Wednesday, April 01, 2009

Millennium Bank, Continued

A few more details. Banks in the States may not be paragons, but they generally aren't completely crooked.

Reprinted from Cayman Net News
US regulators halt Ponzi scheme
Published on Tuesday, March 31, 2009
NEW YORK (Bloomberg): US regulators said they halted a $68 million Ponzi
scheme at St Vincent-based Millennium Bank, the second case this year accusing
a bank in the islands of fraudulently selling certificates of deposit.
Millennium, describing itself as the subsidiary of a Swiss bank, made “blatant
misrepresentations and glaring omissions” while marketing the instruments to
wealthy US clients since 2004, the Securities and Exchange Commission said in a
statement on Thursday. A federal judge in Texas agreed to freeze assets after the
SEC sued both companies and five people, including residents of North Carolina
and California.
“The defendants disguised their Ponzi scheme as a legitimate offshore investment
and made promises about exuberant returns that were just too good to be true,”
said Rose Romero, director of the SECʼs office in Fort Worth, Texas, in a statement.
Attorneys for the defendants couldnʼt be located.
The lawsuit against Millennium is similar to a February SEC case against Texas
financier Allen Stanford, whom the agency accused of defrauding investors out of
as much as $8 billion. In both cases, operators told investors their money was
being managed by a team of professionals under the watch of Caribbean
regulators, according to the SEC.
“Investors need to be especially cautious when placing money with entities that
may be outside the reach of US regulators,” Romero said.
The SEC has disclosed more than a dozen lawsuits this year to freeze money
raised in alleged Ponzi schemes, in which early investors are typically paid using
money raised from later participants. “You will not see a week go by where we are
not bringing federal court cases against Ponzi scheme operators,” SEC Chairman
Mary Schapiro told Congress on Thursday.
At Millennium, based in St Vincent and the Grenadines, “none of the investor funds
were used for any investment purpose,” the agency said in its complaint at federal
court in Wichita Falls, Texas. Instead, defendants took a “vast majority” of the
money, while using a portion to pay purported returns, it said.
The scheme was orchestrated by William Wise, 58, who has residences in Raleigh,
North Carolina, and the Caribbean, and by Kristi Hoegel, 34, who lives in Napa,
California, according to the complaint. The lawsuit names Hoegelʼs mother,
Jacqueline Hoegel, of American Canyon, California, and two other people. The
SEC wants them to forfeit profits and pay unspecified fines.
Wise didnʼt respond to a message left at the bank, and a Raleigh telephone
number in his name is disconnected. Kristi Hoegel also is known as Kristi
Christopher, the SEC said. Nobody answered a phone listed in that name.
Jacqueline Hoegel, 52, didnʼt respond to a message at a number listed in her
Millennium marketed the certificates in Internet banner advertisements and in
magazines catering to wealthy investors, the SEC wrote in its complaint. The ads,
with slogans like “Invest in Peace,” boast that offshore banks can offer higher
interest rates compared with larger domestic rivals.
Customers were told to send checks to the Caribbean, where they were collected
and mailed to Napa, the SEC said. The money was then deposited into a single
Washington Mutual Inc. bank account opened in Las Vegas by the Hoegels, it said.
Money from the account was shared among at least nine people and seven
businesses, including the bank and a company listed as its parent, United Trust of
Switzerland SA, the SEC said. From October 2008 to February, about $3 million
was returned to investors.
Stanford, who hasnʼt been criminally charged, filed papers last month refusing to
testify in the SEC case and asserting his right against self-incrimination under the
Constitution. His lawyer, Dick DeGuerin, in a telephone interview today denied
Stanfordʼs business was a Ponzi scheme and said regulators caused investors to
panic, creating a fatal run on his financial empire.
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