9 Accused in Alleged Giant Ponzi Scheme

[DoYouEverWonder]

May 22, 2005

Two former Orange County residents plucked by police from palatial Costa Rican homes on May 13 face extradition and an 83-count U.S. indictment charging them and seven others with running a complex international Ponzi scheme that defrauded investors of nearly $60 million.

Using the funds of some investors to pay "returns" to others and to finance lavish lifestyles, organizers of the scheme — called the Genesis Fund — took in more than $80 million between 1998 and 2002 while generating little, if any, profit, prosecutors say.

"They were marketing this as a private offshore fund outside the scrutiny of regulators like the IRS," said Nanette Davis, an attorney with the U.S. Justice Department's tax division who helped prepare the indictment. "All an investor had to do was follow the 'too-good-to-be-true rule' to avoid being duped."

Arrested were John S. Lipton, 58, formerly of Mission Viejo and Laguna Hills, principal manager of the fund; and Victor H. Preston, 64, a fund founder who lived in Huntington Beach and Laguna Beach while the venture operated out of Orange County.

Lipton and a third defendant, fund manager Richard B. Leonard, 71, formerly of Littleton, Colo., were taken into custody at the coastal resort town of Tango Mar. Preston was arrested at his home in San Jose, Costa Rica.

http://www.latimes.com/news/yahoo/la-me-genesis22may22,1,5294687.story?coll=la-newsaol-headlines

Doesn't this story just want to make you run right out and take all your money out of social security, so you can invest it yourself?

[alcibiades_mystery]

1. I dare you to speculate on who these three schmucks vote for

Dare you! Dare you!

Fuckin' Repubs for sure.

[DoYouEverWonder]

2. Here's a little more info from Costa Rica:

Genesis Fund Creators Arrested

13 May 2005


Victor Preston being led off by police following his arrest at his home on Wednesday. Preston is accused of being part of the Genesis Fund who defrauded investors of up to us$60 million.


Three Americans were detained by the authorities on Wednesday following raids on two homes in Paquera in Puntarenas and Sabana Norte, in San José.

The three men - Víctor Hawthorne Preston (65), John Sherman Lipton (59) and Richard Blake Leonard (72) - were wanted in the United States for fraud in excess of us$60 million dollars. The charges against the men include mail fraud, money laundering and obstruction of justice.

The International Police (INTERPOL) moved in on the men in mid afternoon on Wednesday in a simultaneous action against the three men, on team visiting the home of Preston in La Sabana, while the another team moved in on the luxury homes of Lipton and Leonard in Tango Mar, an exclusive community in Paquera.

According to the INTERPOL, the men have been wanted for several years but it was only in the last three months that agents located the whereabouts of all three men and began extradition proceedings. Police did not move until their legal paperwork was completed.

http://insidecostarica.com/dailynews/2005/may/13/nac02.htm


I'm googling to see if I can find any linkage to Bu$hCo.

[UpInArms]

3. don't know if this is the same group, but it

was interesting:

http://www.e-n.org.uk/1997-04/378-What-is-ethical-investment.htm

excerpt:

Ethical Financial, a national firm of Independent Financial Advisers, have established a number of ethical funds with the Judaeo-Christian viewpoint at the heart, reflecting their own internal philosophy as a company of committed Christians.

Their range of funds, known as the Genesis Funds, allow individuals to invest into Personal Equity Plans, regular savings, pensions and lump sums, as well as some form of life insurance, in a manner which more adequately reflects the Christian viewpoint.

...more...

or there was this:

http://www.genesisvp.com/Pages/news_content.asp?PrId=144

The next generation of venture capital funds in Israel will raise significantly larger amounts of capital than the first generation, Genesis Funds partner Eddy Shalev told the Israeli Business Conference today.

On a panel devoted to foreign investment in Israel, Shalev said that the second generation of venture capital funds will raise amounts ranging from $150 million to $400 million. He was speaking in particular of the 10-12 largest funds, already active with a combined volume of $1.5 billion.

...more...

[DoYouEverWonder]

4. I believe that 'genesis funds'

are a type of investment, not necessarily related to the company called "Genesis Funds, Ltd." There is also a non-profit group called Genesis Fund(s) that does charitable work that is not related.

[UpInArms]

7. here's another article

http://www.quatloos.com/Tax-Forums/viewtopic.php?t=1001271

excerpt:

The indictment alleges between May 1998 and June 2002, Genesis Fund investors entrusted over $80,000,000 with the defendants. The defendants-through promotional materials, account agreements, and other means-allegedly told investors that their funds would be pooled and invested in highly-profitable foreign currency trading. Instead, the indictment alleges virtually all investor funds were used to make payments to investors and to personally enrich the defendants.

The indictment also alleges that in June 2002, within weeks after advising investors that the Genesis Fund was worth $1.3 billion, investment, trading, and payment activities in the fund were suspended. After the collapse of the Genesis Fund, investors were allegedly lulled into believing that their investments would be recovered through a new investment plan.

The indictment also alleges that the defendants promoted the Genesis Fund as having no reporting obligations to the IRS. Bank accounts in the names of trusts and offshore bank accounts were allegedly used to receive distributions from the Genesis Fund that were not reported to the IRS. Some of the defendants allegedly created "disclosed" and "undisclosed" Genesis Fund accounts for themselves and certain Genesis Fund investors in order to conceal from the IRS all but a small portion of Genesis Fund distributions. In addition, some Genesis Fund investors were allegedly advised to create nominee offshore corporations and bank accounts to receive distributions from the Genesis Fund.

...more...

[DoYouEverWonder]

5. A couple of more interesting links

This one is for pdf of the Indictment is US District Court:

http://66.102.7.104/search?q=cache:S7HVnijY2OkJ:www.usdoj.gov/tax/GenesisIndictment.pdf+%22Genesis+Fund+ltd%22+&hl=en&client=firefox-a


This second link is to Genesis Fund Ltd's website and a few of the letters they sent to investors. I love the part where they so DO NOT PANIC. Usually that means it's time to panic. Plus, they don't know how to spell to save their lives.



The Genesis Fund, Ltd.

Main Street

Charlestown,

Nevis WI

As many of you are aware, the United States Department of Justice Tax Division and the United States Attomey in Los Angeles have been conducting an investigation of Genesis for almost three years. The investigation was dormant for a period of time but has recently been reactivated. During the course of this investigation, agents from the Intemal Revenue Service and FBI have contacted several investors. Accordingly, you may be contacted by one or more of these federal investigators. In the event you are contacted you should not panic and we encourage you to be truthful and cooperative. Y ou should also be factual and not speculate about matters that you do not have personal knowledge. In the past, at least one investigator has on several occasions made allegations about Genesis and certain individual s that have not been accurate. Do not assume that Genesis has engaged in illegal conduct based on comments made by an investigator. In the past, some shareholders contacted by telephone have politely asked the investigator to put any questions in writing and have agreed to submit written answers. This ensures that an accurate record of questions and answers is maintained. You should also be advised that you may ask to have the opportunity to seek the advice of counsel before answering any questions. In this regard, I am enclosing a memorandum that was prepared for Genesis by one of its attomeys for distribution to its investors. While Genesis is not qualified to provide its shareholders with legal advice, we strongly recommend that you seek the advice and guidance of a qualified lawyer if you have any concerns about responding to questions or protecting your legal rights.

Roger Smyth Ltd.

http://gfsoc.org/gfsoc_1_28_2003.htm

[Jose Diablo]

6. Wouldn't it be interesting if Dr. Dobson was somehow connected

From the article:

"A ninth defendant, Marlyn D. "Milt" Hinders, 65, allegedly a leading promoter of the Genesis Fund who lived in Aurora and Parker, Colo., and later Mexico, is being sought."

I tried to find a linkage between the Genesis Fund and Focus on the Family, Dr. Dobson, but google wasn't successful.

To bad that a connection between this Genesis scam and the fundamentalist Dr. Dobson cannot be established.

It's been my experience that serious religiosity and groping for someones wallet seem to be natural pair. With those very religious but always looking for a money angle people, scams are a natural outgrowth. I think it has something to do with peoples defenses are sometimes lowered when the scam artist evokes 'God' into the picture. People become little children again, innocent to predation by others.

It's all about money, you know. Not much changes in this world.

Edit: I wonder if Dr. Dobson in his many appeals to the generosity of his followers maybe sometimes 'offered' good advice as to where a good return for their money could be obtained. Maybe in a pamplet or something. Who knows, maybe there is a record of the Genesis Fund making a payment to Dr. Dobson's Focus on the Family publications for advertising. Couldn't this be a legal 'kickback' in the form of an advertising expense?