Published: Sat, October 9, 2010 @ 12:08 a.m.

http://www.vindy.com/news/2010/oct/09/feds-file-charges-in-ponzi-scheme/

Kevin L. Harris of Warren, accused in lawsuits of operating a Ponzi investment scheme in 2006, 2007 and 2008, now is charged in federal court with wire fraud and money laundering.

U.S. Attorney Steven M. Dettelbach of the Northern District of Ohio said Harris, 45, and others facilitated the scheme through the Parkman Road, Warren, company Complete Developments LLC, and another company. The charges allege they attracted $20 million in investments that were purportedly re-invested in start-up companies, inventions and foreign currency.

The charges relate to the same scheme his investors, most of them from Toronto, Ontario, spoke of in their lawsuits in state and federal courts. The crimes carry penalties of more than 30 years in prison.

On Thursday, Harris waived prosecution by indictment and agreed to prosecution by information, which usually means the defendant has agreed to plead guilty to the charges.

No hearings have been scheduled in the case, but federal Judge Lesley Wells in Cleveland and Magistrate George Limbert in Youngstown have been assigned.

Complete Developments and Investments International Inc. promised investors a return of 7 percent to 12 percent per month on their money and said at least 80 percent of the money was safe from loss, Harris’ charges say.

In reality, the investments were being used to pay Harris and his employees, finance the costs of the businesses, obtain automobiles, and travel to Canada, Mexico, Panama and the United Arab Emirates, Dettelbach said.

According to charges, Harris and his associates “paid some investors purported ‘interest’ payments for a period of time so as to give the false impression that there were actual investments, when, in truth ... as part of a classic Ponzi scheme, [Harris] and others well knew, any ‘interest’ payments came from other investors’ funds.”

Atty. Harry Wise III of New York City, who filed a suit in federal court against Harris and his associates, told The Vindicator this summer that Harris’ companies took in $42 million and paid out $29 million in interest. Investors are still owed the rest of the money and the money they were promised, Wise said.

Based on information secured as a result of filing a federal lawsuit against Harris and his associates, Harris’ companies invested almost nothing in the industry Harris claimed to be most involved in — foreign-currency exchange, known as Forex, Wise said.

Harris’ charges say he committed wire fraud by having investors wire money to a Warren business bank account. Some specific wire transfers mentioned in the charges were for $220,000 from a bank in Maryland and $70,000 from a bank in Quebec.

The charges say Harris committed money laundering by withdrawing $26,588 from the Warren bank on April 28, 2007, to pay $21,588 to Preston BMW of Warren to lease a 2007 BMW Z4 automobile for his personal use.

Dominic Ventura, one of the Toronto investors, when reached by phone Friday, said Harris’ charges are “good news,” but his ultimate hope is that Harris will be required to pay restitution to the victims.

“My dream is 100 percent” restitution, Ventura said, adding, “I hope he has something to give back.”

Ventura and about 200 other Toronto-area investors appealed the January 2010 dismissal by Magistrate Limbert of their federal lawsuit against Harris, his brother, Keelan Harris, 34, also of Warren, and a Toronto woman.

In dismissing the suit, Limbert said it was not specific enough in describing “the circumstances surrounding the alleged fraud.”

Kevin Harris, a 1983 Harding High School graduate, has been a journeyman with the local electrician’s union since 1991 and has helped operate a family-owned Parkman Road repair shop over the years. He once lived on Garden Street Northwest but frequently uses the Parkman Road shop as his address.

Kevin Harris spent a short time in prison for his role in a 1995 Warren arson and has been sued or charged criminally in Warren more than 55 times since 1994, a Vindicator investigation found.

Keelan Harris has been sued at least 13 times and faced misdemeanor- and felony-criminal charges in Warren and Youngstown six times, including state and federal prison sentences of more than three years after he broke into the Champion License Bureau in 2003 and took equipment used to make driver’s licenses.

Ventura said he was unaware of the legal problems and criminal convictions of the Harris brothers when he invested in Complete Developments.

Mike Tobin, public affairs specialist for the U.S. attorney’s office in Cleveland, said the case against Harris and his associates is still “open,” but he cannot say whether charges will be filed against any of Kevin Harris’ associates.