’ officials are a “Ponzi” or “pyramid” scheme, in which investors are promised big payoffs when the company invests the money. But instead of investing the money, the company uses it for other purposes, and to pay back people who gave money earlier in the scheme. Only those who get in early profit; the scam usually collapses in on itself when new investors can no longer be found to sustain the “pyramid.”
Court documents indicate the company solicits business primarily through seminars, which are held in hotel conference rooms or in homes. To attend meetings, potential investors can be “invited” only by a current investor.
“It’s a secret society,” Sers said. “We have information that these groups are holding meetings in Iraq and Afghanistan.”
He said a soldier’s wife called the staff judge advocate’s office to complain that another soldier was soliciting for the company in her husband’s unit. The soldier who was soliciting had recently moved from Fort Bragg, N.C., where a number of such solicitations have been going on.
The South Carolina attorney general’s office said the companies entice people to invest, reportedly in foreign currency, by promising that they will get a 10 percent monthly return on their investment after 91 days. They also can choose to pay a fee and have the mortgage of their home paid off after 16 months; have credit cards paid off after 12 months; or have a car loan paid off after 12 months. Generally the investments were in the $1,000 to $5,000 range, but at least one person in the court document was said to have given the companies more than $50,000.
“Everyone knows each other. They sign up some respected leaders, and it makes it easier to recruit others,” Plowden said. “And the lure of easy money enables the typical pyramid scheme to gain inroads into communities.”
Plowden said it is unknown how long the companies have been operating or how widespread their reach is. “I’ve heard inquiries from people up and down the eastern seaboard, mostly North Carolina and Maryland,” he said. “The best news is we learned about it relatively early, and were able to stop $17 million from leaving the state.”
Troops at Fort Benning who have invested in these companies should contact their staff judge advocate office immediately at (706) 545-3285, to get more information about their rights. Service members and family members can call the legal office at their installation, or military investigative agencies.
Plowden encourages anyone with information to call the South Carolina attorney general’s office at (803) 734-3970.
“It was concerned citizens who notified us about this in the first place,” he said. “We’re trying to unravel this and return as much money as we can to investors.”
Ellie
By Karen Jowers - Staff writer
Posted : Wednesday Jun 13, 2007 15:33:35 EDT
State and federal agencies are investigating an allegedly fraudulent investment scheme targeting military members and church congregations that has apparently spread its tentacles to 23 states — and to troops in Iraq and Afghanistan, officials said.
South Carolina officials have frozen $17 million in bank accounts belonging to Capital Consortium Group Inc. and 3 Hebrew Boys, LLC, after obtaining a court order, said Mark Plowden, spokesman for the office of South Carolina Attorney General Henry McMaster.
“But we hear the total investments could be as high as $50 million,” Plowden said.
Although the companies are based in that state, with bank accounts there, officials believe most of the alleged victims were in North Carolina and other states, Plowden said. The two companies share the same address and phone number in Columbia, S.C.
The information has been referred for possible criminal prosecution in South Carolina, he said.
The attorney general alleges that the companies have violated state securities laws “by engaging in fraudulent sales practices” and by selling securities without properly registering them. None of the funds have been invested as investors were promised, authorities said. Instead, bank records indicate the money has gone into the pockets of the three company officials — Tony Pough, Tim McQueen and Joseph Brunson, who are named in court documents. They did not immediately return phone calls. Their representative, Sakima Bey, said, “I have nothing to say,” before hanging up the phone.
At Fort Benning, Ga., the installation commander has placed the two businesses off limits to service members in the Columbus, Ga., area, by authority of the installation’s Armed Forces Disciplinary Control Board. The staff judge advocate’s office has initiated an investigation with the Army Criminal Investigation Division, said Capt. Timothy Sers, an attorney with the administrative law section of the staff judge advocate’s office.
Plowden said complaints are not limited to the Army; service members of other branches are also affected. He said in addition to the Army CID, the South Carolina attorney general’s office is working with the Department of Justice, the U.S. attorney’s office, and the Internal Revenue Service.
Officials are investigating whether the investment programs offered by the companies’ officials are a “Ponzi” or “pyramid” scheme, in which investors are promised big payoffs when the company invests the money. But instead of investing the money, the company uses it for other purposes, and to pay back people who gave money earlier in the scheme. Only those who get in early profit; the scam usually collapses in on itself when new investors can no longer be found to sustain the “pyramid.”
Court documents indicate the company solicits business primarily through seminars, which are held in hotel conference rooms or in homes. To attend meetings, potential investors can be “invited” only by a current investor.
“It’s a secret society,” Sers said. “We have information that these groups are holding meetings in Iraq and Afghanistan.”
He said a soldier’s wife called the staff judge advocate’s office to complain that another soldier was soliciting for the company in her husband’s unit. The soldier who was soliciting had recently moved from Fort Bragg, N.C., where a number of such solicitations have been going on.
The South Carolina attorney general’s office said the companies entice people to invest, reportedly in foreign currency, by promising that they will get a 10 percent monthly return on their investment after 91 days. They also can choose to pay a fee and have the mortgage of their home paid off after 16 months; have credit cards paid off after 12 months; or have a car loan paid off after 12 months. Generally the investments were in the $1,000 to $5,000 range, but at least one person in the court document was said to have given the companies more than $50,000.
“Everyone knows each other. They sign up some respected leaders, and it makes it easier to recruit others,” Plowden said. “And the lure of easy money enables the typical pyramid scheme to gain inroads into communities.”
Plowden said it is unknown how long the companies have been operating or how widespread their reach is. “I’ve heard inquiries from people up and down the eastern seaboard, mostly North Carolina and Maryland,” he said. “The best news is we learned about it relatively early, and were able to stop $17 million from leaving the state.”
Troops at Fort Benning who have invested in these companies should contact their staff judge advocate office immediately at (706) 545-3285, to get more information about their rights. Service members and family members can call the legal office at their installation, or military investigative agencies.
Plowden encourages anyone with information to call the South Carolina attorney general’s office at (803) 734-3970.
“It was concerned citizens who notified us about this in the first place,” he said. “We’re trying to unravel this and return as much money as we can to investors.”
Ellie