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OFIR Shuts Down Ann Arbor Serial Scam Artist's $5 Million Ponzi Scheme


Agency puts an end to Mark Carpenter’s multiple investment scams

FOR IMMEDIATE RELEASE
March 4, 2010
Contact: Jason Moon 517-335-1700
http://twitter.com/midifs

LANSING – The Office of Financial and Insurance Regulation (OFIR) announced today that it has put an end to a multi-million dollar Ponzi scheme run by Ann Arbor’s Mark Carpenter. OFIR found that Carpenter, through his company TGBG Financial, violated the state’s Uniform Securities Act and the agency ordered him to cease and desist from the sale of unregistered securities products. OFIR determined that Carpenter sold investment products that were not registered with the state.  

"This was a multi-headed Ponzi hydra," OFIR Commissioner Ken Ross said. "Bank records indicate that Carpenter got scammed and then set up his own scam. We found fraud within fraud involving working people who were robbed of their life savings. These were not high rollers.”

From June, 2007 through October, 2008, Carpenter was employed with CUSO Financial Services and was registered with OFIR as a securities agent associated with CUSO, a broker-dealer firm that is also registered with OFIR. His principal place of business was at MidWest Financial Credit Union (MFCU) located in Ann Arbor where CUSO maintained a securities branch office inside the credit union. OFIR has also issued orders seeking to revoke Carpenter’s securities and insurance licenses.

An OFIR investigation found that in December 2007, Carpenter became directly involved in a multi-level crude oil bond Ponzi scheme operated by Michael Winans, Jr. OFIR announced today that it has issued a separate cease and desist order against Winans, several other individuals and numerous business entities related to the Ponzi scheme. In January 2008, Carpenter created TGBG, which stands for To God Be Glory, for the sole purpose of accepting funds to invest in the Winans Ponzi scheme. To read OFIR’s order against Winans, visit: http://www.michigan.gov/documents/dleg/Winans_10-7597_313347_7.pdf

Carpenter solicited the crude oil bond as if it were a legitimate investment to his CUSO and MFCU clients.

OFIR identified at least 12 investors were also MFCU members. Each one of them issued one or more MFCU personal checks to invest with TGBG. Likewise, at least 20 of TGBG’s investors were also CUSO clients. Carpenter, through TGBG, transferred over $700,000 in investor funds into the Winans scam. During the same time frame, TGBG received over $670,000 on checks drawn from the Winans Foundation and several affiliated for-profit entities principally owned by Mike Winans.

From several bank accounts held by TGBG, Carpenter returned to investors a small portion of their investment. However, Carpenter transferred large sums of money to his personal bank accounts, paid his living expenses, paid TGBG’s business expenses and paid his friend James Smith, who introduced him to Winans, and Smith’s businesses outrageous returns on their investments. None of the investors from MFCU or CUSO received such exorbitant returns.

Soon thereafter, Carpenter became involved in another investment scheme dealing with an alleged gold mine that was developed by Ronald Brito (“Brito”) and his company GetMoni.Com, a Nevada corporation. Again Carpenter solicited this product as a legitimate investment to individuals who were his clients through his MCFU and CUSO business relationships. A significant portion of the investors’ funds received by TGBG were wired to GetMoni in Nevada. Carpenter received more than $2 million in new investor funds, but received less than $115,000 in returns. In November, 2009, OFIR ordered Brito and GetMoni.com to cease and desist. To read OFIR’s order against GetMoni.com, visit: http://www.michigan.gov/documents/dleg/GetMoni.Com_Inc._a_Nevadat_299964_7.pdf.

In November 2009, Carpenter yet again became involved in another investment scam. Through TGBG, he issued securities for an investment in an alleged Orlando real estate development. The offering document customers received described the investment as a bridge loan financing opportunity to erect the “tallest, most luxurious new condo hotel available to Orlando real estate buyers.” He called the investment the Blue Rose Orlando Project. The offering document identified Carpenter and TGBG as key players in the project. Unbeknownst to Blue Rose investors and in similar fashion to his previous scams, Carpenter used their funds to invest in GetMoni, pay his personal and TGBG’s business expenses and pay the interest or principal payments due to earlier investors in a classic Ponzi style.

OFIR has been able to account for a total of $5 million that was received by Carpenter and TGBG for investment in the above-mentioned Ponzi schemes. Approximately 47% was received by GetMoni, 18% was received by Carpenter and TGBG, 17% was received by Mike Winans and the Winans Foundation, and 4% was received by James Smith and his businesses. The remaining 14% was disbursed to investors as alleged interest payments.

Violations of the Uniform Securities Act may subject Carpenter to a criminal penalty of not more than $25,000 for each violation, or imprisonment of not more than 10 years, or both.

OFIR has handed the results of its investigation over to the appropriate law enforcement agencies.

If consumers think they may be a victim of any of the above-mentioned Ponzi schemes, they are asked to contact OFIR toll-free at (877) 999-6442.

OFIR’s investigation found that Carpenter’s investment offering should have raised a number of red flags for consumers, which included:

  • Promises of “guaranteed” returns
  • Promises of outrageous returns on investment – “double your investment within 60 days” (1,200% annually).
  • Sophisticated investments involving bogus “Saudi Arabian crude oil bonds” were being marketed to unsophisticated investors who did not know what they were being sold.
  • Investors provided cash to and/or investment checks were made out directly to promoters – not to a 3rd party custodian.
  • Investor documents contained obvious spelling errors.
  • If an investment seems too good to be true it probably is.
  • Investors received no financial statements, risk disclosures or other disclosures that would have been material to a reasonable investor before investing.
  • Carpenter provided no documentation that the investment products were registered with the state.

Before entering into an investment, Michigan consumers are encouraged to contact OFIR and the agency can run a check on any investment firm, professional or product. OFIR can be reached at (877) 999-6442 or online at: www.michigan.gov/ofir.

To view OFIR’s cease and desist order against Carpenter, visit: http://www.michigan.gov/documents/dleg/Carpenter_10-7549_313348_7.pdf

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