A Mini Stanford

Posted by: Adrienne Carter on March 26

Turns out, Millennium Bank was too good to be true.

At least that’s what the Securities & Exchange Commission is claiming. On March 26, the federal regulator put the kibosh on an alleged $68 million Ponzi scheme at the Caribbean-based bank.

The firm’s gambit sounds a lot like that of alleged fraudster Allen Stanford, who regulators claim ran an $8 billion fraud. Millennium offered high-yielding certificates of deposit with interest rates between 6% and 7.75%—investments that BusinessWeek first questioned back in February. The CDs, claims the SEC, were simply “fictitious.” The SEC alleges that William J. Wise and Kristi M. Hoegel ran the fraud, along with the help Jacqueline S. Hoegel (Kristi’s mom), Brijesh Chopra, and Philippe Angeloni

The complaint alleges that Millennium raised $68 million from investors over the past five years, luring them with promises of safety and security. Millennium also claimed it was wholly-owned by United Trust of Switzerland S.A. a Swiss-registered trust company founded in 1931. The SEC says United Trust isn’t a Swiss bank or securities dealer.

It didn’t take much digging for us to have serious doubts about the bank’s pedigree. The Swiss banking regulators had never heard of United Trust of Switzerland. (Millennium said its parent company didn’t have a website as to “maintain absolute privacy” of its customers.)

The regulator’s complaint alleges the defendants “misappropriated” investors’ money to pad their own accounts and pay personal expenses. Millennium, claims the SEC, made only nominal payments to investors.

“The defendants disguised their Ponzi scheme as a legitimate offshore investment and made promises about exuberant returns that were just too good to be true,” said Rose Romero, Director of the SEC’s Fort Worth Regional Office.

Reader Comments

Zoe Graves

April 1, 2009 08:15 PM

I had $300,000. invested in "United Trust of Switzerland". That's my daughter's college tuition. What do I do now?

Hal

April 7, 2009 11:23 AM

A law firm has been appointed to be the "Receiver" for this case. You can get information at http://www.tklaw.com/millennium_bank_receivership.cfm. They have not posted exactly what will happen, but some reports indicate that all money and property are being seized, so investors may get something back, after the law firm takes their cut...

Plan on taking out student loans.

Sarah Summer

April 10, 2009 03:54 PM

Wow "$68 million Ponzi scheme".Its lots of money and that too done in only 5 years time.I appreciate the brains of the owner who must be really very clever to gain so much in so little time.But as usual "all bad things have a bad ending!"

Thanks,
Sarah Summer
Dalton,GA

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BusinessWeek's Adrienne Carter, Jessica Silver-Greenberg, and David Henry deconstruct the mysteries of high finance, Wall Street, and hedge funds for pros and ordinary investors. E-mail them directly if you've got tips about big deals, a hedge fund, or even securities industry gossip.

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