Thursday, May 17, 2012

Corruption: Couple convicted of operating $12 million Ponzi scheme.

U.S. Attorney’s Office 
Northern District of Georgia

ATLANTA—A jury in federal district court has returned a guilty verdict today against Andrew S. Mackey, 62, and his common-law wife, Inger L. Jensen, 54, both of Cedarhurst, New York, for operating a Ponzi scheme, announced Sally Quillian Yates, United States Attorney for the Northern District of Georgia. The scheme was marketed by the defendants through their company, ASM Financial Funding Corporation, as a “Wealth Enhancement Club,” and was touted as an investment program for a small and select group of sophisticated investors.

United States Attorney Yates said of today’s verdict, “As the witnesses and the evidence proved at trial, this was a tragic case of fraud that victimized more than 150 people. The victims thought they were investing in legitimate offshore business opportunities, but it was in fact a Ponzi scheme that netted Mackey and Jensen over $12 million. We hope that the jury’s verdict has brought some measure of justice to the many victims of this fraud.”

Brian D. Lamkin, Special Agent in Charge, FBI Atlanta Field Office, stated, “The FBI dedicates substantial resources to investigating these types of investment or Ponzi schemes in an effort to protect the public from such individuals as Mr. Mackey and Ms. Jensen. While the FBI is proud of the role it plays in assisting the victims of such greed, it is important for investors to be cautious and to question such promises of high returns.”

The trial lasted eight days before United States District Judge William S. Duffey, Jr. The jury deliberated approximately five hours before reaching guilty verdicts on 15 of the 17 counts charged. Mackey and Jensen were indicted by a federal grand jury on July 20, 2010 on charges of wire fraud, mail fraud, and conspiracy to commit wire fraud and mail fraud.

According to United States Attorney Yates, the charges and other information presented in court:

The evidence presented at trial showed that from 2003 through 2007, Mackey and Jensen owned and operated ASM Financial Funding Corporation in Valley Stream, New York. Mackey and Jensen held themselves out to the public as investment advisors and financial experts who catered only to a small and select group of sophisticated investors. They falsely represented to the investors that they would use their sources to place investors’ money in private and confidential offshore business deals designed to promote the financial stability of select qualified individuals; that investors would earn up to 20 percent interest per month; that investors could choose to reinvest their earnings or receive monthly interest payments from ASM; and that investors’ earnings would be based on “trade proceeds.” Mackey and Jensen paid commissions to brokers they called “intermediaries” to help them recruit new investors. These intermediaries in turn repeated the defendants’ false promises to potential investors, themselves believing the defendants’ promises were true.

As a result of these false representations and with the assistance of the unwitting intermediaries, approximately 150 people invested a total of more than $12 million in a fraudulent investment program known as ASM’s Wealth Enhancement Club. The evidence showed that Mackey and Jensen invested less than one-third of the investors’ money. And, they never generated any profits whatsoever for the investors. Moreover, Mackey and Jensen lost the entire amount that they invested on behalf of the investors. Mackey and Jensen used the other two-thirds of the investors’ money to operate their fraudulent scheme, to pay their own personal expenses, and to pay make-believe profits to some of the early investors to give ASM an air of legitimacy.

The evidence showed that all of the money that Mackey and Jensen distributed to the investors as purported interest payments came not from trade proceeds but from the investors’ own money. Nevertheless, the defendants led the investors to believe that ASM was earning profits by distributing monthly statements and 1099-INT forms, which showed that the investors had earned interest income and that their investments were safe and secure.

ASM stopped paying make-believe profits to the investors in February 2006 and thereafter tried to lull the investors into a false sense of security and delay or prevent their complaints to law enforcement by promising that additional payments would be forthcoming and by telling the investors that talking to law enforcement would make it less likely that any of the investors would receive additional payments. Witnesses at trial included several intermediaries and numerous investors who were victimized by the scheme.

Mackey and Jensen could each receive a maximum sentence of 30 years in prison and a fine of up to $1,000,000 for each count of conviction. Sentencing is scheduled for August 21, 2012 at 9:30 a.m. before Judge Duffey. In determining the actual sentence, the court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

This case was investigated by special agents of the Federal Bureau of Investigation.

Assistant United States Attorneys J. Russell Phillips and Stephen H. McClain are prosecuting the case.