FOR IMMEDIATE RELEASE

Contact: Phil Stenger
Stenger & Stenger
616/940-1190

Bull market may increase investors’ vulnerability to fraud

WEST MICHIGAN RESIDENTS LOSE $1 MILLION
IN FRAUDULENT INVESTMENT SCHEME

GRAND RAPIDS – March ??, 2000 – Six West Michigan residents, and about 20 others across the state, have lost more than $1 million after investing in an investment scheme in the United States and the Cayman Islands which turned out to be a $300 Million fraud. The so-called Ponzi Scheme referred to as “Cash 4 Titles” is the kind of deceptive deal that can trap just about anyone who doesn’t carefully scrutinize private investment opportunities, according to a Grand Rapids attorney involved in the case.

“Ironically, our hot economy may be contributing to peoples’ vulnerability to these so-called Ponzi schemes,” says Phil Stenger, whose firm, Stenger & Stenger, is investigating the scheme for the Securities and Exchange Commission. “More people have more money to invest, and even legitimate opportunities are yielding great rates of return.

“It wasn’t just a few naïve investors who put up big bucks in this case,” says Stenger. “New York Giants wide receiver Ike Hilliard, as many as six other athletes and an agent lost huge sums of money in the same scheme. Even an accountant – a professional one might think would know better – invested. Investments averaged $200,000. All told, we’ve determined the scheme’s leaders duped some 1,500 people in just about every state and several foreign countries out of more than $300 million.” The case was mentioned in a recent segment of the CBS news magazine 60 Minutes.

Ponzi scheme leaders raise money from new investors to pay early investors. Investors are led to believe that the returns they are receiving are from a profitable underlying business, but instead, the returns are simply money from new investors. Investors are lured by the promise of extremely attractive return rates that some don’t question because the stock market is doing so well.

“There’s always a sexy business involved to attract investors,” Stenger says. “People think they’re getting great returns because the business is profitable. Investors in this scheme were getting returns of as much as thirty six percent per year.” These schemes usually are slickly marketed, and often are promoted by people who seem trustworthy – a member of one’s church, for example.

In this case, the “sexy” business was a car-title loan company called Cash 4 Titles which lends money at rates as high as 360% per year. But, the schemes often lack the formality of legitimate investments, relying more on personal hype. (In another Securities Exchange Commission case Stenger is working on, the “sexy” business was oil and gas)

The Atlanta-based car title loan company has more than 20 retail operations, mostly in the south – prospective investors could visit the stores and get an impression of legitimacy, according to Stenger. They even advertised the stores. A Fort Lauderdale man, an Atlanta resident and several unregistered brokers working for them, have been charged with securities fraud and money laundering in the case.

Stenger was named by a federal judge as receiver in the Cash 4 Titles case to marshal and protect assets and to maximize any actual profits for the benefit of the investors. He is essentially responsible for the day-to-day operations of the Cash 4 Titles stores and manages the perpetrators’ interest in other businesses.

Stenger has also been named as liquidator by the Grand Court in the Cayman Islands to unravel the portion of the scheme which occurred in the Cayman Islands. Stenger has spent much of his tweleve-plus year law career tracing and recovering assets for the Securities and Exchange Commission and other clients in cases like this.

Stenger & Stenger ( www.stengerlaw.com ) specializes in business consulting, real estate, estate planning and creditors’ rights. The practice has six attorneys and ten support staff.