| | | Effective PR

"Estate planning advisers" were running a ponzi scheme

The Securities and Exchange Commission has obtained an emergency court order to shut down a Ponzi scheme targeting retirees in California and Illinois by inviting them to estate planning seminars and later coaxing them to buy promissory notes for purported Turkish investments.

The SEC alleges that USA Retirement Management Services (USARMS) and managing partners Francois E. Durmaz and Robert C. Pribilski mass-mailed promotional materials to prospective investors and invited them to estate planning seminars held at country clubs and banquet halls.

They gained retirees' confidence in follow-up meetings and portrayed themselves as educated and experienced in foreign investments specifically tailored to the needs of the elderly.

Durmaz and Pribilski then pitched what they represented as safe, guaranteed investments in "Turkish Eurobonds" through the purchase of USARMS promissory notes that would earn annual returns between 8 and 11 percent.

The SEC alleges that USARMS raised at least USD20 million from more than 120 investors, but did not actually invest the money in Turkish Eurobonds as promised. Instead, returns were paid to earlier investors with funds received from new investors in Ponzi-like fashion. Durmaz and Pribilski further misused investor funds to finance their other businesses and purchase such things as luxury automobiles, homes, vacations, and web-based pornography.

They also wired investor money into bank accounts belonging to individuals living in Turkey who are named as relief defendants (third parties) in the SEC's case.

"Durmaz and Pribilski used estate planning seminars as a means to elicit investor trust and lure retirees into investing in a classic Ponzi scheme," said Rosalind R. Tyson, Director of the SEC's Los Angeles Regional Office.

USARMS and its securities are not registered with the SEC. USARMS is incorporated in Illinois and has offices in Los Angeles; Irvine, Calif.; and Oakbrook Terrace, Ill. Durmaz resides in Los Angeles and Streamwood, Ill., and Pribilski resides in Lisle, Ill. Neither of them is registered with the SEC in any capacity nor do they hold any securities licences.

According to the SEC's complaint, filed on 9 March in U.S. District Court for the Central District of California, Durmaz and other USARMS employees provided seminar attendees a general presentation on estate planning and later sent them a letter inviting them to their offices for a personal consultation "to explain the amazing steps you must take when you set up a Living Trust or Will."

The SEC alleges that once seminar attendees went to their estate planning appointments, Durmaz examined their personal financial information and told prospective investors that they had issued hundreds of millions of dollars in USARMS promissory notes. In addition, Durmaz falsely claimed that he held a Masters of Business Administration (MBA) and was a Certified Senior Adviser (CSA). Thus, prospective investors were led to believe that Durmaz was educated and experienced in investments specifically tailored to the needs of the elderly and retirees.

The Honourable George H. Wu, U.S. District Judge for the Central District of California, granted the SEC's request for emergency relief for investors on 9 March, including an order temporarily enjoining defendants from future violations of the anti-fraud provisions and freezing their assets.

Judge Wu also granted the SEC's request for emergency relief against relief defendants Sibel Ince, Marlali Gayrimenkul Yatirimlari, Mehmet Karakus, Marlali Property Investment Company, LLC, and Gulen Enterprises, Inc.

World Money Lau...