SEC Stops $68 Million Ponzi Scheme Involving Caribbean Bank

The U.S. Securities and Exchange Commission has put a halt to a $68 million Ponzi scheme centered around the sale of fake high-yield certificates of deposit in a Caribbean-based bank.

The scheme, involving Millennium Bank, targeted investors in the United States by tricking them into investing in fictitious certificates. The CDs promised returns that were up to 321 percent higher than those offered by legitimate banks.

The SEC complaint accuses William J. Wise of Raleigh, N.C., and Kristi M. Hoegel of Napa, Calif., of masterminding the scheme through Millennium Bank, its Geneva, Switzerland-based parent United Trust of Switzerland S.A., and U.S.-based affiliates UT of S, LLC and Millennium Financial Group.

The SEC also charged Hoegel’s mother, Jacqueline S. Hoegel, Brijesh Chopra, Philippe Angeloni, and others for their supporting roles in the scheme.

“The defendants disguised their Ponzi scheme as a legitimate offshore investment and made promises about exuberant returns that were just too good to be true,” said SEC official Rose Romero. “This case demonstrates that investors need to be especially cautious when placing money with entities that may be outside the reach of U.S. regulators.”

Hundreds of Investors Were Duped

The Millennium Bank scheme earned the defendants as least $68 million from more than 375 investors since July 2004, according to the SEC. Millennium Bank solicited new investors for its CD program through online advertising and other marketing by grossly misrepresenting earnings and other facts, the SEC said. For example, the bank claimed that it was a Swiss-licensed bank and securities dealer when in fact it is not, according to regulators. Also, the bank’s solicitations falsely claimed the bank had a 100 percent client satisfaction record dating back for 10 years.

According to the SEC complaint, investor funds were not used for legitimate banking or investment activities. In order to create the appearance of a legitimate offshore investment, investors purchasing the CDs were instructed to deliver their investment checks to the offshore bank. Those checks were then packaged and delivered to UT of S LLC’s office in Napa, Calif., where the checks were electronically deposited by a remote deposit machine into an account controlled by UT of S, LLC.

The defendants then misappropriated the investor funds to pay their own personal expenses while making few Ponzi payments to investors, according to the SEC. In a Ponzi scheme, early investors are paid profits from money contributed by later investors.

Asset Freeze Granted

The U.S. District Court for the Northern District of Texas granted the SEC’s request to freeze the company’s assets in an effort to protect defrauded investors.

Also charged in the Millennium Bank Ponzi scheme were Lynn P. Wise of Raleigh, N.C. (the wife of William J. Wise); Ryan D. Hoegel of Lincoln, Calif. (the brother of Kristi Hoegel); Daryl C. Hoegel of American Canyon, Calif. (the husband of Jacqueline Hoegel), Laurie H. Walton of Raleigh; and United T of S, LLC, Sterling I.S., LLC, Matrix Administration, LLC, and Jasmine Administration, LLC.

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