Guilty Plea In 6 Percent US Treasuries Scam

September 9, 2013

Until March 2011, Gary H. Lane, Reno, NV, was employed as a financial adviser by Bank of America Investment Services, which later merged with Merrill Lynch. If you had met Mr. Lane, he may have launched into a spiel about how he could make you some serious bucks. Breathlessly, he may have told you that he had this E*Trade account that allowed him to circumvent normal Bank of America procedures. There was some talk about U.S. Treasury Bonds and safe, short-term, high yields.


You see, right there, you should have waved this character off and told him to take a hike. After all, he was an adviser at Bank of America Investment Services / Merrill Lynch -- and the reason that Lane wasn't offering this wonderful opportunity through his employer was what exactly? Taking things to yet another level of skepticism, this transaction is going to be run through an E*Trade account?  That's the firm with the asterisk in its name and the talking baby commercial? 

Okay, so, sure, in hindsight you agree; you should have run away from Lane as fast as your feet could take you but his investment program sounded interesting . . . interesting in the way that many shady deals do and in the way that inexplicably attracts far too many investors.

Baited Hook

Apparently not being a complete fool, Lane seems to have thought through his scam and he targeted the elderly and the inexperienced.  My guess is that he figured that such folks had an appetite for high returns and were relatively easy prey  Lane dangled a juicy worm on his hook: good old U.S. Treasury Bonds paying over 6% with a two-year maturity.  Yes!! The little fat fishies bit down on that bait and all Lane had to do was reel ‘em in.

Bait And Switch

Where did the victims' investment dollars go?  Oh, surely you didn't expect into USTs, did you? No - the cash went to Lane's wife, who deposited the funds into her personal E-Trade account; thereafter, the funds were withdrawn and used by Lane for his own purposes and, a la Ponzi, to pay earlier investors. 

For those victims who asked for proof of their investments, Lane provided them with fabricated confirmations. Lane never purchased any USTs.

Undue Diligence

Oh, one more thing, at the time of Lane's solicitations, you couldn't buy a UST with a two-year maturity and 6%-plus return.  Frankly, anyone could have - and should have - at least looked that fact up as part of due diligence; however, that's how these con games work.  The fraudster spins a tale too good to be true, folks believe what they shouldn't, and, in hindsight, no one really bothered to confirm and verify anything. 


In August 2012, Lane, 59, was indicted in federal court in Reno, NV, on 12 counts of felony mail fraud and 5 counts of felony tax evasion charges alleging that from 2010 to 2011, he had defrauded six persons out of over $2 million. The Indictment alleged that Lane had also filed false and fraudulent individual tax returns for the years 2006 through 2010, substantially understating his income and tax due and owing to the IRS. If convicted, he faced up to 20 years in prison for each mail fraud count and up to five years in prison on each tax count, as well as fines of up to $250,000 per count.

On September 3, 2013, Lane pleaded guilty in federal court in the District of Nevada.

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