What makes this complaint interesting is that it lists the excuses Dalton made up when there were no packies to be found. It's lengthy, but worth reproducing; if anyone hears this stuff from someone to whom s/he has invested money, run to law enforcement.
43. In the first half of June 2010, Dalton told investors in a letter that “[t]here have been some significant changes in the trade program.” Dalton claimed that “the Trader” had to switch from using “Deutche Bank” [sic] to “a prominent Swiss bank” but “was unable to trade from March 20, 2010 until May 17, 2010. . .” Dalton stated that “regular monthly payments will resume June 15, 2010 and be sent out the 15th of every month thereafter.” As part of its investigation, the SEC did not find – and Dalton and UCR did not provide – any evidence that there ever was a trader who conducted profitable trades for UCR, or that the purported trader was forced to switch banks for his trades.
44. On June 17, 2010, Dalton again sent a letter to investors to explain the delay in payments, stating “[t]here is a payment that was due in May that has not been paid and the trader will make every effort to make this up to us during the next 6 months.” Dalton asked the investors to “be patient” but offered that they “can request [their] funds to be returned . . . and [their] request will be honored according to the agreement.” As part of its investigation, the SEC did not find – and Dalton and UCR did not provide – any evidence that the purported trader ever existed or that he missed a payment or agreed to make up any missed payment.
45. On June 25, 2010 Dalton again sent a letter to investors, claiming that “[o]ur attorneys have decided that we are currently not totally SEC compliant.” Dalton explained that because “we are no longer able to continue operating under the current business structure, we will be dismantling UCR and discontinuing all operations.” Dalton also indicated that he was attempting to start a new investment company: “Every attempt is being made to formulate a new company that meets the complexities of the SEC and related agencies.” Dalton asked investors to complete a form, indicating how much the investor had invested in the Program, the date of initial investment, and monthly payment amount.
46. On July 19, 2010, Dalton sent a letter to investors stating that “[t]his will be the last letter addressing the return of your funds that you have entrusted to [UCR].” Dalton explained that prior to issuing refunds, he “committed the funds to the trader for the month of July” in “an effort to create the possibility of one final month’s distribution to each of us. . . .” Dalton also stated that he was continuing “to explore any viable options for future restructuring that would comply with federal regulations.” Dalton claimed that “we will be returning your funds to you immediately upon completion of the month’s transactions on or before the first week of August.” As part of its investigation, the SEC did not find – and Dalton and UCR did not provide – any evidence that UCR committed investor funds to the purported trader for the month of July, or that UCR was attempting to fund another month’s purported profit distribution.
47. On September 15, 2010, after months of lulling investors and stalling payments, Dalton again sent a letter to investors, claiming a delay because of “a dispute between me and the trader. . . .” Dalton said that “[i]n an effort to return your funds sooner we have taken a cache of diamonds that were put aside for this exact purpose and have begun to liquidate them and use the funds to pay your [sic] back.” A further delay was purportedly caused because “[o]ur airplane goes to Africa every week to pick up stones . . . [but] had the number three engine go out and had to land in Amsterdam for repair.” Additionally, Dalton claimed that once the delayed diamonds arrived in New York, “[m]ixed in with the 50,000 carats were 18,000 fake diamonds.” Additionally, “[w]e have been waiting for the African Government to send the 18,000 stones for over a week.” Dalton attempted to calm the investors by saying, “[r]est assured though your funds are safe and you will have them back very shortly.” As part of its investigation, the SEC did not find – and Dalton and UCR did not provide – any evidence of any dispute with the purported trader, or any evidence that Dalton and UCR owned, rented, or used an airplane for transporting diamonds, transported any diamonds into the country, or received fake diamonds, that any fake diamonds were investigated by the government, or that Dalton and UCR actually conducted the Diamond Trading Program as claimed.
48. On October 20, 2010, Dalton sent a letter to investors stating that the return of investor funds is “only days from its conclusion.” Dalton claimed that “the funds will be released” by “the Trader,” and “[c]hecks will be released to you the middle of next week.” Dalton also claimed that “we are still active on the diamond front.” As part of its investigation, the SEC did not find – and Dalton and UCR did not provide – any evidence that “the Trader” was about to release investor funds – or even had them in the first place – or that Dalton and UCR ever generated profits from diamond trading.
49. On October 31, 2010, Dalton sent a letter to investors again stalling payment, claiming that the Trader rejected Dalton’s proposed settlement. Dalton also stated that “[m]y partners and I have been involved in a bank trade for the last 11 months. . . . As soon as the cash is available I have standing instructions to wire enough to my Denver based attorney to pay everyone back.” As to the Diamond Program refunds, Dalton asserted that “I also have confidence that the Angolan diamond problem is getting solved the first of the week.” Dalton promised, “I will return all your capital so I can remain a man of my word.” As part of its investigation, the SEC did not find – and Dalton and UCR did not provide – any evidence that Dalton had any partners involved in a bank trade for the past eleven months, or that there was ever an “Angolan diamond problem” that affected Dalton and UCR.
50. On November 12, 2010, Dalton again updated investors, promising to repay both
invested capital and missed profit payments: “I assure all of you no one will lose any money and I intend to pay you for every month that your money has been held up.”
51. Dalton also communicated with investors by telephone to explain the status of
their investments. During those conversations Dalton made the following additional claims:
• The Trader “hasn’t released the depository value on [the investor funds escrow account] yet because he’s grinding my chops for what I did to him. . . . I can go over to -- to Switzerland and sue him in the court system to hurry it up if I wanted to.
• I spent the whole day at the SEC’s office at downtown today, and what we’re doing is we’re going to -- we have already set up the attorney escrow account rather than using UCR because they did a TRO, it’s called, on my bank account, temporary restraining order.
• So what I’m doing is refunding everybody the money I brought over --over 100,000 carats of my diamonds to liquidate and pay everybody back their money.
• We had determined prior to the first amount of money coming who was going to get paid when. We submitted that to the SEC and to the attorneys and everybody was good with it. . . . I think you’ll find on Friday you’ll probably have your check in the mail.
• They’re sending out tranches [of investor payments] now, and the first tranche is out. And the second one is going to go out probably Monday afternoon. The third will be out Wednesday afternoon. . . . It’s from the first guy in the program to the last, and the SEC asks you to pay the oldest people first and the youngest people last.
• Your money is in the escrow account. It’s still there. It’s never moved.
• I’m going to pay you the profits for every month you were in the program so you’re not going to use a dime off your contract.
52. As part of its investigation, the SEC did not find – and Dalton and UCR did not provide – any evidence that any of these statements was true. The SEC never prevented Dalton from making distributions and never signed off on any investor distribution plan.
53. Dalton also claimed that the SEC investigation forced him to move investor funds offshore: “The reason [the investor funds escrow account] left the country is because the SEC came in and started investigating this whole thing and I was advised to move the money out of the country because if I didn’t, they could seize it and it could be six months before you got your money back.”
Note the similarity of the excuses to the ones Jim Norman and every other ponzi scammer use to buy some time.