On November 29, 2010, William Graulich IV, 54, Henryville, PA, purported managing partner of iVest International Holdings, Inc., was charged in a federal criminal Complaint for conspiring to perpetrate a multimillion-dollar investment fraud using interstate wires. Allegedly, Graulich and unnamed co-conspirators represented that they had an "exclusive" investment platform available by invitation only, and that had been previously open only to those able to invest at least $100 million.
Oh my, it's exclusive. By invitation only. And it's always been limited to high rollers but, hey, just for you, this one time, I'm gonna make an exception. I'm even gonna waive the $100 million fee but just this once. Ya gotta keep this quiet because these things are usually only open to institutions like Goldman Sachs, JP Morgan, Citigroup, Bank of America, and Wells Fargo. Ya hear what I'm sayin'?
As the feds tell it, Graulich and his co-conspirators pitched this investment platform scam to a number of targets as involving no risk and all invested funds would be used as collateral to obtain a line of credit, which would be used to trade financial instruments, including "Medium Term Notes" and "Standby Letters of Credit." Even more importantly, investors were promised weekly returns of 22 percent.
As if that fabulous deal weren't enough, investors were promised that all funds would be deposited into a super safe and secure "non-depletion attorney account." What's a non-depletion attorney account, you ask. Great question. However, since that whole concept is nonsense to begin with, don't expect the answer to be anything more than garbage piled on top of garbage.
Yup, here we go again. Absolutely safe. Astronomical returns. In a non-depletion attorney account, which, I can tell, you're a smart fellow and I don't need to explain what that's all about, right? All done as a favor to you. Lemme know quickly, okay, I can't hold this open for you forever.
Based on Graulich's false representations and willingness to waive the purported $100 million minimum investment requirement, in August 2008, one victim wired $2.8 million into the conspirators' purported non-depletion attorneys account at J.P. Morgan Chase Bank. A second wire was sent for $1.6 million in November 2008. From December 2008 through January 2009, the investor actually received back about $1 million in promised returns.
Wow! Maybe this was for real and Bill Singer is just a nasty stick in the mud.
Of course, the investor did wire out some $4.4 million and only got back, so far, $1 million, so that leaves, what, lemme do the math here, carry the 1, add 3, multiply by something: Oh, yeah, Graulich is still sittin' pretty with about $3.2 million of the victim's moolah. Hmm . . . maybe that $1 million wasn't from profits but just part of the sting?
When federal investigators reviewed the J.P. Morgan "non-depletion account," they determined that immediately upon receiving the $2.8 million wire in August 2008, Graulich wired that money to his personal Chase Bank account. Graulich used that money to make payments on such personal expesnse as to Bennett Jaguar, CVS, Bushkill Golf, Stone Bar Inn, Gulf Oil,Verizon, and DIRECTV. Much the same happened after the November 2008 $1.6 million wire. From that second deposit, Graulich sent the investor the bogus $1 million "return on investment" but used the balance of funds to make $100,000 in tax payments, approximately $10,000 in mortgage payments, approximately $25,000 in legal bills, and approximately $100,000 for New York Yankees tickets.
If convicted, Graulich faced a maximum potential penalty of 30 years in jail and a $1 million fine. On May 17, 2012, Graulich, after previously pleading guilty to conspiracy to commit wire fraud, was sentenced to 70 months in prison, three years of supervised release , and ordered to pay $3.6 million in restitution.
"Street Sweeper" readers know that I have often warned against investing in so-called "investment platform" or "trading platform" deals. Frankly, I don't think that I've ever seen an honest one. For some further guidance, read this past articles:
FOREX Trading Platform Scam Ends In Guilty Plea (March 19, 2012)
UPDATE:The Lawyer, Judge, Financial Wizard's Tranche Trading Platform Deal (September 29, 2012)