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Merchant Portfolio Scam Ends With Prison
Written: September 17, 2012

Magician's Hands, No. 11 - Showing the cards

Are you being offered a real business opportunity or is it all part of a card trick? (Photo credit: Fifth World Art)

In 2006, James E. Rotterman, 33, Orchard Park, NY began to advertise on www.BizBuySell.com  that he had business for sale – in order to get out the word, Rotterman had formed JRCG Holdings, LLC and Warlord Media, LLC. If you came upon one of Rotterman’s online ads, you would have learned that he supposedly had profitable merchant portfolio accounts for sale and that these money-making businesses would provide you with cash flow. 

SIDE BAR:Rotterman was likely one of thousands of BizBuySell.com users who advertise on that platform. To that extent, online enterprises such as BizBuySell are frequently collateral damage in schemes such as Rotterman's.  Notwithstanding efforts many such DotCom businesses take to preserve their organization's integrity and credibility, fraudsters typically go to even greater lengths to circumvent the platform's quality controls and consumer protection surveillance. Ultimately, not only are fraudsters like Rotterman trying to screw unwary buyers of their services but they also hope to evade setting off the alarms on sites such as BizBuySell -- ultimately creating two sets of victims.

Anyway, if you were intent on doing some due diligence and asked for information about these supposedly fabulous opportunities, Rotterman sent you emails and financial documents showing profit statements, banks statements, and tax returns.  Okay, maybe that did the trick and you were one of the hundreds of investors that Rotterman attracted between 2006 and 2010 to the tune of $6 million.

Okay, now, let’s slow yer roll.  Just a bit – ease back on the gas. Before you too plunge in to this exotic world of merchant portfolio accounts, you should know that there are a lot of dubious looking online offers to buy/sell these things and it’s all a bit too rah-rah for my tastes.  And puhlease, don’t start in with what you’ve seen on Facebook or found through a Google search or learned about on Craigslist. Really?  That’s your concept of adequate due diligence?

You know those profit statements disseminated by Rotterman to corroborate his claims about how much moolah investors could make? Bogus.

You know those bank statements? Bogus.

You know those tax returns? Bogus.

The whole business for sale thing? Bogus.

True, some investors got payments but, in fact, the source was either their own investments or a Ponzi like sleight of hand from the pockets of others who were duped.  As to the balance of investors’ funds, well, Rotterman used that to support his own lifestyle, replete with large gambling debts.  The gross total of investor losses is likely over $5.1 million.  And that’s not the least of Rotterman’s troubles – seems that for tax years 2008 and 2009 he didn’t declare the income from the funds he received from those he duped.

On September 14, 2012, after previously being convicted in federal court on wire fraud and tax charges, Rotterman was sentenced to six years in prison and ordered to pay restitution of over $4.5 million  — good luck with that.

For more fun and games, READ:

Make Millions Leasing A Line Of Credit Or Go To Jail

Business Opportunity Fraud From Sunny Costa Rica


 
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