WASHINGTON (Legal Newsline) - An money manager and two of his chief marketers were charged Thursday by the Securities and Exchange Commission with defrauding investors with a fake company simulating one of Germany's former largest banks.
The $5.77 million investment scheme was allegedly operated by Geoffrey H. Lunn, who portrayed himself as the vice president of Dresdner Financial with claims of connections to Dresdner Bank and supposed plans to purchase several other banks to expand operations, according to the SEC.
Lunn allegedly worked with the assistance of Darlene A. Bishop and Vincent G. Curry.
The team assured solicited investors from the U.S. and foreign countries it could turn an investment of just $44,000 into $2 million within 10 to 12 banking days with their ".44 Magnum Leveraged Financial Program."
Lunn then allegedly withdrew the invested money in cash and Western Union transfers, paid hundreds of thousands of dollars to Bishop and Curry and gave nearly a million dollars to three Las Vegas call girls, the SEC claimed.
Lunn, Bishop, and Curry told investors that their company offered 100 percent guaranteed rates of return through a process involving the lease and monetization of bank instruments, the SEC claimed.
Curry and Bishop marketed the program to potential investors and Lunn held conference calls with marketers and investors to explain the program.
This occurred between Feb. 2010 and Feb. 2011, according to the complaint filed in Denver's federal court by the SEC. The securities offered were never registered with the SEC as required under the federal securities law.
Lunn admitted "It was a con, basically," in sworn testimony during the SEC's investigation. Lunn also admitted he did not lease any bank instruments, obtain any insurance wraps, monetize any bank instruments, or place any money into trading platforms as represented to investors.
As a result, Lunn, Bishop and Curry could not repay investors after the promised 10 to 12 days. They maintained the scheme by postponing the payout dates and claimed delays due to holds placed by banks or the government, the SEC said.
Lunn testified he paid three Las Vegas "call girls" at least $848,500 beginning in October 2010. The following month, Lunn used the investors' money to make a $1 million Ponzi-like payment to a favored investor. Other marketers involved in the scheme were paid $1.3 million by Lunn, he said. Bishop and Curry received more than $650,000 and the remaining investor funds were used by Lunn for his personal and business expenses, he said.
A "one-eyed man" by the alias of "Robert Perello", Lunn testified, is who actually created the fake company and Mangum program. Lunn claimed that Perello told him he choose that name for the program because "when people found out they'd been ripped off, they would buy a .44 Magnum and shoot themselves in the head." Lunn is the only person who claims to have met Perello in person and he does know his true identity or current whereabouts. Lunn claimed he gave investor funds to Perello and he threatened to kill him and his family if he did not cooperate with the Dresdner scheme.
Despite Lunn's claims and testimony, no individual believed to be Perello has been identified or located.
The SEC's complaint alleges that Lunn, Bishop and Curry violated the registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933, the antifraud provisions of Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the broker registration provisions of Section 15(a) of the Exchange Act. The complaint seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.