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Investment Brokers In Two States Face Fraud Charges
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(October 22, 2009 - Thursday) - In Pennsylvania, Attorney General Tom Corbett has filed criminal charges against a Beaver County man accused of operating a $2 million "Ponzi scheme," defrauding credit unions in Armstrong, Westmoreland and Luzerne counties.
Corbett identified the defendant as Eugene D. Miley. Corbett said that Miley allegedly served as a financial broker for clients, including three credit unions operating in southwestern and northeastern Pennsylvania, offering to locate and purchase various high interest rate certificates of deposit (CD's) for those institutions. Instead of purchasing CD's, Miley allegedly diverted the funds for his own personal use, depending on new credit union purchases to pay-off older fictitious "investments."
Investments an 'illusion'
"Miley claimed to be helping his clients earn a good return on their investments, but this was simply an illusion," Corbett said. "As with other ponzi schemes, the money received from new clients was used to pay-off older investors, or siphoned off for personal use, until the flow of new money stopped -- causing the operation to collapse and leaving victims with nothing more than empty promises."
According to the criminal complaint, Miley sold $2,080,000 in fictitious certificates of deposit between 2006 and 2008, including $1,387,000 to Moonlight Credit Union, located in Worthington, Armstrong County; $594,000 to VANtage Trust Credit Union, in Wilkes-Barre, Luzerne County and $99,000 to Stanwood Area Credit Union, in New Stanton, Westmoreland County.
'Misappropriated client funds'
In Massachusetts, meanwhile, a Barnstable County Grand Jury has returned indictments against a former financial broker in connection with the alleged theft of hundreds of thousands of dollars from his former clients. Shane Selewach of Hyannis is charged with six counts of larceny over $250, six counts of securities fraud, and transacting business as an unregistered broker/dealer.
In 2007 Massachusetts Attorney General Martha Coakley's Office began an investigation after Selewach's alleged activities had been referred by the Massachusetts Securities Division (MSD) in the Secretary of State's Office. The MSD's investigation concluded that while working as a securities broker-dealer agent for a major financial company, Selewach had misappropriated client funds he had been entrusted to invest. As a result, Selewach was fired from his former employer and his registration was terminated in April 2006. The MSD subsequently suspended Selewach for three years, beginning in May 2006.
Read more: http://www.consumeraffairs.com/news04/2009/10/ma_pa_investment_scams.html#ixzz0UgQoO8Ne
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