Has Las Vegas become the fraud capital of America?

Las Vegas fraud capitalThere was the lawyer who collected a whopping $500 million after promising hundreds of investors around the world a 50% annual return in what prosecutors call a classic Ponzi fraud scheme. The telemarketer who raised huge amounts of money nationwide for faux charities. The promoter who swindled small business owners everywhere out of nearly $12 million by collecting fees for promising grants that never materialized. The seven-person ring that collected $10 million million in fees after sending out thousands of phony prize notifications redeemable upon payment of small fees that can add up. The man who swindled more than $3 million in security deposits across the country. The tax preparer caught collecting nearly $10 million in phony refunds. A plethora of other cases too numerous to mention, especially COVID-19 loan refund fraud and identity theft cases.

Besides their fraudulent audacity, these perps had two other big things in common. They all lived and/or worked in the Las Vegas area. And criminal litigation involving their alleged deeds transpired within the past year.

Now, as epidemiologists might say, that’s quite a cluster of societal illness cases in a single geographic region. It’s more than enough to ask this basic question: Has Vegas become the fraud capital of America?

I poise this query from some experience. As a veteran financial journalist, I have written about fraud for decades before becoming New to Las Vegas. Long ago, several of my stories on individual situations even helped send fraudsters to jail.

But area overview articles are far more revealing. In 1999, as it became evident Salt Lake City had won the 2002 Winter Olympics with help from bribery, I wrote an article for Forbes about the dozens of recent fraud cases there, some with nationwide scope, in what then (and even now) is not a very large city. The headline: “Fraud per capita.”

During the 2000s, also in Forbes, I published several tables of fraud cases (see the bottom of these links here and here) in Spokane, Wash., a remote area of less than a half-million people. In 2009 I finally wrote up the big picture, which included stock-market manipulations, a dubious bond deal, and a scheme operating in more than 100 countries. The print headline: “Sleepless in Spokane.”

But the magnitude of deeds of a fraudulent nature in Sin City seems to be of a much grander scale, especially since so many of the victims were across the country.

For openers, there’s the case of Matthew Beasley, a 50-year-old Las Vegas lawyer arrested at his Las Vegas house in 2022 after a spectacular raid that resulted in him being shot and wounded by FBI agents when he pointed a gun. A year later, federal prosecutors in Las Vegas accused him of running for five years a Ponzi scheme, where investors are paid with funds from newer investors rather than from profits, that brought in a half-billion dollars. The alleged lure: Beasley offered a nearly risk-free 50% returns saying he would make short-term loans of the invested funds at high interest rates to persons awaiting settlements in unrelated lawsuits involving slip-and-fall injuries. The feds say there were no such cases, and that Beasley simply lived the good life.

Authorities said Beasley targeted members of the Church of Jesus Christ of Latter Day Saints, a/k/a the Mormons. The estimated 1,000 allegedly swindled investors who paid $80,000-to $100,000 a pop are said to include Mormon bishops, surgeons, business folks and retirees, some of whom poured in life savings. Beasley and several purported accomplices also face civil lawsuits brought by private investors and the U.S. Securities and Exchange Commission. Meanwhile, after pleading not guilty, Beasley himself remains in custody awaiting trial scheduled for February on mail fraud and money laundering charges that could put him away for life if convicted. Not surprisingly, the Nevada Supreme Court has suspended his law license.

I several times have written in this space about Richard Zeitlin. For years the 53-year-old Las Vegas resident has been the telemarketing power behind what I call faux charities and others call scam charities. They are political action committees cold-calling nationally asking for money that sound like worthy causes but aren’t and spend almost nothing collected from clueless donors on the stated mission. Zeitlin and his network of companies hold on to almost all the proceeds. There are media estimates he raised more than $100 million from unwary donors this way.

Nevada regulators traditionally have turned a blind eye to charitable chicanery, refusing to enforce disclosure and registration laws. But in August federal prosecutors in New York indicted Zeitlin on criminal wire fraud and obstruction of justice charges, which can carry a 30-year prison sentence if convicted. After a federal judge here heard Zeitlin had his own plane and just gotten dual Israeli citizenship, he was denied bail and shipped off in custody to New York City awaiting a trial scheduled for April. He’s pleaded not guilty and is appealing the denial of bail.

Earlier this year, Michael Jones, then 43, of Las Vegas was sentenced to 6½ years in prison and ordered to make millions in restitution after pleading guilty to multiple counts of wire fraud involving a plot running from 2009 to 2014. According to a federal press release, Jones and two co-defendants swindled nearly $12 million from 2,100 small business owners–apparently around the country–who paid fees thinking they were applying for supposed government, private and charitable grants for their businesses. But there were no grants awarded. “The scheme functioned solely to enrich Jones and his co-defendants,” the statement said, describing what is known as a classic advance fee fraud. According to the federal court online docket, the other two defendants, Jason Demko and Michael Guariglia–also from Las Vegas–previously pleaded guilty and were sentenced to lesser punishments.

I’m just getting started.

In another case, a federal judge in Vegas last month sentenced to stiff sentences the last three of seven Las Vegas-area persons who for eight years to 2018 ginned up a phony a prize-notification scheme that stole $10 million from elderly and other victims victims around the country. Mario Castro, 55, was sentenced to 20 years in prison, Miguel Castro, 58, to just five months less and Jose Luis Mendez, 49, to 14 years. In April, a jury found the three men guilty of conspiracy to commit mail fraud and multiple individual counts of mail fraud. Four other defendants–Patti Kern, 65; Andrea Burrow, 43; Edgar Del Rio, 45; and Sean O’Connor, 54, earlier pleaded guilty. Here’s how a press release from the U.S. Attorney’s Office described the case:

The three defendants and other co-conspirators printed and mailed millions of fraudulent prize notices that led their victims to believe that they could claim a large cash prize if they paid a fee of about $20 to $25. This was false; victims who paid the fees did not receive anything of value. Once victims fell prey to the scheme, the defendants bombarded them with more fraudulent prize notices. The defendants produced the fake prize notices at their warehouse in Las Vegas. The defendants received millions of dollars of money from victims.

Just two weeks ago, Norbert Ozemena Ikwuegbundo, 31, a citizen of Nigeria who chose, of all the places in the world, to make his home in Las Vegas, was sentenced to 44 months in prison for wire fraud and other charges. Also known as David Okon Larry and Ezekiel Moses Azizi, he pleaded guilty to his role in a plot during 2018 and 2019 to swindle a total of $3.3 million from more than 3,500 would-be renters across the country out of security deposits. I can do no better than quote another U.S. Attorney’s Office press release:

The conspirators assumed the identities of homeowners who were advertising on websites to rent their properties and posted imposter rental advertisements online at reduced rent prices, using the names and personal identifiers of the real homeowners—but changing the contact information to email addresses and phone numbers controlled by the conspirators. When contacted by potential renters, the conspirators requested that potential renters wire money for first and last month’s rent. Throughout the duration of the conspiracy, the conspirators used various lulling techniques, such as sending false rental agreements for victims to sign, so that they would have more time to pick up the wired money.

A co-defendant, Omniyi Jonathan Omotere, 37, also a citizen of Nigeria who chose, of all the places in the world, to make his home in Las Vegas, pleaded not guilty. He is scheduled to stand trial here in February.

Meanwhile, according to the prison locator website of the U.S. Bureau of Prisons, another Las Vegas area man, King Isaac Umoren, 42, is in the federal lockup at Fort Dix, in my native state of New Jersey. He was sentenced last December after his guilty plea to what I would call a double whammy fraud. Umoren ran a tax preparation business in North Las Vegas called Universal Tax Services. First, according to yet another U.S. Attorney’s Office press release, from 2012 to 2016, Umoren made up deductions and business losses to get his clients bigger refunds, but then forced them to use a refund anticipation check service from which he took fees without their knowledge. Secondly, he stole the identity of 12,000 persons who weren’t his clients and used the paperwork to make his business seem a lot bigger to sell to an unsuspecting buyer for $3.8 million. Besides getting a 13-year sentence, Umoren was tagged with a restitution order for $9.7 million, the estimate of his ill-gotten gain.

I could rattle off another 50 Vegas cases in the past year..

In my earlier stories for Forbes, I suggested one root of the fraud culture in Salt Lake City and Spokane was their long histories hosting iffy regional stock exchanges. The Salt Lake Stock and Mining Exchange and the Spokane Stock Exchange were both shut under regulatory pressure in the 1980s. Their listed companies consisted mainly of dubious outfits. These included highly speculative “penny stocks” touting mining and other opportunities that almost never panned out. Except, that is, for promoters who pumped up the stock price and then dumped their shares before the inevitable collapse.

Las Vegas never had that kind of financial infrastructure, with the attendant armies of dodgy securities lawyers, CPAs and transfer agents facilitating such activities. But since 1931, Las Vegas has had legalized gambling, with an undercurrent of risk-taking and, sadly, cheating in hopes of getting an edge and not getting caught. Vegas also has long styled itself the city of second chances, which can mean that some of the folks moved here because of problems elsewhere (i.e. organized crime figures starting in the 1940s).

Everyone knows famous Las Vegas marketing slogan, “What Happens Here, Stays Here.” That’s not always a good thing.

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