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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 last year 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 program. 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.
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 ruse. 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: :
SUBURBAN BUSINESSMAN CHARGED WITH BILKING MILLIONS OF DOLLARS FROM HUNDREDS OF INVESTORS IN ALLEGED 22-YEAR “PONZI” SCHEME
U. S. Department of Justice FOR IMMEDIATE RELEASE PRESS FRIDAY JANUARY 23, 2009 www.usdoj.gov/usao/iln
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 usailn.victim.aa@usdoj.gov 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 reasonable doubt.
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