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Factual Summary: Defendant No. 4 served as the charismatic leader of an Oklahoma investment company known as Wealth-Mart (Company). Defendant No. 4 was said to be a Christian businessman whose humanitarian investments promised investors extremely high returns with little to no risk. Defendant No. 4 formed Company with his personal accountant, Defendant No. 2, who also served as Company's financial manager. Both Defendant No. 4 and Defendant No. 2 attended daily meetings of employees and investors, describing to them in sophisticated terms the investments in which Company would place their money.

Defendant No. 1 (also known as Wooly West), another accountant, was known to investors as Company's international financier. Investors understood that Defendant No. 1 was the trader, or a liaison to actual traders, who actually placed the investments. Defendant No. 1 and Defendant No. 4 were longtime friends and purportedly had been participating in international trade since the early 1990s.

Defendant No. 3 acted as Company's leading sales and customer service representative whose job it was to convince people to invest in Company. Defendant No. 3 had persuaded a number of individuals, including members of its own family, to invest in the company and also managed relations with investors when investors began complaining about the lack of returns on their investments.

The fifth and final defendant, Denise Jones, an employee of Company, plead guilty to fraud before the trial began and testified on behalf of the United States.

Investors in Company were brought into the fraud with a combination of sophisticated pitches and humanitarian pleas. Defendant No. 4 and Defendant No. 1 typically gave Company's pitch to potential investors at investment seminars, where investors were exposed to Company's purported riches. Investors were brought to seminars in chartered airplanes and buses, and the seminars were held at luxurious Colorado ranches that created the image of an elite gathering of international traders.

Components of the pitch highlighted Defendant No. 1's knowledge of sophisticated-sounding financial terms to lull investors into believing the hype. Defendant No. 1 and others described Company as a bank debenture trading program that used Europe's intra-bank market to gain high returns with little to no risk. Wealth-Mart purportedly invested its clients' funds in instruments representing the obligations of major world banks, "prime banks." In Defendant No. 1's words at trial:

Going back to the understanding of what I was trying to do in the factoring concept of buying midterm notes, working through securities traders, things of this nature, was an opportunity to simply point out the opportunity of international factoring in types of commercial paper, whether it be standby letters or letters of credit or whatever.

Defendant No. 1, throughout his seminars with Company, talked of "prime bank guarantees," and "bank debenture trading programs," accessible only to world's elite traders. Defendant No. 1 described a market that was so secret that even those with access to it might deny its existence and that even the investors' brokers might deny its existence. Investors were also forced to sign non-disclosure agreements.

Focus on Company's sophistication was complimented by emphasis of Company's humanitarian goals. Defendant No. 1 and Defendant No. 2 both claimed to be active ministers, and Defendant No. 1 repeatedly cited Christian values when giving investment seminars. Defendant No. 4, himself portrayed as a devout Christian and humanitarian, cited the humanitarian investments that Company would also make and told investors how their money would be used to advance charitable causes.

In less than two years, Company had convinced nearly 200 investors to deposit more than US$14,000,000 with Company. Defendant No. 2 had set up what appeared to be a functioning tribal bank, First Lenape Nation Bank, into which much of the money was placed. In fact, the bank was a shell, and investor funds were passed into accounts at local Oklahoma banks. Although some of the funds were deposited directly into Defendant No. 1 account, the rest were funneled into Defendant No. 4's accounts.

When investors began complaining that they had received no returns on their investments, Defendant No. 1 and Defendant No. 3 devised a "re-entry" program. According to the program, investors signed a form that purported to reinvest their earnings into new investments. The group then began giving increasingly preposterous excuses as to why investors had not received their funds, including that various government entities were holding the funds and that Princess Diana's death and other world events delayed release of the funds.

When investors finally notified authorities, U.S. Attorneys charged the group with a sixty-count indictment, and each of the four defendants on trial was convicted on the overwhelming majority of the counts. Two of the groups have been ordered to make restitution in the amount of approximately US$3,000,000, and each member of the group was sentenced for at least four years in prison.

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* Jacob A. MANNING is an associate with the law firm of Steptoe & Johnson, PLLC, practicing in the firm's Wheeling, West Virginia office. He focuses his practice on civil litigation, with an emphasis on business, commercial, and insurance defense litigation.

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