Spanish Doubloons, Spanish Realty, and US Prison

October 15, 2014

You should be thrilled to learn that the venerable Lloyds & Associates Management Ltd. is involved in this deal that I'm going to pitch to you. You know that name and what it stands for. Need I say more? Lloyds & Associates Management Ltd. is a highly regarded international business that handles collectible coins and precious metals.  Given the tenor of these times, those are two hard assets that every diversified portfolio must contain. One further point, and this is by way of reassurance, we've all been reading about far too many fly-by-night coin and metals companies - you probably saw some of those scams on cable television or read about them being shut down by the authorities. I don't want you to worry about any of that.  Lloyds & Associates Management Ltd. has brought in Pinnacle Depository Service to ensure the safety of your investments. Pinnacle Depository Service ranks about the most conservative coin depositories on the planet and its secure storage facilities are legendary in the industry. But you knew that already, right?

Okay . . . let's stop here. I don't know what the hell you think you know or knew, and I don't know what you may have confused but let me clarify a few things. 

I never heard of Lloyds & Associates Mangement Ltd. or Pinnacle Depository Service, and I've been working on Wall Street since 1982 - and I collected coins since the 1950s. Yes, there is a famous "Lloyds" but this isn't it. Oh my, imagine that, someone used a well-known name and tricked you.  Now, maybe you should re-think your planned investment in Morgan Lynch & Sachs International Securities Dealers? 

Similarly, you don't know me - you may think that you know me but I'm just this disembodied voice speaking to you from a computer or smartphone screen.  For all you know, I could be some con artist in Asia or Latin America pretending to be the very handsome and brilliant United States attorney Bill Singer.

What I do want you to learn . . . and what I'm hoping you are now starting to process . . . is that good cons, great scams, all rely upon having the victim fill-in a lot of blanks.  Savvy fraudsters don't spoon feed their pigeons; to the contrary, you let the mark figure that he or she is "in" on the whole deal from the beginning; and if that investor mistakenly infers that a reputable company is protecting their money or that they are dealing with some well-known investment guru or firm, hey, all the better.  

Using my sales pitch above as a starting point, let's take your mind-set and plug it in to some actual facts from an actual criminal prosecution.  

Coin of the (Un)Realm

From 2002 to January 2005, federal prosecutors allege that Anthonie R. Sparrow a/k/a "Ronnie Sparrow" and Masroor A. Khan a/k/a "Maz Khan," "Mazhar Akhtar," and "Mazhar Kahn," perpetrated a  coin investment scheme whereby those two defendants solicited victims to invest in rare, collectible coins through Lloyd's & Associates Asset Management Ltd., and those coins would be deposited in the secure storage of Pinnacle Depositor Service. Oh, and as these rip-offs now tend to work, there was a lovely website where you could gain daily valuation about all of your rare coin investments.  If you really, really insisted on physically inspecting some of the coins, you would be rebuffed and deflected - but if you were a persistent pain in the ass, Sparrow, on rare occasions, would trot out a few of his prize pieces to assuage your concerns.  

Unbeknownst

Given the international expanse of their scheme, Sparrow operated the New York offices of both LAM and Pinnacle; and Khan operated the Spanish office of LAM. Allegedly, the defendants divided their territories up in such a fashion that Khan got to pitch the deal to European investors. Investors were instructed to wire their payments to LAM's New York-based bank accounts at JP Morgan Chase Bank. Unbeknownst to those victims, the funds were soon transferred to LAM's Cyprus-based bank account. 

Spanish Doubloons To Spanish Realty

By 2004, investors were becoming concerned and began to demand the liquidation of their holdings and the forwarding of their proceeds.  At some point, the defendants allegedly tried to convince some victims to sell their coins and invest the proceeds in some Spanish real estate venture. As these things go, when the heat got too hot, in January 2005, the New York office of LAM closed and Sparrow (at the time a U.S. citizen) fled to Spain. And that's $15 million in lost investments later!

Caged Sparrow

In 2009, Sparrow, 53, of Estepona, Spain was indicted in the Southern District of New York and eventually extradited from Spain in August 2013. On February 26, 2014, Sparrow pled guilty to one count of conspiracy to commit wire fraud and one count of wire fraud. He faces a maximum sentence of 20 years in prison on each count. He also agreed to forfeit $16 million to the United States.

On October 6, 2014, Sparrow was sentenced to 65 months in prison.

No Khan Do

Khan, a citizen of the United Kingdom, remains a fugitive from the charges contained in the Indictment.

NOTE: An Indictment merely contains allegations and Defendant Khan is presumed innocent unless and until proven guilty in a court of law beyond a preponderance of the evidence. 

READ the full-text IndictmentU.S. v. Anthonie Sparrow and Masroor Khan (SDNY, 09-CR-1197)