The Securities and Exchange Commission recently obtained an emergency court order shutting down a Ponzi scheme that centered on inviting retirees in California and Illinois to estate planning seminars and luring them to buy promissory notes for purported foreign investments.
The SEC alleges that USA Retirement Management Services (USARMS) and its managing partners, Francois E. Durmaz and Robert C. Pribilski, sent mass promotional materials to retirees and invited them to estate planning seminars held at country clubs and banquet halls. They then held follow-up meetings where they sought and gained the retirees’ trust, portraying themselves as educated and knowledgeable in the area of foreign investments specifically tailored to the needs of seniors.
Durmaz and Pribilski sold the retirees what they claimed were safe, guaranteed investments in “Turkish Eurobonds,” through the purchase of USARMS promissory notes earning annual returns between 8 and 11 percent.
The SEC alleges that USARMS’ scheme raised approximately $20 million from over 120 investors, but that it did not invest the money as promised in Turkish Eurobonds. Instead, the Company distributed returns to earlier investors with funds received from new investors in Ponzi-like fashion.
“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’ plan centered on giving a general presentation on estate planning to the seminar attendees and later inviting them to their offices for a personal meeting “to explain the amazing steps you must take when you set up a Living Trust or Will,” according to the SEC’s complaint.
The SEC alleges that once seminar attendees attended their “personal meetings,” Durmaz analyzed their personal financial information and informed them that the company had issued hundreds of millions of dollars in USARMS promissory notes. In addition, Durmaz misrepresented to the retirees that he had a Masters of Business Administration and was a Certified Senior Advisor. Thus, prospective investors were led to believe that Durmaz was educated and knowledgeable in investments specifically tailored to the needs of seniors and retirees.