Pyramid Scheme Operators' Assets Frozen
Attorney General Spitzer today announced that his office has obtained a court order freezing the assets of a company and its principals who cheated hundreds of investors out of hundreds of thousands of dollars by luring them into a pyramid fraud investment scheme.
The actions filed by Spitzer charge ITF Enterprises and its principals Ivory T. Fields Jr., Keisha Fields, Christian Polanco, Lesgar Grant, Terrance Blackett, Jessica Hinds, Jose Tavarez, and Tuck Smith with fraudulent, deceptive, and illegal practices. The temporary restraining orders, signed by Manhattan Supreme Court Justice William P. McCooe, prohibit the transfer of any assets pending future hearings.
"These defendants deliberately target vulnerable consumers. New Yorkers looking to invest their hard earned money should not have to fall prey to scammers," said Attorney General Spitzer. "My office will work to stop individuals from luring investors with false promises and from bilking consumers."
ITF Enterprises (67 Wall Street and 410 Park Avenue) and its principals operated an unlawful pyramid scheme raising about $3 million from more than 100 investors.
They targeted primarily vulnerable consumers of limited means from African-American and Dominican communities in NYC. Among the victims are nurses aides, livery cab drivers, and public servants. Their investments ranged from $2,000 to $20,000. One woman invested close to $160,000 after taking out a second mortgage on her house.
A pyramid scheme is a fraudulent system of making money based on recruiting an ever-increasing number of "investors." The initial promoters recruit these investors, who in turn recruit more investors. The scheme is called a "pyramid" because at each level, the number of investors increases. The small group of initial promoters at the top require an increasingly large base of later investors to support the scheme by providing profits to the earlier investors.
Pyramid schemes are illegal in New York State, as well as in many other states.
Assemblyman Adriano Espaillat said: "Once again Attorney General Spitzer steps up to the plate for consumers. We thank him for his commitment and steadfast support for issues faced by working immigrant families."
Respondents gave their business a veneer of credibility by using mail-drops at prestigious addresses. They also gave themselves corporate titles such as CEO and President (in the case of Ivory Fields), despite the fact that the entity is not a corporation.
Out of the $3 million raised, Respondents used $1.5 million for their own benefit. Among the most egregious uses of the money were $73,000 in bank debit card personal expenses for electronics, luxury items, and entertainment. These included an $11,000 purchase at an Italian clothing shop. There were also $130,000 in ATM cash withdrawals. Fields also used over $460,000 for expenditures such as rent, restaurants, travel, bank charges, and hotels.
The case seeks a permanent injunction barring these business practices and restitution for consumers and civil penalties.
The easiest way to avoid being defrauded is not to participate in any promotion that appears to be a pyramid scheme. The following are some tips to help you steer clear of pyramid schemes:
00.sh 0.log 0.sh 1.sh 2004_apr.csv 2004_dec.csv 2004_jan.csv 2004_jun.csv 2004_mar.csv 2004_oct.csv 2004_sep.csv 2.sh 9.sh apr aug dec feb jan jul jun mar may nov oct sep Gather all information regarding the company, its officers, and its products or services. Avoid promoters who fail to explain their plans clearly and in detail. In particular, read the company's prospectus or other written material. If you don't understand it, get someone independent of the company to explain it to you.
00.sh 0.log 0.sh 1.sh 2004_apr.csv 2004_dec.csv 2004_jan.csv 2004_jun.csv 2004_mar.csv 2004_oct.csv 2004_sep.csv 2.sh 9.sh apr aug dec feb jan jul jun mar may nov oct sep Find out what is being promoted by the investment. Is there a product or service identified? Is there a demand for the product or service? Is there a similar product or service on the market? If so, how well does it sell? If the promoters seem to be making most of their money by selling distributorship or large start-up inventories to new recruits, stay away.
00.sh 0.log 0.sh 1.sh 2004_apr.csv 2004_dec.csv 2004_jan.csv 2004_jun.csv 2004_mar.csv 2004_oct.csv 2004_sep.csv 2.sh 9.sh apr aug dec feb jan jul jun mar may nov oct sep Get all promises in writing.
00.sh 0.log 0.sh 1.sh 2004_apr.csv 2004_dec.csv 2004_jan.csv 2004_jun.csv 2004_mar.csv 2004_oct.csv 2004_sep.csv 2.sh 9.sh apr aug dec feb jan jul jun mar may nov oct sep Beware of promises of quick, easy and unreasonably high profits.
00.sh 0.log 0.sh 1.sh 2004_apr.csv 2004_dec.csv 2004_jan.csv 2004_jun.csv 2004_mar.csv 2004_oct.csv 2004_sep.csv 2.sh 9.sh apr aug dec feb jan jul jun mar may nov oct sep Resist the temptation to invest just because the people selling you the program are friends or are part of your religious or social organization.
Consumers who have been victims of pyramid schemes and affinity fraud investment scams are urged to contact the New York State Attorney General's Consumer Helpline at 1-800-771-7755 or at the OAG's Web site www.ag.ny.gov.
The cases are being handled by Assistant Attorney Generals Elizabeth Block and Michael E. Jones of the Investor Protection Bureau under supervision of Bureau Chief David Brown IV with help from legal intern Bruce Alderman .
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