Madoff, GM, UBS Name Droppers Charged In Federal Investment Fraud

April 19, 2012

Bernie's back -- well, sort of

On April 18, 2012, a criminal Complaint filed in federal court in Brooklyn, NY, alleged that from December 2008 and April 2012, three defendants had participated in a $15 million investment fraud:

  • Peter Liounis: wire fraud;
  • Ruslan Rapoport: conspiracy to commit wire fraud and money laundering; and
  • Roman Tsimerman: money laundering

NOTE: The charges in the Complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The Complaint alleges a three-part conspiracy:

The Rockford Group

From approximately December 2008 to November 2009, Defendant Liounis and his co-conspirators allegedly executed a fraudulent investment scheme through a company called the Rockford Group, which was marketed as a "leading private equity firm." According to the Complaint, the Rockford Group promised investors a 15% return derived from  investments in plaintiffs' rights to future recoveries in personal injury and other lawsuits; however, nearly all of the investor funds were purportedly wired to overseas bank accounts - resulting in some 200 U.S. and Canadian investors being defrauded out of about $11 million.

General Motors IPO

The Complaint also charges that in September 2010, an individual who had been solicited by a "James Weston" to invest in the Rockford Group began receiving calls from someone who sounded like Weston, but was now identifying himself as "Andrew Black from UBS." Black solicited multiple investors to invest in an General Motors  initial public offering (IPO).  Prosecutors claim that there was no Andrew Black at UBS and that this scheme was purportedly halted in its early stages enabling the return of most of the investors' funds.

Grayson Hewitt

The third-part of this alleged scheme occurred around  March 2011, when investors were purportedly contacted by a person who sounded like Andrew Black and James Weston, but was now identifying himself as "Mark Anderson from Grayson Hewitt." Anderson pitched a deal similar to Rockford Group's involving rights to future lawsuits' recoveries. Federal prosecutors claim that Black/Weston/Anderson was Defendant Liounis.

Federal prosecutors allege that court-ordered wiretaps recorded conversations during which an investor's son asked for the return of his father's investment following his parent's heart attack - the money was to be used to place the investor in assisted living.  Notwithstanding prosecutors' assertion that the father's account at Grayson Hewitt had a $23,000 balance, Defendant Liounis allegedly informed the son that his father had depleted the balance down to $3,000.  TheComplaint alleges that Liounis sent a get-well fruit basket to the father.

In another alleged wire-tapped call, a Grayson Hewitt investor expressed skepticism about the company, noting "I see this as a Bernie Madoff deal. . ." Defendant Liounis  is reported as having responded, "This is no way, no how, a Bernie Madoff…believe that…You gotta understand, the amount of money we handle here, uh, we'd go away for a h*** of a lot longer than Bernie did."

The Complaint asserts that the defendants and others misused investor funds to purchase gold, meals, clothing, and other consumer items. Defendants Rapoport and Tsimerman are charged with assisting in the transportation of gold that was purchased by Grayson Hewitt, with one purported shipment costing Grayson Hewitt $100,000.

Based on bank and financial records, it appears that the Grayson Hewitt scheme resulted in approximately $5 million of losses to investors.

If convicted, Liounis and Rapoport each face a maximum sentence of 20 years in prison, and Tsimerman faces a maximum sentence of 10 years in prison.

Bill Singer's Comment

On April 13, 2012, that I published another "Street Sweeper" column about another General Motors IPO stock scam - which also managed to extend to Facebook, Groupon, and other issuers: "SEC Persian Jewish Affinity Fraud Case Is Not A New Bravo TV Series."Some of you accuse me of being too cynical - moi?  Among my oft-repeated laments that seem to provoke many of you to wag your finger at me is when I roll my eyes in response to some prosecutor's assurance that a given case has finally "sent a message" to the underworld and that future wannabe fraudsters will somehow be deterred from their nefarious deeds.  As if.

When some Wall Street regulators assure us that they've made significant inroads against fraud and corruption, I can barely contain my laughter.  You haven't even scratched the surface.  When prosecutors crow after a guilty verdict that some message has finally be sent and that it will serve as a deterrent, I often wonder whether their fingers are crossed behind their back when they speak into the microphones.  You really think that Madoff was a deterrent?  Really?? Okay, go back and listen to the wiretapped recordings in today's case. They're merely using Madoff as a prop to further a new fraud.  Some deterrence.

Hey, ya gotta minute? My name is William Nohtell and I'm a Senior Vice President with Merrill Lynch, Smith Barney, JP Morgan, and Goldman Sachs; and I've got this amazing opportunity for you to own a piece of the red lights in the crosswalks all over New York City.  How come I'm employed at all those brokerage firms? Hey, sonny, step aside, yer askin' too many questions - let your folks come closer.  Anyway, here's the deal, for $1 million I can sell you the rights to the red lights in the Big Apple's traffic lights - they make about eight cents a blink and you get two cents of that, each time. How does that work - hey, trust me, it's too complicated to explain but I ain't no Madoff or Stanford and if you're gonna insult me like that, then get lost. Now, will that be cash or charge?