Southern Californians Arrested For Offshore 'Ponzi Scheme'

Southern Californians Arrested For Offshore 'Ponzi Scheme'
Fraud, Money Laundering Charged In $80 Million Investment Fraud

LOS ANGELES -- An investigation into alleged federal fraud and tax evasion led to the arrest on Friday of nine people, five of them from Southern California.

Internal Revenue Service investigators said the group tricked hundreds of victims into investing "tens of millions of dollars in a fraudulent offshore fund that claimed to invest money in highly-profitable foreign currency trading," according to an IRS news release.

The indctment referred to the alleged fraud as a "Ponzi scheme."

The indictment alleges that between May 1998 and June 2002, Genesis Fund investors gave more than $80 million to the defendants after being told that their money would be pooled and invested in "foreign currency trading through a currency dealer in Hong Kong and Macau that had earned large profits for investors in the past."

Instead, the indictment alleges, most of the investor funds were used "to make Ponzi payments to investors and to personally enrich the defendants."

According to the indictment, the allegedly fraudulent Genesis fund collapsed weeks after telling investors it was worth $1.3 billion, and the defendants told investors a new investment plan would keep help them recover their money.

Investors were allegedly told that the Genesis Fund did not have to report to the IRS, and they were encouraged to create offshore corporations and bank accounts to receive the proceeds from the fund.

The indictment also alleges that, "in an effort to conceal the true nature of the Genesis Fund from investors and the government, the Fund's administrative operations were relocated from Anaheim, California, to Costa Rica in April 2000. At this time, paper records and electronic data on computers were hidden or destroyed."

A federal grand jury in Los Angeles returned the indictment on March 30, "charging conspiracy, multiple counts of mail fraud and wire fraud, money laundering, obstruction of justice, obstruction of a criminal investigation, tax evasion and several other tax-related charges."

The five defendants arrested in Southern California were identified as:

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David L. Johnson, 66, alleged to be an early investor, and later manager and promoter of the Genesis Fund, who lives in Walnut;

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William H. Nurick, 69, alleged to bea founder and manager of the Genesis Fund, who resides in Camarillo;

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Denise Taylor-Fraser, 51, alleged to bea Genesis Fund investor who later became a manager, who resides with her husband in Riverside;

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William Taylor-Fraser, 57, Denise's husband, alleged to bea Genesis Fund investor who became one of its managers during the summer of 2000;

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Teresa R. Vogt, 51, alleged to bea primary administrator and later a manager of the Genesis Fund, who resides in Anaheim.

The IRS said three other Southern Californians living in Costa Rica were arrested in connection with the alleged scheme earlier in the week:

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John S. Lipton, 58, alleged to be a founder and the principal manager of the GenesisFund, who resided in Mission Viejo and Laguna Hills, California, until about March 1998 when he relocated to Costa Rica;

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Richard B. Leonard, 71, alleged to be another early investor, and later a promoter and manager of the Genesis Fund, who resided in Littleton, Colorado, until he relocated to Costa Rica in about June 2000; and

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Victor H. Preston, 64, alleged to be a founder and manager of the Genesis Fund, who from about July 1994 to about June 2000 resided in Huntington Beach and Laguna Hills, California, after which he relocated to Costa Rica.

The agency said the three people arrested in Costa Rica were in Costa Rican custody, and the United States will ask for their extradition.

According to the release, investigators are still looking for Marlyn D. "Milt" Hinders, 65, alleged to be a leading promoter and manager of the Genesis Fund who resided in Colorado from about July 1994 until about May 2004, when he moved to Mexico.

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