April 17, 2011

http://latimesblogs.latimes.com/money_co/2011/04/payday-loans-foreign-currency-ponzi-scheme.html

Here is a roundup of alleged cons, frauds and schemes to watch out for.

Payday loans – The Federal Trade Commission has filed a complaint accusing two men and their Las Vegas companies of participating in a scheme to unfairly charge people who inquired on in the Internet about payday loans. According to the FTC’s complaint, Michael Bruce Moneymaker, Daniel De La Cruz, and their companies obtained consumers’ personal information from websites that claimed to match consumers with payday lenders and then enrolled them in worthless “continuity” programs. These programs included an up-front cost of up to $49.99 each, plus additional weekly or monthly recurring fees of up to $19.98. Continuity programs charge recurring fees until a consumer takes action to cancel. At the FTC’s request, a federal court temporarily ordered the defendants to stop the practices, froze their assets and appointed a receiver to take control of the business and its assets. The FTC complaint seeks to stop the practices and make the defendants provide refunds to consumers.

Shopping discounts – Two men who stole $8 million by promoting a bogus shopping club have been convicted of grand theft and securities fraud. Patrick M. Ryan, of Canyon Lake, Calif., and James A. Sweeney II of Tennessee were accused of luring consumers to pay dues and invest in a Riverside company, called Big Co-Op Inc., by promising discounts, rebates and commissions for bringing in new customers. The company generated $1.2 million in revenue from 2005 to 2006 and an additional $7 million through the promotion of an initial public stock offering that never took place, prosecutors said. The pair are scheduled to be sentenced June 14 in Riverside County Superior Court.

Ponzi scheme – A Santa Barbara man has been sentenced to nine years in prison for stealing $8 million from victims of a Ponzi scheme, the U.S. attorney’s office said in a news release. Peter Frommer, 35, pleaded guilty in November to wire fraud, money laundering and failing to file tax returns. He was accused of running the scheme through two companies, Cap Exchange and Cap X, telling victims that he would invest their money in surplus property from defunct companies. Instead, he used the money to make interest payments to early investors and to buy a $20-million Malibu mansion, prosecutors said.

Foreign currency – A Los Angeles man has been accused of defrauding investors of nearly $3 million by promising to invest their money in foreign currency but instead spending it on personal expenses, including nearly $1 million at Las Vegas casinos and a $130,000 car. In a criminal complaint, federal prosecutors accused Lyndon Parrilla of producing false statements to deceive investors into believing he was investing their money instead of spending it on himself.