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Huge fraud ring broken, FBI says
More articles on this topic: Fraud7 arrested; victims lured by trust fund
Authorities say the story was as compelling as it was bogus: Descendants of Mormon church founder Joseph Smith had created a $1.6 trillion trust fund held overseas, and investors were needed to bring the money back home.
The FBI said yesterday it had broken up a massive fraud ring operating out of an Ocean Beach liquor store and a Mission Valley apartment complex. It said flim-flam artists flew to Utah, Texas, Idaho and other states pitching ways to broker phony deals.
Over 100 victims were bilked out of between $20 million and $50 million, money they earned through construction work, farming, drilling and real estate, said FBI agent Adam Lee.
Seven people accused of luring investors, laundering money and distributing cash as part on the scam were arrested Tuesday – four in San Diego, two in Utah and one in Mississippi.
Authorities are seeking three other people who have been indicted, including Daniel Anderson, 63, formerly of Scripps Ranch, who Lee said has been a part of the scam for more than 10 years.
Eight other people were arrested last year and two others agreed to plead guilty before charges were filed against them, he said.
Lee said John Harrell, 70, of Santee, who is accused of being the ringleader of what the FBI called the “Good Samaritan” scam, has been awaiting trial since his arrest in March 2003.
“They targeted largely people of means without a lot of sophistication,” Lee said.
Investors were sometimes promised annual returns of 100 percent for 99 years.
“There were religious undertones to virtually every part of this,” Lee said, noting that investigators observed prayer meetings held with some potential investors.
Those behind the scam claimed a link to descendants of Smith, the founder of the Church of Jesus Christ of Latter-day Saints, but were in no way connected to the church, Lee said.
Lee said Harrell’s “gift of gab” enabled him to adapt his pitch depending on the victim: Churchgoing victims were told their help was needed for a religious theme park; philanthropic victims were pitched development centers; and ill people were promised miraculous cures.
“Curiosity and greed is what’s going to sell this program,” Harrell once told an associate, according to court records.
Many of the defendants – part of the sales team – lived in a Mission Valley apartment complex where Harrell met with them individually every day and paid them cash, about $40,000 in total a day, Lee said.
Millions of dollars were laundered through Chris’ Liquor Store in Ocean Beach, Lee said.
“That’s where they all got paid and took their money,” he said.
A store manager said yesterday he was unfamiliar with the owner’s legal troubles. “I haven’t heard anything about it,” he said.
The local arrests Tuesday include liquor store owner Gregg Stavros, 46, and an El Cajon couple, George Eastman, 43, and his wife, Angela, 37. Also arrested in San Diego was John Zane, 73, of Rancho Mirage.
Kenyon Flake, 44, and Clarence Pack, 63, were arrested in Utah, and Roland Harris, 55, was arrested in Mississippi.
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