Header graphic for print

Ponzi Clawbacks

Defending Victims of Investment Fraud

SF Real Estate Broker Was Looking Out for Number One

By Michael Hackard on Posted in Ponzi Profiles

Dreamworks SKG

San Francisco real estate broker W.B. Coyle has become the subject of intense media scrutiny after what alleged victims assert has been a “decade of deception.” The State of California’s Department of Real Estate filed a complaint against Coyle and his business, charging that the broker engaged in numerous fraudulent practices against clients while managing their investments. Local journalists have detailed 20 lawsuits and over 40 victims in the wake of Coyle’s reported swindle, making for a total of $15 million at stake.

Coyle has been head of the North Beach-based Telegraph Hill Properties (THP) for at least seven years, operating the company as a vehicle for investing in high-end San Francisco residential real estate. He would often form joint ventures with clients to purchase properties and then sell them at a return, yet he is accused of making sales, co-mingling funds and awarding himself commissions without client knowledge or approval.

Along with this misappropriation of investor funds, Coyle is said to driven several of these enterprises to bankruptcy, resulting in clients’ money being sucked away by lenders and lawyers. THP also reportedly facilitated the eviction of rent-controlled tenants at multiple locations under the Ellis Act with the aim of speculating on re-sale of the units. The THP entities that went bankrupt were named Dissolution Properties LLC, Turbulence LLC, and Hades LLC, curious designations for a man looking to pass himself off as an honest broker.

While Coyle already has a $1.1 million judgment leveled against him, he would lose his license entirely if state authorities’ investigation is proven accurate. Many of his investors have attempted to pursue every possible avenue of civil and criminal action against the North Beach broker after years of what they would call outright theft. Sam Kiamanesh, a professor of real estate law and investments at DeAnza College in Cupertino, offered this assessment of Coyle’s case:

I have never seen a broker with so many violations over so many investment properties with so many different investors. It seems like a pattern with Mr. Coyle. He is basically at every turn making sure he gets taken care of first. Whether it is getting paid the commissions on a transaction, or taking a position that was adverse to his clients. My take is he (Coyle) is in a lot of hot water. He’s been accused of breaking every rule in the book basically.

wbcoylefraud.wordpress.com

WILLIAM BERNARD COYLE

  • Companies: Telegraph Hill Properties
  • Job: Real Estate Broker
  • Alleged Scam: SF Residential Properties
  • Amount of Fraud: $15 million
  • Number of Victims: 40
  • Location: San Francisco, CA
  • Complaint: Fraud, Co-Mingling, Secret Commissions
  • Agency: CA Dept. of Real Estate

W.B. Coyle CA Dept. of Real Estate Complaint

 

Scammer Nominated Himself for Nobel Peace Prize

By Michael Hackard on Posted in Ponzi Profiles

Damien Glez

A Kansas City, MO, preacher and four co-conspirators were convicted last week for running a large-scale investment scam that exploited black churchgoers. Owen Isreal Hawkins, 57, masterminded a fraudulent stock offering that would swindle around 9,000 unqualified investors out of $10.2 million, causing $7.2 million in losses. After being indicted in 2010, he has been found guilty in US District Court on multiple counts of conspiracy, securities fraud, wire fraud, currency structuring and money laundering.

From 2007 to 2010 Hawkins collaborated with a number of fellow ministers to found and promote Petro America Corporation, supposedly a company with massive holdings in oilfields and gold mines. Hawkins called his henchmen the “White Hat Guys,” as they all sported white fedoras while serving as his personal bodyguard. With the assistance of several sales agents, he pitched Petro America’s unregistered securities as a sure way to score untold riches. Hawkins said Petro America stocks would skyrocket to $24 a share once it went public, as the company was worth $284 billion – second in the US only to Exxon-Mobil.

To the consternation of many, Petro America didn’t actually have $284 billion in assets and its stocks turned out to be worthless. Although Hawkins was the subject of cease-and-desist orders from Kansas and Missouri state authorities, he went on his merry way and told investors that he would soon receive a Nobel Peace Prize for his achievements in wealth-creation. Petro America was known, after all, as “The People’s Company.” Hawkins went on to tell investors that Hollywood was even planning a celebration of his feats of philanthropic entrepreneurship on the silver screen:

I have talked to a Hollywood producer, that’s interested in doing a story on Petro America the people’s company, and a documentary on how we’ve gone from where we have in such a short time, and the great uh, shareholder base that we have, and also the humanitarian projects that we are looking forward to doing. Uh, the producers said that they do believe that we will get that Nobel peace prize and that would mean so much to me personally, and as well, uh, to the corporation, to show that we have done a great corporate work and good corporate will.

In a rather ostentatious show of corporate good will, Hawkins treated himself to $2 million of shareholder funds, including $595,000 in annual salary, a Hummer, a Mercedes, 19 pimp-tastic suits and a $5,700 fur coat. The man cannot be denied his bravado and a certain gift of imagination, though. Representing himself in the courtroom, Hawkins cross-examined a witness and explained that allegedly worthless Petro America land could supply billions of dollars’ worth of rocks to decorate the facades of Burger Kings and Wal-Marts. While already convicted in the case, Hawkins is nonetheless suing the US Attorney and an IRS agent for $100 million over claims of defamation.

 

Pitch.com

ISREAL OWEN HAWKINS

  • Age: 57
  • Company: Petro America Corp.
  • Job: CEO
  • Scam: Oil and Gold Mines
  • Ponzi Time: 2007-2010
  • Number of Victims: 9,000
  • Amount of Fraud: $10.2 million
  • Location: Kansas City, MO
  • Indictment: Multiple Counts of Fraud, Conspiracy, Structuring, Money Laundering
  • Court: US District Court, Western District of Missouri

US v. Isreal Owen Hawkins Indictment

 

“Unlimited Cash, Inc.” Turned Out to be Ponzi Scheme

By Michael Hackard on Posted in Ponzi Profiles

Three Ventura County, CA, residents were sentenced yesterday in US District Court to federal prison time for operating a Ponzi scheme. Alan Flesher, 65, his brother Wayne, 62, and Nancy Khalial, 65, received respective terms of 17 years, 6 years and 4 years after pleading guilty to fraud charges in June of 2012. The trio had managed to scam $41 million out of 790 investors, causing $27 million in damages.

It was from 2001 to 2005 that the Flesher brothers and Khalial were soliciting investors for “ad toppers,” portable screens that could be placed on ATMs, gas pumps and vending machines in order to flash video advertisements from well-known corporations like Gold’s Gym, Coca-Cola and Paramount Pictures. The topper moguls used their companies Unlimited Cash, Inc. and Douglas Network Enterprises to market the program, offering no less than 16% returns a year.

While representing the ad-topper business as wildly successful, the Unlimited Cash team was actually spending little of client funds on the devices and related costs. The Fleshers and Khalial would sell the same ad-topper unit to multiple investors and then inform them it had been installed at any number of locations. With minimal profits from the devices, the trio was paying clients fictitious interest drawn from their own principal. Sales agents were also afforded sizable “commissions” for recruitment, another fact never disclosed to victims.

Despite its enticing name and unbeknownst to investors, Unlimited Cash went bankrupt in 2003, and by 2005 the scheme had collapsed. The group then went on to fabricate a series of excuses for non-payment, ranging from their claim that a computer virus had frozen company accounts to the finalization of a deal with a national advertiser seeking to buy the program. In addition to their sentence, the Fleshers and Khalial will also be required to pay $27 million in restitution.

Florence County Detention Center

WAYNE FLESHER

  • Age: 62
  • Company: Unlimited Cash, Inc., Douglas Network Enterprises
  • Job: Advertising Broker
  • Scam: Ad Toppers
  • Profits: 16% per year
  • Ponzi Time: 2001-2005
  • Number of Victims: 790
  • Amount of Fraud: $41 million
  • Location: Los Angeles, CA
  • Indictment: 17 Counts of Fraud
  • Court: US District Court, Central District of California

Wayne Flesher SEC Complaint

 

Accused Scammer Offered Investors Returns at Ludicrous Speed

By Michael Hackard on Posted in Ponzi Profiles

St. Peters, MO, resident Michael Kitchen has some explaining to do over what authorities say was an investment scam that raised over a half million dollars from at least five investors. The 47-year-old Kitchen was indicted last week by a federal grand jury on charges of wire fraud and money laundering. Kitchen had already been the subject of a related injunction issued in December 2012 by the Missouri Secretary of State.

MGM

From 2008 to 2009 Kitchen is said to have operated a fraudulent high-yield investment program under the guise of his company, PIF Financial Services, LLC. Kitchen solicited funds by telling investors he traded leveraged banking instruments among the world’s top 100 financial institutions. He claimed the transactions were so safe as to be “foolproof,” telling one alleged victim in a rather frank admission that the program was “almost too good to be true.” PIF’s vehicle was so good that it generated 1000% annual returns, ludicrous profits at ludicrous speed. To convince one investor of his bona fides, Kitchen produced a supposed letter from Bank of America stating that his account held $840 million just waiting to be tapped once a special SEC-issued code was entered.

Yet none of the story, the US Attorney asserts, was actually true. According to his indictment, there were no prime bank instruments; Kitchen was simply collecting investor funds and spending them on himself. In its own documents, the State of Missouri says that Kitchen blew through at least $300,000 in clients’ cash, sinking $10,000 alone on pet supplies. While every hound deserves a bone now and then, those purchases evoke images of diamond-studded collars and luxury doghouses.  Kitchen would only pamper his pets so far, though; travel to the canine day spa would be restricted to a Ford Edge and Kia Borrego reportedly bought with victims’ money.

 

MGM

MICHAEL KITCHEN

  • Age: 47
  • Company: PIF Financial Services, PM Solutions
  • Job: Broker
  • Scam: International Bank Instruments
  • Profits: 1,000% per year
  • Ponzi Time: 2008-2009
  • Number of Victims: At Least 5
  • Amount of Fraud: $500,000
  • Location: St. Louis, MO
  • Indictment: Multiple Counts of Wire Fraud, Money Laundering
  • Court: US District Court, Eastern District of Missouri

US v. Michael Kitchen Indictment

 

Man’s Commodity Trading Robot Wasn’t Real

By Michael Hackard on Posted in Ponzi Profiles

The operators of an unregistered commodity pool have been ordered to cough up millions in penalties for running what regulators say was a $28.4 million Ponzi scheme that swindled 2,000 victims. US District Court Judge Daniel Hurley ruled in a CFTC suit that Philip Milton of Palm Beach Gardens, FL, must pay $10.8 million in restitution and a $7.6 million civil monetary penalty, while his company Trade, LLC is required to fulfill restitution obligations of $11.4 million and pay $28.4 million in penalties. In addition to this, other related commercial entities must disgorge $4.7 million, making for an approximate total of $63 million in payments to the federal government.

From 2007 to 2009 the 65-year-old Milton and his two associates, brothers William and Gregory Center, ran Trade, LLC as a commodity pool trading securities. The men solicited members of three investment clubs with wild claims of 8% monthly returns, nearing an annual windfall of 100%. Milton told them that Trade could produce such hefty yields due to a special proprietary software the firm used. Clients had no reason for concern, he would explain, since risk to principal was minimized by pulling profits off the market at the end of each business day.

Unfortunately for investors, Milton’s trading software was about as genuine as some of the talking robots featured in 1980s TV sitcoms. And while Trade did apply $15 million to its stated purpose, the firm lost money during all but two months of its activity. Milton and Gregory Center misappropriated at least $9.6 million for their own interests, distributing false returns and rewarding themselves with handsome salaries for all their hard work. $4.8 million of that amount was also funneled to three Florida businesses. A victim who with his family invested $200,000 in the scheme traveled from his home in Michigan to tour Trade’s offices in Palm Beach Gardens and inquired how the company was so incredibly successful:

I asked them about the high returns, and they told us they had a mathematical system whereby they would get in certain stocks in the morning and be out by the end of the day… It’s just unconscionable that he could totally make things up.

 

garycoleman.net

PHILIP MILTON

  • Age: 65
  • Company: Trade, LLC
  • Job: Commodities Trader
  • Scam: Commodity Pool
  • Profits: 8% per month
  • Ponzi Time: 2007-2009
  • Number of Victims: 2,000
  • Amount of Fraud: $28.4 million
  • Location: Palm Beach Gardens, FL
  • Complaint: Multiple Violations of Commodity Futures Trade Act
  • Court: US District Court, Southern District of Florida

Philip Milton CFTC Complaint

Philip Milton SEC Complaint