According to Lunn, Perello told Lunn in the fall of 2010 that he named Dresdner's program the Magnum Program because "when people found out they'd been ripped off, they would buy a .44 Magnum and shoot themselves in the head."
In a bizarre Ponzi scheme purportedly based in Chicago involving a mysterious one-eyed man and 4,445% returns, the Securities and Exchange Commission ("SEC") charged three individuals with masterminding an investment fraud that scammed investors out of at least $6 million. Geoffrey H. Lunn ("Lunn"), 56, Darlene A. Bishop ("Bishop"), 40, and Vincent G. Curry ("Curry") (collectively, the "Trio"), 42, were charged with multiple violations of federal securities law in connection with the scheme, which used the name of a prestigious German bank to lull investors. The SEC is seeking injunctive relief, disgorgement of ill-gotten gains, pre-judgment interest, and civil monetary penalties.
According to the SEC's complaint, Lunn created Dresdner Financial ("Dresdner") in February 2010, claiming it had extensive connections with top world banking institutions and was a leader in commercial financing and bank instruments. The operation provided a phone number and physical address in Chicago, Illinois. Lunn then hired Bishop and Curry to serve as "affiliates" to market and sell investments on behalf of Dresdner. For their efforts, Bishop and Curry were promised commissions commensurate with their sales.
The primary investment marketed by Dresdner was the .44 Magnum Leveraged Financing Program (the "Magnum Program"). According to Dresdner, investors who initially contributed $44,000 could expect a 100% guaranteed return of $2 million within ten to twelve banking days - a 4,445% return. Investors were told that such a high rate of return was possible through the leasing and "simultaneous monetization" of bank instruments. Despite the exorbitant rate of return offered, at least seventy investors contributed nearly $6 million in the 1-year period from February 2010 to February 2011.
Not surprisingly, investors did not receive their promised 4,445% return. Instead, Lunn cited numerous delays for payments to affiliates and investors, including that the insurance company was behind schedule, banks or governments had placed a hold on the funds, or that Dresdner was worked through tax reporting issues. To compensate investors for the delays, Lunn promised even more money.
In reality, Lunn did not use any investor funds as promised. Instead, during a deposition before the SEC, Lunn stated that "it was a con, basically," and admitted to never leasing or monetizing any bank instruments. Instead, Lunn misappropriated investor funds for a variety of unauthorized purposes, including the payment of nearly $1 million to three Las Vegas call girls so they could have "a better type of life." Additionally, Lunn paid over $600,000 to Bishop and Curry in commissions.
When asked to explain over $1 million in cash withdrawals, Lunn told the SEC that an individual named Robert Perello ("Perello") had created Dresdner and the Magnum Program and had threatened to kill Lunn if he did not participate in the scheme. According to Lunn, the cash he withdrew from the scheme was given to Perello. Lunn claimed to be the only individual at Dresdner to have met Perello, and told SEC officials that Perello could be easily identified, as he only has one eye. To date, the SEC has been unable to identify or locate Perello.
The action was filed in a Colorado federal court, where Lunn resides.
A copy of the SEC complaint is here.
For more news and analysis of Ponzi schemes, visit Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.
For more information about LexisNexis products and solutions connect with us through our corporate site.