Published on June 11th, 2013 | by Daniel Perlman0
Ventura County ‘Ad-Toppers’ Ponzi Scheme Cost Victims Millions
Three Ventura residents were sentenced today to federal prison – with one defendant being ordered to serve more than 17 years – for their roles in an investment scheme that victimized hundreds of investors across the United States and caused losses of more than $27 million.
The three defendants – two brothers and woman, all of whom share a house in Ventura – fraudulently raised money by telling victim-investors that funds would be used to purchase Ad Toppers, a video device that can be placed on ATMs or vending machines and used to display advertisements.
The defendants sentenced today were:
Alan G. Flesher, 65, the leader of the scheme, who was sentenced to 210 months in federal prison;
Wayne D. Flesher, 62, Alan’s brother, who was sentenced to 72 months in prison; and
Nancy Carol Khalial, 65, who was sentenced to 48 months in prison.
All three were sentenced by United States District Judge Terry J. Hatter Jr., who also ordered the defendants collectively to pay $27,377,470 in restitution.
All three defendants pleaded guilty last July to 17 counts of mail fraud and admitted that they used Oxnard companies called Unlimited Cash, Inc. (UCI) and Douglas Network Enterprises, Inc. (DNE) to run the Ponzi scheme. The defendants told victims that UCI would sell ATM machines and “Ad Toppers” – computer monitors capable of displaying video advertisements – and DNE would place the devices in commercial locations that would generate income.
Victims were told they would earn income from ATM transaction fees and advertisement revenue generated by Ad Toppers which would show ads for companies such as Coca-Cola, Gold’s Gym and Paramount Pictures. Even though the scheme took in approximately $41 million from approximately 790 victim-investors from approximately 2001 to 2005, the defendants did not place most of the ATMs and Ad Toppers sold to investors.
“In other words, defendants sold nonexistent ATMs and Ad Toppers and paid the later investors with the funds from the earlier investors,” prosecutors wrote in court documents filed in relation to today’s sentencings.
The defendants used the majority of investor funds to pay personal expenses and to continue operating the fraudulent scheme by paying personal salaries, sales commissions and by making Ponzi-style payments.
This investigation was conducted by the FBI and the United States Postal Inspection Service, which received assistance from the Securities Exchange Commission.
Source: justice.gov “Ventura County ‘Ad-Toppers’ Ponzi Scheme Cost Victims Millions,” June 11, 2013.