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Michigan regulator Ponzi scheme by CUSO broker
LANSING, Mich. (3/9/10)--Michigan's Office of Financial and Insurance Regulation (OFIR) issued a cease-and-desist order against a broker who sold unregistered securities in a multi-million dollar Ponzi scheme while operating out of a credit union service organization in Ann Arbor. OFIR also has issued orders to revoke securities and insurance licenses of Mark Carpenter, who sold investment products through his company, TGBG Financial, while employed with CUSO Financial Services from June 2007 through October 2008. CUSO Financial maintained a securities branch office inside MidWest Financial CU. The credit union and CUSO Financial were not involved in the scheme. "This was a multi-headed Ponzi hydra," said OFIR Commissioner Ken Ross in a press release. "Bank records indicate that Carpenter got scammed and then set up his own scam. We found fraud within fraud involving working people who were robbed of their life savings. These were not high rollers," he added. OFIR said the investments totaled at least $5 million. It identified at least 12 investors who were MFCU members and 20 investors who were also CUSO Financial clients. An OFIR investigation found that in December 2007, Carpenter became a victim of a Ponzi scam involving bogus Arab crude oil bonds and operated by Michael Winans Jr. and his father, gospel singer Michael Winans Sr. of Detroit. Carpenter then sold interests in the phony crude oil bonds to his own clients, forming TGBG (for "To God Be Glory") to funnel funds into the Winans scam, said the OFIR. Carpenter also was involved with other frauds including an alleged gold mine developed by Ronald Brito and his company, GetMoni.Com, a Nevada-based corporation, and an Orlando, Fla. real estate development called the Blue Rose Orlando Project, OFIR said. The regulator said Carpenter transferred large sums to his personal bank accounts and used funds to invest in GetMoni, pay his personal and TGBG's expenses and pay interest or principal payments that were due to earlier investors in a classic Ponzi scheme style. The Winans, Brito and GetMoni.Com also have received cease-and-desist orders from the Michigan OFIR. Carpenter allegedly promised investors they would double their investment with 60 days (or 1,200% annually) and "guranteed" the returns. OFIR said it has accounted for $5 million that Carpenter and TGBG received in the schemes for investment. Roughly 47% was received by GetMoni, 18% by Carpenter and TGBG, 17% by Mike Winans and the Winans Foundation, and 4% by a friend, James Smith and his businesses. The remaining 14% was disbursed to investors as alleged interest payments, said OFIR. OFIR has handed the results of its investigation to law enforcement agencies. Violations of the Uniform Securities Act are subject to a criminal penalty of a maximum of $25,000 for each violation, or imprisonment of up to 10 years, or both.
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