Feds uncover, prosecute fraudulent business practices
LA GRANDE - Larry “Buck” Hunter and Bryant E. Behrmann, the two men who pleaded guilty in June to running a fraudulent business enterprise from headquarters in La Grande, aren’t the only ones who have found themselves in hot water with federal authorities in recent times.
Since 2007, a host of cooperating agencies, have closed down at least a half-dozen Oregon and Washington enterprises that cheated thousands of investors out of millions of dollars.
Consumers, beware: swindlers and crooks are always out there, using the Internet, the U.S. mail and any other tool at their disposal to part honest, hard-working people from their money.
A huge case concluded in federal court in August, 2007, involved the so-called First International Bank of Grenada, which defrauded depositors out of nearly $170 million.
Three Portland residents and a Canadian citizen who lived in Lake Oswego were convicted of running what the U.A. Attorney’s office termed “easily the largest Ponzi scheme in the history of the District of Oregon and one of the most devastating anywhere.”
Robert J. Skirving, 59, Portland; Laurent Barnabe, 68, Lake Oswego; Douglas Ferguson, 74, Portland; and Rita Regale, 54, Portland drew prison sentences ranging from eight years to 18 months. In addition, they were ordered to pay restitution of over $110 million.
“Through their deceitful scheme, the defendants shattered the retirement hopes and dreams of thousands of victims throughout the world to lavishly enrich themselves,” said U.S. Attorney Karin Immergut.
The defendants established the First International Bank of Grenada in the late 1990s, offering depositors interest rates as high as 300 percent. Some investors were persuaded to roll over pension and individual retirement account money into the bank.
In reality the bank was a massive Ponzi scheme that attracted $170 million in deposits. The defendants were convicted on conspiracy, fraud and money laundering charges.
The bank claimed to have earned more than $12 billion in high-yield trading and to have acquired assets in excess of $26 billion. But when the Granadian government took over the bank in 2000, real assets totaled just $2 million.
The U.S. Internal Revenue Service Criminal Investigation Division teamed with the FBI to track evidence all over the world. The investigation took eight years to complete.
Another major fraud case prosecuted recently involved Bend resident Michael Marks Rich, who headed a company called Pac Equities, Inc.
In April 2008, Rich was sentenced to 20 years in federal prison and ordered to pay over $10 million to people he victimized.
Pac Equities had an office in Bend and claimed success at managing profitable real estate developments and loans.
The company solicited investments in real estate and continued to recruit and retain investors even though its sources of income came from only a few projects and loans. More than 300 people invested $18 million in Pac Equities.
Rich and Pac Equities were convicted of securities fraud, wire fraud and mail fraud. Rich was also convicted of bank fraud, attempted bank fraud, money laundering, obstruction of justice and tax fraud.
The money laundering charges were based on Rich’s use of investor money to pay personal expenses.
Transactions engaged in by Rich as alleged in the money laundering counts exceeded $7 million. He was sentenced to 20 years in prison.
In some other notable cases involving major fraud in the Pacific Northwest:
• Jason Paul Christensen, 34, formerly of Pasco, Wash., pleaded guilty in April of this year to mail fraud and money laundering charges in connection with the operation of a debt discharge program.
Christensen promised customers he would discharge their debts in return for an advanced fee. According to the U.S. Department of Justice, he took over $2.5 million and did not discharge debts as promised. He will be sentenced in October.
• James Ray Mast of Portland drew a 51-month prison sentence in August 2007 followed by 36 months post-prison supervision his role in promoting a fraudulent investment scheme called GlobalTech Partners.
Mast pleaded guilty to mail fraud and money laundering in April 2007 and was sentenced the following August.
• Edwin Garcia of Vancouver, Wash., was sentenced in January 2008 to 27 months in prison and ordered to pay $124,000 in restitution for using the Internet to advertise high-yield investment programs for which no high yields existed.
Earlier, codefendant Daniel Wheatley, of Springfield, was sentenced to a 41-month prison term for Internet fraud and money laundering.
Another co-defendant, Sunshine Simmons of Springfield, drew a three-year probation term and six months home detention for concealing information from a bank so that financial transactions would not be filed.
Both Wheatley and Simmons were ordered to pay $124,000 in restitution.
Hunter and Behrmann were the owners of Global Online Direct, which was in the business of buying distressed inventory and re-selling it in flea markets, street sales, retail storefronts and online auctions.
Headquartered on Peach Road in rural La Grande, Global owned warehouses in La Grande and Union and at one time employed about 60 local workers. The company spent millions of dollars on real estate locally.
Global Online Depository, also owned by Hunter and Behrmann, raised money for the business by soliciting loans that supposedly were secured by inventory.
Federal authorities say the company promised returns on the loans of up to 1,100 percent. Investors were recruited via the Internet.
According to prosecutors, some early investors were paid with money from later investors, but most investors were not paid at all. There never was enough inventory on hand to secure the loans.
The government says that the company owed investors $264 million but had less than $1 million in its bank accounts.
Last month, Hunter and Behrmann pleaded guilty to money laundering. Sentencing is scheduled for Aug. 31.
Hines said that with the advent of the Internet, fraudulent schemes have become much larger and more sophisticated.
“In my years with the IRS, I’ve watched these evolve from local operations into global type crimes. That person (doing the cheating) can be sitting anywhere around the world,” he said.
He said he feels deep sympathy for the victims.
“People are trusting and want to believe they’re buying a good product, and they’re not aware they’re being sold things by a snake oil salesman,” he said. “Victims I talk to always say, ‘He seemed like such a nice person.’ ”
All the cases cited in this story were prosecuted in federal court. The IRS Criminal Investigation Division, the U.S. Secret Service, the FBI and the U.S. Postal Service played prominent roles in investigations, with state and local agencies helping out.
Hines said his office plans vigorous investigation and prosecution of fraud in the future.
“We will continue to pursue these kinds of cases aggressively,” he said.