How Should I Report This Fraud???

Stock and Bond Fraud, including Boiler Rooms / Pump and Dump Schemes, Mutual Fund & Hedge Fund Fraud, FOREX scams, plus Churning, Private Placements, Venture and Bridge Funding, IPOs, Viaticals Fraud, HYIP and Prime Bank scams, MTNs, Historical Notes, Recovery Schemes, etc. Includes the Jim Norman Project and the Michael Dotson Project and similar HYIP scams.
GMillionaire

How Should I Report This Fraud???

Postby GMillionaire » Thu May 07, 2009 5:52 pm

Hello Quatloos Community!

I worked for C****** C********** for almost a year and despite finding his name briefly mentioned on this site, I thought he was a good guy for the most part. That all came to change and here's how...

I was very naive when I started working for him and I was, in my opinion, taken advantage of. He told me he was going to pay me $8/hr under the table when I started, and since I didn't have to pay taxes on it, this was like him paying me $10 over the table! I was hesitant to accept but didn't really have much leverage to negotiate. He told me that he wouldn't 1099 me but asked me to sign an independent contractor's agreement (I never did). Now, my understanding of a private contractor is that you cannot have hours set and are free to work outside of the office with your own equipment, etc. Instead my job was very much that of an employee, arriving early and staying late, all of which I was never paid any overtime for. I was even punished for being late one day by given a week off unpaid! And that's not even the upsetting part, he never even paid me my last paycheck! So you can imagine how surprised I was to find I was 1099'd by this bastard only a few weeks ago!

But back to the real fraud...

One day out while I was out at lunch with him I asked him how he had managed to get a REIT to give him the money to purchase the land for the property he was developing. He surprised me by telling me that he had taken out packets of money in quantities of $9,999 and paid him around $60,000 to buy a Cadillac Escalade, just like his. This is when my eyes started opening. He told me that everybody needed to get greased in this business and it was standard business practice. I thought that maybe he was right. He also said that he was comfortable telling me because if I ever said anything he would simply deny it and I could never prove it!

After a few more months I started to see how he would hire new guys to recruit investments and then after they had brought in all their friends and family to invest with him and couldn't bring in any more, he would cut them loose and find new guys. He was paying advanced commissions to almost all these guys and was keen to keep it under the table as he didn't want investors to know that their family and friends were making money bringing them to the table. It all started to look like an MLM scheme (or at least that was the only thing I could associate it with). But then I realized how much he was pulling in. He took $750,000 from one investor, $1m from another and in total he must have scammed more than $10m from all of them. When I looked at the books we had only spent around $1m on the project so I wondered where the rest of the money was going.

Then one day an investor called to say she was coming in to look at the books and I saw everything in the office go to hell. His secretary, A***** M****** was running around the office like a chicken with her head cut off! I could tell something was up. When I asked my colleague who was working with me, he told me she was freaking out because the numbers didn't add up so she was trying to figure out ways to cook the books without anybody finding out. After this whole episode I saw her crying and when I asked my colleague he said that it was because she knew what she had done could implicate her and she didn't want to take the fall for C*****. Sad, I know.

It was around this time that I made up my mind to quit and told my colleague. He also said that he wanted to leave as he knew it was all a fraud too, but that he needed the paycheck and had to wait another month or so before he could afford to. So I made the jump and a month later he followed. It felt alot like jumping from a sinking ship, but one that I had never planned to be on in the first place, I felt conned just like his investors.

After all this I became disillusioned with the business and decided at the suggestion of my father to take a trip to Thailand to stay in a monastery with a family friend who had recently become a monk there. A month into my stay I started getting calls from family and friends telling me that C***** was contacting them telling them he fired me and that I had stolen his credit card and used it. I was quite upset that he was trying to discredit me, as I had said nothing about him or the things I witnessed! Surprisingly, the monks I was living with actually advised me that I should not ignore the problem but pursue the proper legal route to resolve the dispute and clear my name.

Now, I am being accused of something I didn't do and I am damn angry! I want the salary he never paid me and I want the 1099 he filed to be dropped as I was never an independent contractor. I also want him to be brought to justice for defrauding all the investors whose family savings and nest eggs he took! I told myself before that I wouldn't get involved but he's decided to get me involved, so I need your advice on how I should proceed as I have never had to deal with fraud like this before and just want to clear my name and put this scammer behind bars so that he doesn't ruin any more lives. I would also like to give him his own exhibit on the main Quatloos page as I am sure this isn't the first time he's done this and I know how much he hated being on here for the ITEX fraud he committed. He even asked me at one point if there was a way to take his name off your site! HAH! Now I know why he was on Quatloos...he belongs here!

Thanks in advance for any feedback/suggestions. I know it's quite a long story but I wasn't sure what was relevant, and what wasn't. Looking forward to hearing what you guys think about what I should do.

Best Regards,
GMilli

(Edited to redact names. Names associated with allegations such as this should be left out unless or until there is a public civil or criminal action or something published by a bona fide news source you can point to.)

Arthur Rubin
Tupa-O-Quatloosia
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Joined: Fri May 30, 2003 12:02 am
Location: Brea, CA

Re: How Should I Report This Fraud???

Postby Arthur Rubin » Thu May 07, 2009 6:43 pm

First, I'm not someone who could represent you even before the IRS, so check this out of someone who could or has been on one side of the table or the other before you follow through.

I'd file tax returns, reporting the income as wages in the year(s) you actually got the income, as best you can. Reporting him to the IRS and the State labor board (the California EDD (labor board), at least, likes to crack down on employees reported as indepedent contractors even more than the IRS or the FTB (tax board)) might be a good step. Suing him for unpaid "wages" doesn't sound promising, but suing him for slander of credit may be helpful if you can afford a lawyer. It's unlike you'll get anything from him if he is running a Ponzi scheme, although unpaid wages are among the highest priorities in bankruptcy.
Arthur Rubin, unemployed tax preparer and aerospace engineer
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GMillionaire

Re: How Should I Report This Fraud???

Postby GMillionaire » Thu May 07, 2009 8:17 pm

Thank you for your quick reply Arthur. Sorry I posted names...there is a criminal action being pursued by one of the defrauded investors although I am not sure how far along it is as I haven't talked with the investor in quite awhile. How might suing for slander of credit be useful for me? I thought about suing for slander but I'm not sure how that differs from 'slander of credit'.

Thanks Again,
GMilli

Arthur Rubin
Tupa-O-Quatloosia
Posts: 1434
Joined: Fri May 30, 2003 12:02 am
Location: Brea, CA

Re: How Should I Report This Fraud???

Postby Arthur Rubin » Thu May 07, 2009 8:29 pm

Suing for slander (if not in a fixed medium) or libel (if in a fixed medium) is problematic, as you have to prove that he knew or should have known it was false. "Slander of credit" may have a lesser standard of proof, and should be used if he actually reported his credit card as being stolen by you to the credit issuer, and hence to the credit reporting services. It can only be used to collect damages caused to your credit by his actions and the costs of removing his false statements from your credit report. I believe he may be required to demonstrate that he believed the statements to be true in order to defeat a "slander of credit" suit.

But I'm not a lawyer; I did once have a lawyer threaten a slander of credit suit against a credit issuer who lost (in a bankruptcy acquisition) the record that I had paid the requested amount.
Arthur Rubin, unemployed tax preparer and aerospace engineer
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