Schuette Announces Pleas for Two Charged In $9 Million West Michigan Ponzi Scheme that Targeted ElderlyContact: Joy Yearout 517-373-8060
December 12, 2013
LANSING - Michigan Attorney General Bill Schuette today announced Thomas Doctor, 53, of Grand Rapids, and Douglas Kacos, 58, of Grand Rapids, both pleaded no contest to Money Laundering for their role in a massive $9 million Ponzi scheme that operated under the name API Worldwide, Inc. The no contest pleas follow a joint investigation by the Department of Attorney General and the Department of Insurance and Financial Services which revealed API defrauded approximately 140 victims out of $9 million in total, including some elderly victims who lost their life savings.
"Financial scams that target vulnerable seniors can devastate our parents and grandparents who have worked and saved their entire lives to provide for their families," said Schuette. "These convictions bring us closer to securing justice for the elderly victims of the API Worldwide investment scam. The message here is clear - if you break the law, there are consequences."
From July 2006 through January 2012 API Worldwide Holdings and its operators ran a Ponzi scheme promising huge returns on investments. Ripley and VanLiere defrauded at least 140 victims of approximately $9 million by selling fake securities. The two men promised high returns on money invested, but never delivered on their promises to victims. Investigation revealed that victims were defrauded of amounts ranging from $3,000 to $600,000 each.
Despite knowledge that Ripley had been caught and punished for selling unregistered securities on two previous occasions, it is alleged that Doctor and Kacos allowed, aided and abetted Ripley in operating a third unregistered investment scheme by acting as a registered agent and account holder for API Worldwide, Inc. Doctor and Kacos also allegedly opened financial accounts used to receive or liquidate cash and orchestrated and compensated third parties to wire investor funds to various foreign destinations including Africa and the United Kingdom in order to avoid detection by regulatory or law enforcement organizations. Both Kacos and Doctor invested money in API Worldwide, Inc.
Ripley and VanLiere targeted elderly investors with their scam. Investigation revealed they preyed on elderly victims by convincing them to cash in certificates of deposit (CD's) and other legitimate investments in order to invest the proceeds in API Worldwide. Ripley and VanLiere tracked maturation dates of CD's for some victims to persuade the victims to transfer the funds to API Worldwide immediately after the CD matured. Most victims did not receive the principal or interest on their investment. Investigation revealed that although some investors did receive a return, those returns were derived from other investor's funds, the trademark of a Ponzi scheme.
None of the victims received any returns on their "investments," and some even lost their life savings to the scam.
Kacos and Doctor both pleaded no contest as charged to one count each of Money Laundering - 4th Degree, a misdemeanor punishable by two years in prison and/or a $10,000 fine or twice the value of the proceeds, whichever amount is greater. Sentencing for Kacos and Doctor is set for January 27, 2014 at 2:00 P.M. before Kent County Circuit Court Judge James R. Redford.
In March 2013, Schuette announced that Jeffrey L. Ripley, 61, of Sparta, and Danny Lee VanLiere, 62, of Grand Rapids, pleaded no contest to one count of racketeering and two counts of selling unregistered securities before Ottawa County Circuit Court Chief Judge Edward R. Post. Ripley and VanLiere were sentenced on June 21, 2013 to serve six to twenty years in prison. Ripley was ordered to pay $5,367,033.30 in restitution and VanLiere was ordered to pay $3,024,833.74.
Schuette encourages seniors to exercise caution before investing their money with those who promise exorbitant returns. Key tips to avoid falling victim to a Ponzi scheme or investment fraud include:
- Check out your broker or adviser. Confirm that your broker and financial adviser is registered and in good standing. Contact the Bureau of Commercial Services with the Department of Licensing and Regulatory Affairs, at 517-241-6345, to check out your broker or adviser.
- Beware of strangers touting strange deals. Trusting strangers is a mistake anyone can make when it comes to their personal finances. Almost anyone can sound nice or honest on the telephone. Say "no" to any investment professional who presses you to make an immediate decision, giving you no opportunity to check out the salesperson, firm and the investment opportunity itself. Beware of anyone who suggests investing your money into something you don't understand or who urges that you leave everything in his or her hands.
- Take your time - don't be rushed into investment decisions. Salespersons who use high-pressure tactics to force an investor into an immediate decision are almost always pitching frauds. They don't want you to think too carefully or find out too much because you may figure out that it's a scam.
- Keep tabs on your investments. Be wary when a financial planner says "leave everything to me," or "the plan is too complicated to tell you." Everything should be clear and explainable to you.
- Monitor the activity on your account. Insist on receiving regular statements.
- Ask Questions. Never be embarrassed or apologetic about asking questions for trading activity that looks excessive or unauthorized. It's your money, not your broker's.
- Keep Diligent Records. Keep all of your records relating to your investments, including notes of conversations you have with brokers, salespeople, and financial advisers.
Consumers can find helpful advice and a list of questions to consider in Attorney General Schuette's Consumer Alert for Ponzi Schemes, available on the Schuette's website at http://1.usa.gov/AGPonziAlert. Attorney General Schuette also offers specialized consumer advice for seniors on how to avoid investment fraud through the Senior Brigade website, http://bit.ly/investmentfraud.