Diego NRI Investment Adviser bilked NRI Investors
Los Angeles, July 12, 2009
Be Alert for Double
Your Money Scam! A Punjabi Hindu gentleman
from San Diego has targeted Punjabi community in and around Los
Angeles area and swindles millions of dollars.
He convinced people with a written guarantee that by investing
in his firm you can earn returns in 2-4 weeks between 40% and 50%.
It depended upon the amount and the time frame. He stated that he
trades 50 currencies manually every day and make lots of money.
He gave stories that he has been doing this for the last six years
and has made a lot of money for his clients.
According to our investigator, this gentleman had few agents/middlemen,
where he was intrduced for investment. The middle men stated that
they are already earning this kind of returns. One person said that
he has been earning for two years and the other one said for 8-9
months. These so called friends started introducing during September/October
You are all very familiar with the phrase "if a thing looks
too good to be true, it usually is"; let me give you another
one: "If you don't understand what someone is trying to induce
you to invest money in, don't invest a penny in it."
Who wants to admit they are ignorant? When a honey-tongued salesman,
or "investment adviser" spins them a line that is fully
of impressive financial jargon, preferably peppered with reassuring
words such as "prime", "guarantee", "investment
This NRI Investment
Adviser who bilked NRI Investors, millions of dollars used the Ponzi
scheme & an Affinity Fraud:
What is a Ponzi scheme ?
A Ponzi scheme is a pay-as-you-go pyramid scam named after Charles
Ponzi, who went to jail for his fraud in 1920. Ponzi promised to
double, within 90 days, the investments of those who paid into his
program. Those first investors, were in fact, rewarded by having
their investments double in 90 days. Ponzi simply paid the first
wave of investors with the money he received from a second wave
of investors. He then paid them with money from an ever increasing
number of investors. The scheme worked as long as the pyramid continued
to increase. However, once the pyramid stopped growing, there was
no way to continue making the payments, since his scheme produced
no new wealth.
What is an Affinity Fraud?
Affinity fraud refers to investment scams that prey upon members
of identifiable groups, such as religious or ethnic communities,
the elderly, or professional groups. The fraudsters who promote
affinity scams frequently are - or pretend to be - members of the
group. They often enlist respected community or religious leaders
from within the group to spread the word about the scheme, by convincing
those people that a fraudulent investment is legitimate and worthwhile.
Many times, those leaders become unwitting victims of the fraudster's
These scams exploit the trust and friendship that exist in groups
of people who have something in common. Because of the tight-knit
structure of many groups, it can be difficult for regulators or
law enforcement officials to detect an affinity scam. Victims often
fail to notify authorities or pursue their legal remedies, and instead
try to work things out within the group. This is particularly true
where the fraudsters have used respected community or religious
leaders to convince others to join the investment.
In most cases, None of the money is ever
invested in what could be recognised as a legitimate investment
capable of generating a profit. Some victims may be treated
as "loss leaders" in order to encourage others to invest
and some are often paid small amounts of money to allay their growing
fears about the safety of their investment. These sums are met either
from the principal or from funds provided by new investors. For
the investor, trouble begins when the trickster's cash runs short.
He is then held at bay with stories about trouble in the banking
system, intervention by the IRS or the Federal Reserve.
High-yield investment frauds are as old as
Croesus, who, fortunately for him, didn't have to resort
to such devices to make himself a gilt-edged proposition. There
are numerous examples of high-yield investment schemes on our books:
many have international connections and several originate overseas.
The investor is told that very substantial profits
are available to individuals and companies involved in trading in
bank funds and bank instruments. The investor is told that the sums
involved in the business are very substantial but that trading is
not open to ordinary members of the public, access being restricted
to a small number of highly skilled traders to whom privileged access
may be obtained.
Please Note: :
- If you ever do see a Prime bank instrument, Prime Bank
Guarantees or standby letters of credit - it is claimed
these 'instruments' or 'notes' represent inter-bank debt and are
traded on a secret market only available to bankers – watch
- Victims are rarely told of the precise destination of
the funds. Those who introduce victims to a scheme do
so in return for a commission (deducted in fact from the principal
investment). The intermediary passes the bulk of the funds to
a third party who again, typically, will pass them on to another
in return for a further commission.
- Background Checks On Your Advisor- Start by
thoroughly researching any broker, financial planner, or adviser
you are considering hiring. Explore the North American Securities
- Your broker should be a Certified Financial Planner™ (CFP)
professional. You can verify the validity of his registration
SUBURBAN BUSINESSMAN CHARGED WITH BILKING MILLIONS OF DOLLARS
FROM HUNDREDS OF INVESTORS IN ALLEGED 22-YEAR “PONZI”
U. S. Department of Justice
United States Attorney
Northern District of Illinois
Patrick J. Fitzgerald Federal Building
United States Attorney 219 South Dearborn Street , Fifth Floor
Chicago , Illinois 60604
FOR IMMEDIATE RELEASE PRESS
FRIDAY JANUARY 23, 2009
CONTACTS: AUSA Christopher Veatch (312)886-3389
AUSA/PIO Randall Samborn (312)353-5318
CHICAGO – A suburban businessman who promised hundreds of
investors between 10 and 15 percent annual interest rates on promissory
notes he sold them was charged today with operating a so-called
“Ponzi” scheme for more than 20 years, resulting in
losses estimated in tens of millions of dollars. The defendant,
Frank A. Castaldi, was charged with mail fraud in a federal criminal
complaint filed today in U.S. District Court, announced Patrick
J. Fitzgerald, United States Attorney for the Northern District
of Illinois, and Robert D. Grant, Special Agent-in-Charge of the
Chicago Office of the Federal Bureau of Investigation.
Castaldi, 55, of Prospect Heights , was expected to surrender voluntarily
for an initial appearance at 1:30 p.m. today before Magistrate Judge
Nan Nolan in U.S. District Court.
According to the complaint, during approximately the early to mid-1980s,
Castaldi, his father, and a business partner started two businesses
– CZ Travel and CZ Realty. They later purchased ownership
interests in First State Travel Service, Inc., Parkway Towers Insurance
Agency, Inc., and Cumberland Realty, Inc., which later became known
as Remax Cumberland Realty, all currently located at 4501 North
Cumberland in Norridge , with Castaldi identified as the president
of each business.
Beginning in at least approximately 1986, Castaldi allegedly began
offering and selling month promissory notes to investors, the majority
of whom were people who were referred to him by other investors,
and included friends, family members and customers of his businesses.
While the vast majority of notes stated that the annual interest
rate was zero percent, Castaldi allegedly orally guaranteed that
he would pay investors annual returns between 10 and 15 percent.
Castaldi allegedly made false representations to most investors
about investing their principal in his various businesses, as well
as the source of the funds that he used to make their interest payments.
At least five years ago, Castaldi allegedly began falsely telling
investors that he was placing their money with financial institutions
with whom he had a special relationship and would guarantee their
principal and high returns. Instead, Castaldi obtained loans and
used certain investors’ principal payments to make interest
payments to other investors, without disclosing the true source
of the interest payments, the charges allege.
The complaint affidavit states that there are approximately 200
to 300 investors whose principal has not yet been returned and estimates
that the outstanding principal owed to these investors is in the
tens of millions of dollars. In 2008 alone, Castaldi allegedly renewed
or issued promissory notes bearing a total face value of approximately
$68 million to $69 million, in many instances representing the face
value of investors’ initial notes plus the investors’
accumulated interest which had been rolled back into the notes.
In addition to using new investors’ principal to make interest
payments and return principal to earlier investors, Castaldi also
lost investors’ money by funding his failed banquet hall and
other failing businesses, and to purchase some stocks, the charges
allege. It is believed that neither Castaldi nor his businesses
have the money to pay back the investors, the complaint states.
Law enforcement authorities are currently in the process of identifying
potential victims in this case. Individuals who believe they are
victims but have not received information by mail by the end of
February, should contact the U.S. Attorney’s Office Victim
Assistance Program either by calling 1-866-364-2621 and leave a
name, address and phone number, or sending an email to email@example.com
and information will be mailed.
The government is being represented by Assistant U.S. Attorneys
Christopher Veatch and Sunil Harjani.
If convicted, mail fraud carries a maximum penalty of 20 years
in prison and a $250,000 fine.
The Court, however, would determine the appropriate sentence to
be imposed under the advisory United States Sentencing Guidelines.
The public is reminded that a complaint contains only charges and
is not evidence of guilt.
The defendant is presumed innocent and is entitled to a fair trial
at which the government has the burden of proving guilt beyond a