US authorities have charged two men with running an $80 million Ponzi scheme involving fake investments in automatic teller machines.
The office of the US Attorney for Manhattan says Vance Moore and Walter Netschi have each been charged with one count of conspiracy to commit wire fraud and nine counts of wire fraud. Each count carries a potential 20 year jail term.
From 2005 through January 2008, the men allegedly solicited over $80 million dollars worth of investments in ATMs purportedly placed in convenience stores, gas stations, malls and hotels around the country. Victims were told that they would make money through fees charged for using the cash machines.
However: "In truth and fact, Moore and Netschi did not use the victims' funds to purchase ATMs, but rather used the money to further the fraudulent scheme and to enrich themselves," says a Department of Justice statement.
According to the indictment, Moore and Netschi told victims they bought around 4000 ATMs but 90% did not exist or were never owned by the men.
More also sent monthly reports and payments to the victims purportedly relating to their investments in the ATMs, say prosecutors. In reality, the reports were not revenues but simply money scammed from new investors.
Joseph Demarest, assistant director in charge, FBI, says: "The defendants claimed the revenue in their investment opportunity derived from ATM fees. In fact, it was a classic Ponzi scheme, and the phantom revenue came from new investors. The scheme itself, until discovered, was one giant cash machine."