Investor Fraud – Anatomy of a Conman – Identifying a Ponzi Scheme and Scam Artists – Part III of III

Part III of III in this alternation of online writing on Ponzi schemes will appraise a absolute world, advancing scam, the con man abaft it and a few of the hundreds of investors victimized by his bent enterprise, Millennium III Corporation.

History: At an aboriginal age, Gregg Scott Luce was falsely led to accept that his Maine based claret band was anon affiliated to the acclaimed Time-Life Henry Luce legacy. It’s cryptic whether this aberration was absolute aural him by claimed dementia or a aggregate familial dementia. Luce fled his awful abortive ancestors at age nineteen and began trafficking in marijuana. Aural a 5 year period, petty trafficking grew to above distribution: burden planeloads of product, abundant of it brought in anon from Jamaica.

Ten years into this venture, Luce accomplished that a abundant greater accumulation allowance was to be accomplished in trafficking cocaine. It was the aboriginal 1980’s and cocaine was a accustomed and accustomed recreational biologic amidst the establishment. There wasn’t the stigma absorbed to the analgesic that exists today. Luce was apprenticed to the quick fix by impatience, an ambitious spirit, adamant and great ambition, and an clamorous appetite for the recognition, banknote and accumulation that had eluded his ancestors for the bigger allotment of a bearing as it strived, futilely, to analyze itself with the gilded Time-Life Luce lineage.

Sociopathology, abandoned absent focus and alienation to the physique calculation in his wake, both in actuality and figuratively speaking, accustomed Luce to authorize a anchorage of access administration hub in Seattle, Washington, and rapidly boss the bearding US Northwest territory. Coming from a ancestors of bartering fishermen, Luce was able-bodied abreast in abyssal maps. The Pacific Northwest’s unsettled, bound bank accustomed camouflaged admission and departure of carriage planes from Colombia. Luce busy a berth and houseboats off Lake Washington, hosting cocaine fueled parties frequented by arresting breadth artists, business leaders, attorneys, politicos and bankers.

Within a 5 year aeon of time, the administration arrangement continued arctic to Canada and as far Southwest as Aspen, Colorado, area his cartel’s authoritative aggregation oversaw operations. The growing business invested in a Nascar chase team. Artefact was transported to merch bead believability in trailers acclimated to bear cars and pit accessories from city-limits to city.

As with a lot of narco-centric businesses, Luce’s adventure operated on adopted time. If the DEA and Feds bankrupt up the biologic ring, all chief personnel, save for one individual, escaped. The captured accessible banned to about-face state’s evidence, acceptance his assembly to agilely seek out added business opportunities. Luce took a two year aperture lying low and pored over contempo bread-and-butter trends. It was the aboriginal nineties and the Nasdaq balloon had amorphous to gestate. Silicon Valley, Boston, Austin and Seattle were the new Wild West. Greed and blooming were in the air. In the fast paced apple of new media startups, the “cocktail napkin to boardroom” archetype ruled, as did drugs, violence, treachery, and acknowledged manipulation: contrarily accepted as Twenty-First Century accumulated best practices. Easy deals were the bill of success; futures affairs and penny stocks were the new blow. The accurate vetting of business affairs demurred to the alacrity of getting aboriginal to bazaar with a accustomed artefact . Adventure capitalists indiscriminately showered IT neophytes and veterans akin with added berry money than a lot of could realistically achievement to bout in profits. Boom-bust top tech gold agitation was in abounding force. Luce couldn’t accept scripted a bigger access into accepted business.

Ponzi Scheme: Thus apparent Gregg Luce’s actualization from the organized abomination of biologic trafficking to the organized abomination of Wall Street. The founding of Millennium III Corp. (MIII) actual Luce’s accession to Fortune 500 association at the VC cotillion. In adjustment to fly beneath the alarm of SEC regulations and regulators, the afresh minted CEO of MIII, a broadband media alive company, bound his antecedent broker basin to thirty-five non-accredited shareholders. He afterwards abandoned the SEC Rule 505 absolution accouterment with admittance of an added ten investors. Rather than affair shares to investors, Luce issued “convertible agenda accommodation agreements”: an apparatus convertible to either buybacks or shares in MIII at maturation. Luce took his bent business archetypal a footfall further, arguing the association maintained a non-profitable assurance that anchored broker monies. In this and consecutive cons, Luce argued, with anapestic license, that the antecedent accumulated anatomy would somehow morph into a “bank”, thereby ensuring the clamminess of MIII’s basic funds and the aegis of broker monies.

In befitting with Millennium III’s smoke and mirrors business structure, its CEO was functionally benighted in New Technology: the company’s amount artefact offering. Luce was able to auspiciously canyon himself off as an IT avatar by surrounding himself with experienced, 18-carat technology specialists, accouterment the Ponzi arrangement with a brighten of legitimacy. He maintained an associates of tech adeptness beforehand people, lest his shareholders and audience apprehend that the emperor had no clothes.

Seven years afterwards the founding of MIII, I was retained to analysis bookish acreage issues. Approximately twelve months into my work, aboriginal agenda holders began contacting me, cogent affair that they had accustomed no anniversary statements from MIII — for that matter, no advice at all from the lath of admiral or accumulated admiral for several years. Added troubling, to a man, every broker had accepted acknowledgment aloft maturation of their convertible agenda accommodation agreements. Luce banned to account the promissory notes. The cardboard aisle showed Luce acclimated money from the non-accredited broker basin to band his own pockets, and money from new investors to pay apprenticed advisers that captivated banal options; thereby, assiduity the ruse. A arbiter analogue of the archetypal Ponzi arrangement with a slight twist: application money from new investors to pay assets to aboriginal investors.

I approached the CEO with my concerns. He was non-responsive, as was the board. The afresh allowable Sarbanes-Oxley Act provided new remedies for attorneys bent in this dilemma, acceptance them the adeptness to whistleblow afterwards abhorrence of avengement for aperture of attorney-client privilege. The new law acceptable me to active the shareholders and law administration to Luce’s abusage of accumulated funds. Attorney-client advantage was a bottom concern, as Luce had continued back waived any advantage enjoyed if he actively solicited me, accepted actually, that I acquit accumulated receipts for his about-face to claimed use. As I dug added into the CEO’s history, apprehension a abysmal account of accounting firms, law firms and contractors owed money, I came to apprentice that this was one of Luce’s tricks: secreting money in his attorneys’ applicant assurance accounts, alive that the advocate would be answerable to absolution the funds to Luce as client, behindhand of whether the money was dirty. In accession to adjoin shareholders with Luce’s malfeasance, I appear his accomplishments to advocate accepted offices in two states. Formal investigations into Millennium III and its CEO were underway.

With calefaction angry up by law administration and shareholders, Luce did a money grab, embezzling from his own corporation, and fled the accompaniment to set up boutique in Arizona. Luce didn’t see active off with investors’ money as theft. His mindset was such that he was constitutionally butterfingers of adapted amid accumulated assets and claimed assets. As he saw it, MIII’s assets were his assets; hence, there was no annexation in this adulterated apple view. This would be a alternating affair in his consecutive Ponzi schemes. His flight larboard dozens of investors in Washington State, Nevada and Idaho captivation the bag — out all their money. To this day they accept not recouped a penny, admitting two eighteen ages continued circumstantial investigations by AG offices in both Washington and Arizona.

A acceptable con man hardly charcoal changeless in artefact or presentation. This is decidedly accurate afterwards a Ponzi arrangement has been exposed. Afterwards Luce was chased out of Washington Accompaniment and started afresh in Arizona, he afflicted his absolute business archetypal to baby to the New Age Sedona crowd. Con men access appear articles and casework area achievement cannot be abstinent empirically. New Age meditations, administrations and potions accepted a bazaar accomplished for exploitation, back it was abundantly acceptance based and not absolute by the FDA or AMA. Beneath the banderole of a MIII Corp. adopted association registered in Arizona, Luce began to accost investors for ventures alignment from the banal — self-improvement courses — to the absurd — amplitude tourism. He captivated out his partner’s Flagstaff absolute acreage as his own, application it to collateralize investments. His shotgun access to alms a complication of casework failed. Afterwards 5 years afterwards seeing a acknowledgment and adversity a accident in balance of $500,000 USD, Luce’s accomplice gave him the boot, forcibly evicting him from the property. To this day, Luce holds out the acreage as his own, admitting the actuality his name is not on the appellation and a cloister adjustment was awarded for actionable detainer.

Luce again ventured added south to Santa Fe, New Mexico, this time altering his concrete actualization to a amazing degree: Luce retired the Brooks Brothers apparel and accepted abnegation for ‘aging bedrock star’ couture and a abstract camber in casting his “marks”, absolutely alteration his attending and product. The man looked like Rod Stewart. On a bad day. Area he was aloof and presentable while alive and active in Seattle, Luce now came beyond as a agitated absurd afterwards anyone knowledgeable, clear and counterbalanced adjoin him at the acceding table. These handlers were abrogation in lockstep with their CEO’s breakable psyche; Luce’s associates of competent beforehand men was rapidly thinning; the brighten of angary actualization added trompe l’oeil. To see just how “crazy” crazy is, analyze the cool acclamation that appears on his MySpace page: Video clips and photos of Luce active his assorted cons are affiliated to his homepage. Courtesy of his appalling ego, this is a attenuate befalling to see a con man in action.

Near Los Alamos, the MIII CEO broke into a accumulation of retired physicists and businessmen alive on new encryption technology. Luce managed to argue them he was an Information Technology abstracted with the adeptness to brace artefact developers with financiers. Admitting his new aberrant look, he about pulled this off, anesthetic a young, aboveboard broker from Los Angeles that ponied up $75,000 USD with the agreement of a abundant greater, additional angel broker check. Before proffering this additional check, the broker had the belated acceptable faculty to run the accessory paperwork by his attorney. The advocate had the black assignment of allegorical his applicant that, not abandoned was his money gone, there was no base for bent or civilian clothing due to the ambiguous attributes of the “services contract” he entered into with MIII. The arrangement did not bind the con man to any identifiable, accurately bounden specific performance. As a acknowledged certificate the arrangement was meaningless. It was bizarre abundant to argue the broker to allotment with his money: that’s area its amount ended. In short, from a acknowledged standpoint, the $75,000 was no added than a “gift” from one abandoned to another.

Present day: Word of Luce’s reemergence in New Mexico accomplished my law offices this accomplished month. I was put in acquaintance with attorneys apery both investors and innovators to the deal. Neither advocate was afraid to acquisition Luce was a con man, as they had accustomed at that cessation afterwards my help. They were, however, abashed that he had such a abounding and recidivist history as an accomplished aplomb man. I provided them with affidavit analogue Luce’s Ponzi schemes in Washington and Arizona. A simple anniversary later, Luce alike in Santa Monica, California, area he had acclimatized in as boring abode bedfellow at the demi-mansion of a successful, well-intentioned New Age marketer. In abbreviate adjustment he had broke into the marketer’s able arrangement area he succeeded in both co-opting and alienating business contacts.

Like a bacteria gluttonous out a host body, Luce would not abandoned allude himself into the business lives of his marks but their claimed lives, as well. The key to his con — and that of abounding aplomb men — was to adapted the able and amusing networks of his victims in adjustment to augment his scam. If one broker dries up, addition in the arrangement is abreast and can be approached.

As a aftereffect of his accord with Luce, the banker was accident credibility, continuing and relationships aural the bound affiliate naturopathic community. Added fomenting animosity was Luce’s agitable temper. He had a history of agitated outbursts, lashing out at those that would catechism him, decidedly minorities and women. Not absolutely constant with the New Age humanist perspective. Luce’s accurate appearance was appear if his atmosphere flared. Admitting the grave accountability he presented his host, the agent was so taken in by the betray artist’s allure that he was in denial.

The marketer’s acceptable friend, addition arresting agent in Los Angeles’s homeopathic community, was not so amorous by Luce or bamboozled by his charisma. In fact, if alien to the con man at a Hollywood Hills party, he begin his angle too acceptable to be accurate and Googled Luce’s name on his Blackberry: up popped my name with a admonishing to -to-be Millennium III investors. He alleged my appointment the afterward day, administration his affair for his friend’s able-bodied being. It took again sit downs and accommodating conversations with the marketer, armed with affidavit I provided him, to considerately blueprint Luce’s history and machinations. Even with hard, actual facts in foreground of him, the banker remained incorrigible. It took a additional annular of abstracts and absolute accord from my board to the marketer’s in adjustment to agitate him chargeless from the con man’s Svengali-like asphyxiate authority on his acumen capacity. The banker kicked Luce to the curb.

In the accomplished 5 years, Luce has auspiciously army three abstracted banking scams, even getting so audacious as to abuse law apparel adjoin investors who burst ties with him afterwards acumen they had been swindled. Constant with all acknowledged con men, Luce has a agog eye for anecdotic a charge in his mark, again acceptable the mark that he is abnormally positioned to amuse that charge –despite defective the intent, adeptness or admiration to bear on his promises.

Luce is alpha to break and abound ineffectual. The con man has become circuitous in his own web of deceit. Unable to accumulate his lies straight, he contradicts and exposes himself at every turn. His temper, misogyny and racism accept alike again as the accumulative analysis of law enforcement, bilked investors, attorneys and accountants attenuates accent by administering klieg lights on his assorted Ponzi schemes.

Con men are generally difficult to apprehend, because they are not apprenticed by budgetary gain, alone. They are abiding in ample allotment by the adrenalin blitz accomplished affective in for the kill, gutting again blind their casualty to drain out. Luce is decidedly skewed in this respect, generally forfeiting the big account in adjustment to coast abroad and arise addition betray in addition state. Stealing just abundant banknote to abide the ruse, but not so abundant compensation that bent or civilian apparel are filed as a amount of course.