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FBI Shuts Down Prime Bank Investment Frauds
That Cost Investors $500 Million

Washington, DC - FBI Agents around the country today executed arrest and search warrants in what the Bureau calls the culmination of a national anti-fraud initiative. So far this year, the FBI has successfully targeted 100 individuals involved in high yield investment frauds (HYIF), also known as Prime bank investment frauds (PBIF), that defrauded Americans out of approximately $500 million.

The initiative has involved Agents from FBI offices in Boston, Columbia, SC, Dallas, Denver, Houston, Jacksonville, FL, Kansas City, MO, Las Vegas, Los Angeles, Memphis, New Orleans, New York, Oklahoma City, Phoenix, Portland, OR, Salt Lake City, and Sacramento.

FBI Director Robert Mueller called the initiative a "half-a-billion dollar victory for hard-working Americans, legitimate investment bankers, and the nation's economy." Mueller said that the series of actions "sends a strong message that even though the FBI is preoccupied with tracking down terrorists, we are not going to let greedy individuals empty the pockets of unsuspecting investors. Putting an end to high-dollar frauds and other white collar crimes continues to be one of our top priorities."

Deputy Attorney General Larry Thompson also affirmed the Department of Justice's commitment to fighting white collar crime. "The Department of Justice remains committed to protecting the interests of American investors and to prosecuting the scam artists who prey on them," Thompson said.

PBIF and HYIF continue to be a significant crime problem both in the U.S. and internationally. As sluggish investment markets in the US and overseas make the promise of high yields attractive to aggressive investors, con artists promoting PBIF and HYIF scams have found a ready pool of potential victims.

PBIF schemes involve sale of fraudulent, often non-existent, investments. PBIF crimes, typically involve false claims of a secret market, being risk free, having extremely high or guaranteed return rates, and containing formats purportedly approved and/or sanctioned by the Federal Reserve, the International Chamber of Commerce, the World Bank, the International Monetary Fund, or other known international organizations.

The financial instruments may be sold as bank notes, guarantees, letters of credit, debentures, bills of exchange, roll programs/trading programs, foreign currency trading programs, or blocked funds certificates.

Perpetrators of these schemes tell potential investors that they have unique access to a trading program and that by pooling their money with that of other investors they can participate. These opportunities are allegedly only available because the fraudulent solicitor has high-level contacts in the banking world. Investors must often abide by a non-disclosure agreement to protect the secret arrangement. In the end, the investor realizes that there are no such arrangements and what is essentially a Ponzi scheme collapses, costing victims their investment.

Many PBIF crimes have an international aspect. The base of operations of the con artist may be overseas while the victims are in the US Proceeds are often moved to foreign bank accounts, such as the Bahamas or Switzerland. Subjects also fraudulently represent that the investment is insured against loss or non-performance by a foreign insurance entity.

One such case, known as the "Sweet Tea Masquerade," was part of today's crack down. FBI Agents in Columbia and Greenville, South Carolina, conducted an undercover operation, acting as potential investors to target 27 groups of subjects who defrauded other innocent investors of over $31 million. This investigation was initiated in June 2001 and culminated today with the filing of Complaints and the issuance of arrest warrants relating to 51 individuals to be executed in 22 states and the District of Columbia. Thirteen of the subjects are in 6 foreign countries (Canada, England, Germany, Greece, South Africa, and Mexico) and provisional arrest warrants for extradition will be sought where appropriate.

In Los Angeles, Nicholas Roblee, also known as Nicholas Richmond, the operator of Premier Marketing and Investments, Inc., was arrested on wire fraud and money laundering charges. Roblee solicited in excess of $4.5 million from investors, promising returns up to 200% per month through the trading of medium term notes, real estate-related bridge loans, and investments in gold, gold concentrate and other precious metals. One victim of Roblee's scheme was a 62-year-old Baptist minister from Ohio who invested and lost his entire retirement savings of $1 million with Roblee. Allegedly, Roblee diverted the funds for his own benefit and to pay back prior investors through Ponzi-type payments.

A similar story played out today in Jacksonville, Florida, where Agents executed a search warrant on the residence of Gregory Smith. Acting through Tri C Holdings, Smith solicited investors in a high yield investment program which promised rates of return ranging from 15% to 20% every 35 to 70 days, with no risk to the investors' principal. The approximately $1 million investors sent to Tri C Holdings was never invested and was allegedly diverted by Smith.

Other warrants were executed today in a Denver-based investigation that extended into 33 states and 14 foreign countries.

Also today, a number of indictments related to PBIFs were unsealed, including two indictments in Dallas involving a fraud worth $17 million, and another indictment in Phoenix for a fraud worth $23 million.

Director Mueller said, "I hope today's actions will serve to inform potential victims about the schemes that are out there. The old adage still holds: if it sounds too good to be true, it probably is, and you should be on the lookout for the warning signs of a fraud."

Potential investors are encouraged to watch out for PBIF Red Flags -- investment opportunities that have one or more of the following characteristics:

o "Secret" trading
o Risk free
o Guaranteed and/or high rates of return
o Investments only used as collateral
o Not licensed
o Not offered by legitimate brokerage firms

o Complicated, legal looking documents with:

• Errors
• Nondisclosure, non-circumvention clauses
• Confidentiality agreement
• Non-solicitation agreement
• Letter of intent/proof of funds
• Good, clean, clear funds of non-criminal origin

Potential investors are also encouraged to familiarize themselves with fraud schemes before investing. Several web sites post notices describing investment fraud schemes:

United States Treasury Department
www.publicdebt.treas.gov

Federal Reserve Corp.
www.federalreserve.gov

International Monetary Fund
www.imf.org

Federal Reserve Bank of New York
www.ny.frb.org

World Bank
www.worldbank.org

International Chamber of Commerce
www.iccwbo.org

United States Security and Exchange Commission
www.sec.gov

Office of the Comptroller of the Currency of the United States
www.occ.treas.gov

United States Federal Bureau of Investigation
www.fbi.gov

Individuals who suspect possible corporate fraud may report suspicious activity to the FBI in Washington, DC, via a toll-free Corporate Fraud Hotline. The number is (888) 622- 0117. The Hotline is manned Monday through Friday at FBI Headquarters during the normal business hours of 9 a.m. to 5 p.m. by FBI analysts.