In a novel approach employed by prosecutors, a California man accused of operating an ATM Ponzi scheme that allegedly duped victims out of over $10 million has been charged not only with securities fraud and grand theft charges, but also faces a burglary charge. Michael Brendan Ferguson, 44, was recently charged with nine felony counts in connection with what prosecutors allege was a nationwide Ponzi scheme that promised steady returns through a collection of privately owned ATMs. While prosecutors charged Ferguson with securities fraud and grand theft, they also included a burglary charge - reasoning that while Ferguson did not break into any houses, he did enter one investor's home with the intent to commit a felony, grand theft. Ferguson recently entered a plea of not guilty to the charges.
According to authorities, Ferguson solicited investors by promising steady returns through the generation of hefty transaction fees from a nationwide network of private ATMs. In exchange for purchasing the rights to user fees generated by a collection of ATMs located in shopping centers, investors were promised annual returns of up to 15%. To maintain an appearance of legitimacy, Ferguson maintained an office staffed by several employees, and even provided financial statements to investors that purportedly showed the steady growth of the ATM operation. In total, at least 100 investors may have invested more than $10 million with Ferguson.
While investors initially received their monthly interest payments as promised, the payments recently stopped. When some investors began making inquiries to the shopping malls where some of the ATMs were purportedly located, they learned that none of those shopping centers had heard of Ferguson. Ferguson subsequently declared bankruptcy in January.
The burglary charge appears to be favored by prosecutors due to the California Penal Code's definition of burglary as the entry into a structure with the intent to commit a felony - in this case, grand theft. While the theory is certainly a novel one, surprisingly it is not the first time that an accused Ponzi schemer has faced burglary charges. In a case also out of California, James Koenig was charged in 2009 with 40 counts of securities fraud and 37 counts of residential burglary in connection with what prosecutors alleged was a $200 million Ponzi scheme. Koenig chose to fight the charges at trial, and was actually convicted on two of the burglary counts in May 2013. The choice by California authorities to levy burglary charges in white collar crimes may also be partially due to its categorization as a serious "strike" crime under California's Three Strikes Law, which may allow for a stricter sentence.
For more news and analysis of Ponzi schemes, visit Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.
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