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Scam watch: Online shopping, Jewish community targeted, Ponzi scheme

April 15, 2012
  • Investment offers were fraudulent, authorities allege.
Investment offers were fraudulent, authorities allege. (David Paul Morse / Bloomberg )

Here is a roundup of alleged cons, frauds and schemes to watch out for.

Online shopping discounts – Two men have been sentenced to lengthy prison terms after they were convicted of several crimes related to an online shopping club. James A. Sweeney II and Patrick M. Ryan were convicted of numerous charges of grand theft and securities fraud involving a Riverside company called Big Co-Op Inc., which claimed to offer rebates and discounts to online shoppers. Prosecutors had accused the pair of selling worthless private stock in the company, which they claimed was turning huge profits and about to make an initial public offering. There were never plans for an IPO and the company was not profitable, the California attorney general’s office said in a news release. Both men were sentenced to more than 30 years in prison and ordered to pay more than $8 million in restitution to victims.

Persian-Jewish community targeted – The Securities and Exchange Commission has accused a Los Angeles man of operating an investment scheme that defrauded investors out of more than $7.5 million. The SEC alleged in a lawsuit that Shervin Neman, 30, targeted members of the Los Angeles Persian-Jewish community, promising to make huge profits by investing in foreclosed real estate and pre-IPO shares of well-known companies. Instead of making such investments, he used new investor contributions to pay returns to early investors and spent about $1.6 million on himself, including on his wedding and honeymoon and on expensive jewelry and tickets to sporting events. “Although Newman promised investors exorbitant returns resulting from his investing acumen and access to pre-IPO shares of well-known companies, what they actually received was simply other investors’ money in hallmark Ponzi scheme fashion,” the SEC said in a news release.  

Orange County Ponzi scheme – An Orange County man has pleaded guilty to an investment scheme that caused victims to lose $2.7 million. Timothy Melvin Murphy of Orange admitted that he made false promises of guaranteed investment returns to attract investors, who believed that he would invest their money in a truck-leasing business, federal prosecutors alleged. Instead of investing the money as promised, Murphy used it to pay returns to investors, leading them to believe that his investments were profitable. He also used the victims’ money on personal expenses, including on mortgage payments and to refurbish classic automobiles. Murphy, 70, is a retired colonel in the California Army National Guard who previously served as commanding officer of the guard’s base in Los Alamitos.

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