Friday, January 15, 2010

Man Sentenced to Over 13 Years in $21 Million Ponzi Scheme That Cost Dozens of Victims Their Life Savings

LOS ANGELES—After hearing from 15 victims who described the ramifications of losing their life savings, a federal judge yesterday sentenced an Orange County man to 159 months in prison for operating a Ponzi scheme in which victims lost more than $21 million.
John Anthony Miller, 52, of San Clemente, was sentenced Monday afternoon by United States District Judge Christina A. Snyder. Miller pleaded guilty last March to a mail fraud count related to the Ponzi scheme, as well as bribery, passport fraud, and identity fraud charges resulting from his attempt to procure a fraudulent passport and flee the country after his scheme collapsed.

From 2000 through November 2008, Miller operated a Ponzi scheme through his Newport Beach-based investment companies, JAM Jr. Enterprises and Forte Financial Partners. Miller made promises of “guaranteed” annual returns of as much as 18 percent per year, telling investors that their money would be invested in foreign currency trading, oil wells, real estate and other vehicles. During the course of the scheme, Miller provided investors with monthly account statements that falsely represented they were earning the promised returns. In fact, Miller had never earned any real profits from his investment activity and, in the pattern of a typical Ponzi scheme, used money from some investors to make Ponzi payments to other investors.

Over the course of his scheme, Miller defrauded more than 130 people out of more than $21 million, taking millions of dollars that some victims withdrew from IRA retirement savings accounts and others borrowed against their homes.
In court filings, prosecutors quoted from some of the letters victims sent to Judge Snyder. A husband and wife, one of whom was suffering from colon cancer, lost more than $800,000. Now in bankruptcy and suffering from regular nightmares, they wrote: “They say time heals all wounds, but not in this case. The impact on our lives has been like a cancer growing and festering and has caused irreparable and unrecoverable damage to our lives, not just financially but emotionally and physically.”
They added: “Miller raped us of our money, our dignity, and any hope of a decent future.”

In sentencing papers, prosecutors argued that Miller was “amongst the most egregious of any investment fraudster or Ponzi schemer this Court will ever see. He didn’t just solicit fraudulent investments through mailings or mass marketing, like many fraudsters do. He didn’t just interact with victims over the telephone or at investment seminars, like many others. [Miller] lied to people in person, up close, sitting in their living rooms or at their kitchen tables, knowing full well the vulnerability of his victims and the inevitable devastation his deceit would cause them.”
The mail fraud charge is the result of a September 26, 2008 letter that Miller sent to investors, in which he falsely stated that investments made with him were performing well despite the economic downturn, and that his companies had more than $150 million in assets and only approximately $30 million in liabilities. In reality, at that point Miller and his investment companies were nearly out of money, his fraud scheme was collapsing, and he was considering fleeing the country.

Miller was taken into custody in November 2008 as he was preparing to leave the United States. The month before, Miller told a former associate that he wanted to obtain a fraudulent United States passport under a false name that he could use to flee the country. Miller and the former associate discussed the countries that they thought would be best to flee to, including those that did not have extradition treaties with the United States. On November 12, during a meeting at the Federal Building in Westwood with an undercover State Department agent whom Miller believed was a corrupt passport officer, Miller paid a $5,000 bribe to secure a bogus passport that was to be in the name of a former high school classmate who had recently died. The $5,000 came from money collected during his fraud scheme. After Miller completed the fraudulent passport application in the name of his deceased high school classmate and handed the undercover agent $5,000 in cash, he was arrested by agents of the Federal Bureau of Investigation.

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