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Apr
24
Written by:
Chuck Gallagher
4/24/2008 11:18 PM
Twenty years in federal prison for fraud - by anyone's standards, that's painful. But this story goes, in some ways beyond pain. You see...Michael Rich - just sentenced to 20 years in prison is 71 years of age. (Rich
is also known as Richard Forbes Williams and Michael Richard Brown.)
What a way to retire. But the rest of the story is his wife, Phyllis Marks Rich, age 70, was sentenced to 51months for her role as chief operating officer in the fraud.
Phyllis Marks Rich is also known as Phyllis Marks, Phyllis Berg, Phyllis Henning, Phyllis Swetcoy, Phyllis Laff, Phyllis Hurba and Phyllis Johnstone. Gotta admit here I'm confused with all the names. Either there is a multiple personality issue, she's been married more times that I would care to know, or she loves alias names. Go figure? Either way, Rich was also ordered to pay $13,400,138.79 in restitution to more than 300 victims.
The total fraud according to the US Attorney's office was substantial. Pac Equities had an office in Bend, Oregon, and purported to manage profitable real estate development projects, including a subdivision in Phoenix, Arizona, a high-density townhouse development in Salem, Oregon, a dairy in Culver, Oregon, a resort complex in Ocean Shores, Washington, commercial buildings in Redmond, Oregon, and an industrial park in LaPine, Oregon. Rich and Pac Equities also purported to make profitable loans. They facilitated these activities by soliciting investors to invest in real estate development projects and loans with the promise of annual returns of 10% or more, which were paid on a monthly basis. They represented that the investments were secured by trust deeds and always had at least 30% in equity, with no more than 70% loan to value ratio. The evidence at trial, however, showed that in selling real estate investment contracts, Rich misrepresented a variety of things about his educational background, his employment history, and the nature and security of the contracts, which caused over 300 people to invest over $18,000,000 with Pac Equities.
Rich and Pac Equities created the facade of a successful business by using investor principal to make monthly payments to investors. They represented that these payments constituted interest earned from profitable investment and loan activity. They used this facade to recruit additional investors and retain existing investors, knowing that the only sources of income for Pac Equities were from a few projects and loans. These amounts were insufficient to meet monthly interest obligations which Pac Equities owed its investors.
"It can be devastating when the financial well-being of an individual falls into the wrong hands through trickery and deceit," said Kenneth Hines, the IRS Special Agent in Charge for the Pacific Northwest. "The days are numbered for those who peddle false hopes and dreams, and prey on investors for their own personal financial benefit."
Rich and his company would then use the money received to create a “facade to recruit additional investors and retain existing investors, knowing that the only sources of income for Pac Equities were from a few projects and loans,” the U.S. Attorney’s Office said. “These amounts were insufficient to meet monthly interest obligations that Pac Equities owed its investors.” Basically nothing more than a big Ponzi scheme.
Here's a question! For those who were swindled: what caused you to make the first investment with the Rich's? Knowing that more than 300 investors were conned - it would be helpful to others to share your experience.
Earlier this evening I got off the phone with another individual who was conned under a huge Ponzi scheme and the effect to this person is devastating. Not only did he lose his life's savings planned for his retirement, but the effect has been far reaching as it relates to him mentally and emotionally.
Consider responding to these questions:
- What about Rich's investment attracted you?
- How were you first introduced to Rich and his investment scheme?
- When did you first find out it was a sham?
- Did you ever refer others to Rich thinking that you were helping them?
- What effect has this had on your life?
Know that you can reply without revealing any identifying information.
PLEASE COMMENT!
Chuck Gallagher, business ethics speaker, signing off...
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Re: President and CEO of Pac Equities - Michael Rich - Sentenced to 20 Years in Prison!
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