Nevada Secretary of State’s Office Works with U.S. and Canadian Agencies to Halt Multi-Million Dollar Ponzi Scheme
Carson City , NV –Investigators for Secretary of State Ross Miller, working with the United States Securities and Exchange Commission and the Canadian government, have issued a Cease & Desist Order to stop what they say is a $27 million Ponzi scheme being run by a Las Vegas-based company.
The order names Gold-Quest International and Tri-Fund, Inc., both using Las Vegas business addresses, and the companies’ principals, David Greene, John Jenkins, and Michael McGee. All three men have been served with subpoenas, and the companies’ bank assets have been frozen in order to prevent any further transactions.
The SEC charged Gold-Quest International and its three principals for the alleged misuse of investor funds in a scheme that promised incentives to investors who recruited "friends and family" into the system. The SEC alleged that Gold-Quest and its owners misrepresented that investor funds would be pooled and invested in foreign currency exchange trading and would generate annual profits of 87.5 percent. Virtually no investor money was actually invested in foreign currency exchange trading.
According to the SEC complaint, Gold-Quest's owners David M. Greene (who refers to himself as Lord David Greene), John Jenkins, and Michael McGee instead used investor funds to compensate investors who brought in new investors. Up to 88 percent of each investor's principal was paid to the chain of promoters responsible for bringing the investor into the Gold-Quest program. Most of the remaining funds were used by Greene, Jenkins, and McGee for personal expenses.
“Our office is pleased to be able to work with the U.S. and Canadian governments to put a stop to this scam,” said Nevada Secretary of State Ross Miller. “Again, it’s tough economic times that make these
so-called ‘investments’ with unrealistic returns look so attractive. To use unknowing victims to bring in more victims from their circles of family and friends is like creating an entire pyramid of unwitting, surrogate con artists.”
The Honorable Lloyd D. George, U.S. District Court Judge for the District of Nevada, issued an order freezing assets and appointing a temporary receiver over Gold-Quest and its affiliates. The SEC's complaint, filed in federal court in Las Vegas, alleges that since at least mid-2006, the defendants have raised and misappropriated more than $27.9 million from more than 2,100 investors in the United States and Canada. The complaint further alleges that, undisclosed to investors, the defendants paid more than $19.1 million as returns to other investors in this Ponzi-like scheme. According to the SEC's complaint, Gold-Quest and its owners claim they are not subject to the jurisdiction of the United States or Canada because they are members of the Little Shell Nation Indian tribe, purportedly headquartered in North Dakota. However, the Little Shell Nation is not in fact recognized as a sovereign tribe or nation.
In its lawsuit, the SEC obtained an order (1) freezing the assets of Greene, Jenkins, and McGee; (2) freezing and repatriating the assets of, and appointing a temporary receiver over, Gold-Quest and its affiliates; (3) preventing the destruction of documents; and (4) temporarily enjoining Gold-Quest, Greene, Jenkins, and McGee from future violations of the antifraud provisions of the federal securities laws. The Commission also seeks preliminary and permanent injunctions, disgorgement, and civil penalties against all defendants. A hearing on whether a preliminary injunction should be issued against the defendants and whether a permanent receiver should be appointed is scheduled for May 14, 2008 at 2:00 p.m.