Spitzer Obtains Court Order Against Alleged Pyramid Scheme
Attorney General Spitzer today announced that his office has obtained a court order freezing the assets of A & A Global Resources, Inc. and its principals and directing the company and related individuals to appear before the court, give testimony and produce documents. It is alleged that the company engaged in a wide ranging pyramid scheme that targeted low income and elderly investors. Spitzer's office began the investigation after the community-based organization ACORN identified more than 1,200 victims.
The court order also seeks to enjoin the company from continuing to operate the business, and prevent them from absconding with property or money obtained from their fraudulent acts
The Attorney General alleges that AAGR, through its principals, Alfred Mills and E. Ann Alvarez, engaged in a systematic scheme to defraud investors out of millions of dollars by operating a pyramid scheme that promised potential investors guaranteed returns on their investments. AAGR conducted a membership program whereby members paid for the privilege of investing in the company. AAGR actively encouraged members to enlist their friends, relatives, and co-workers to participate in the scam, many of whom believed they were being offered safe investments. Rather than make money, investors found that the company used a network of community relationships as a way to further its fraud.
"It is especially troubling that these defendants exploited unsophisticated investors for their own benefit," Spitzer said. "We will continue to investigate this case, which is a classic example of an affinity fraud. This case demonstrates that those who seek to manipulate and defraud the unsuspecting public in their own communities will be held accountable."
Said ACORN Executive Director Bertha Lewis: "We've seen predatory lenders, red-lining banks, bad landlords --- we thought we'd seen it all, until the victims of this predatory investment scheme came to us. Now we have hard-working families' hopes and dreams, their hard-earned life savings, taken away. In some instances, we even have investors whose homes have been ripped out from under them. This economic injustice is so outrageous that ACORN will not stop fighting until the AAGR predators are stopped by the Attorney General's office."
The court order is based on numerous fraudulent practices allegedly conducted by AAGR. They include:
- Promissory Notes: Spitzer's office determined investors were offered promissory notes that guaranteed rates of return of up to 16%. However, AAGR made only partial interest payments on the notes and nothing thereafter. In some cases investors received no payments at all.
- Foreign Currency: Investors who believed they were investing in foreign currency found that their investments were unilaterally converted to promissory notes with no return on their investments.
- Residential Properties: Investors were offered the opportunity to invest and receive a joint interest in as many as three properties, which would be re-sold at profit. The investigation found that the properties were never acquired and no returns were paid.
- Foreclosure Assistance: AAGR offered assistance to help low-income homeowners stop foreclosure proceedings. Spitzer alleges that the respondents scammed people into signing over the deeds to their homes to AAGR or straw buyers with promises that the homeowners would be able to re-purchase their homes after a year. However, that never occurred because AAGR raised the purchase price and in some case eviction proceedings began.
Spitzer commended ACORN for the organization's assistance in the case, which is continuing.
The court order also seeks to enjoin AAGR, and its principals from continuing to operate the business, and prevent them from absconding with property or money obtained from their fraudulent acts. Individuals wishing to file a complaint against A & A Global Resources, or having any information about this scam should contact the Attorney General's Office at 1-800-771-7755.
This investigation is being handled by Assistant Attorneys General David D. Brown IV, Gary Connor, Hanna K. Flamenbaum and Nancy J. Haber of the Attorney General's Investment Protection Bureau and Dennis D. Parker, Tanya L. Washington and Natalie Williams of the Civil Rights Bureau, under the direction of Acting Deputy Attorney General Terryl Brown Clemons.