PUBLISHED SATURDAY, JULY 8, 2000
Global scam targeted
Niceville man, 10 others to be arraigned in Pensacola
By Charlotte Crane
News Journal business editor
Wealthy investors hoping to make a 300 percent annual return on their money might
have lost up to $95 million in a pyramid scheme, U.S. and Florida law enforcement
agencies said.
Federal charges were filed against 11 people, including a man from Niceville,
for allegedly swindling the investors in a secret trading program.
U.S. Attorney P. Michael Patterson announced Friday the unsealing of a 36-count
indictment charging the defendants with conspiracy to commit wire fraud, securities
fraud and money laundering. The indictments were returned by a federal grand jury
on June 20.
Information on whether any Pensacola investors lost money in the scheme wasn't
available, a spokeswoman for Patterson said.
The 11 individuals will be arraigned in federal court in Pensacola on July 20
before Magistrate Judge Susan Novotny. Their bases of operations included four
states, England and Canada.
Investigators said that funds collected were channeled through Bridgeport Alliance
of Niceville, operated by William Harry West of Niceville and Kenneth Brian Cobb
of Phoenix. Those funds were routed to funds manager Benjamin David Gilliland
in Memphis, Tenn.
The indictment charges that the 11 defendants created and operated three trading
programs called Hammersmith Trust, Microfund and Luxor Capital Markets, which
purported to offer high-yield, low-risk investment opportunities for high-dollar
investors.
Investors were told their money would be used to buy - free and clear - secure
U.S. Treasury obligations, which then would be leveraged in a secret trading program
to which few had access, with the promise of an annual return of 306 percent or
more.
But those secret trading programs never existed, investigators said.
Funds collected from later investors were used to pay earlier investors to promote
the fraud in a classic pyramid, or ``Ponzi'' scheme, according to the Florida
Department of Banking & Finance, one of the investigating agencies.
Money was laundered through a number of corporate entities and bank accounts both
onshore and offshore, until it was eventually disbursed among the defendants,
who took in about $95 million.
West, who was charged with 19 counts of conspiracy to launder money in addition
to conspiracy to commit wire fraud and securities fraud, has been released on
bond.
He did not respond to a phone message.
Recent overnight get-rich stories about dot-com entrepreneurs might have made
people more willing than usual to fall for questionable investment schemes, said
Pensacola financial planner Jack Grantham.
``I would say greed is an emotion that blinds. Anyone who expects to get a 300
percent return is living in a dream world, and they should wise up and walk away
from it.''
The defendants will enter a plea at the July 20 arraignment, and the judge will
set a trial date.
The FBI, the Internal Revenue Service, U.S. Customs and the Arizona Corporation
Commission also were involved in the investigation.
Charges
A federal grand jury indicted the following for their involvement in a financial
scheme:
- Benjamin David Gilliland of Memphis, Tenn.
- William Harry West of Niceville.
- Kenneth Brian Cobb of Phoenix.
- David M. Bishara of Niagara Falls, N.Y.
- Melody I. Rose of West Palm Beach.
- David J. Johnson of Memphis, Tenn.
- Jerrold L. Gunn of Winnipeg, Manitoba, Canada.
- William Scott Dohan of London.
- Mark David Talley of Memphis, Tenn.
- Phillip L. Nesmith of Phoenix.
- Jeffery Alan Matz of Scottsdale, Ariz.
The 11 are charged with conspiracy to commit wire fraud and securities fraud and
conspiracy to launder money. Gilliland, West, Bishara and Rose also are charged
with specific acts of money laundering in 1998 and 1999.
If convicted, the defendants face up to five years in prison for conspiracy to
commit wire fraud and securities fraud and up to 10 years for each money laundering
count.