Here's a glaring example of why private investing for Social Security is a very bad idea.
The Genesis Fund, Ltd.
Main Street
Charlestown,
Nevis WI
As many of you are aware, the United States Department of Justice Tax Division and the United States Attomey in Los Angeles have been conducting an investigation of Genesis for almost three years. The investigation was dormant for a period of time but has recently been reactivated. During the course of this investigation, agents from the Intemal Revenue Service and FBI have contacted several investors. Accordingly, you may be contacted by one or more of these federal investigators.
In the event you are contacted you should not panic and we encourage you to be truthful and cooperative. Y ou should also be factual and not speculate about matters that you do not have personal knowledge. In the past, at least one investigator has on several occasions made allegations about Genesis and certain individual s that have not been accurate.
Do not assume that Genesis has engaged in illegal conduct based on comments made by an investigator. In the past, some shareholders contacted by telephone have politely asked the investigator to put any questions in writing and have agreed to submit written answers. This ensures that an accurate record of questions and answers is maintained. You should also be advised that you may ask to have the opportunity to seek the advice of counsel before answering any questions. In this regard, I am enclosing a memorandum that was prepared for Genesis by one of its attomeys for distribution to its investors. While Genesis is not qualified to provide its shareholders with legal advice, we strongly recommend that you seek the advice and guidance of a qualified lawyer if you have any concerns about responding to questions or protecting your legal rights.
Roger Smyth Ltd.
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9 Accused in Alleged Giant Ponzi SchemeMay 22, 2005
Two former Orange County residents plucked by police from palatial Costa Rican homes on May 13 face extradition and
an 83-count U.S. indictment charging them and seven others with running a complex international Ponzi scheme that defrauded investors of nearly $60 million.Using the funds of some investors to pay "returns" to others and to finance lavish lifestyles, organizers of the scheme — called the Genesis Fund — took in more than $80 million between 1998 and 2002 while generating little, if any, profit, prosecutors say.
"They were marketing this as a private offshore fund outside the scrutiny of regulators like the IRS," said Nanette Davis, an attorney with the U.S. Justice Department's tax division who helped prepare the indictment. "All an investor had to do was follow the 'too-good-to-be-true rule' to avoid being duped."
Arrested were John S. Lipton, 58, formerly of Mission Viejo and Laguna Hills, principal manager of the fund; and Victor H. Preston, 64, a fund founder who lived in Huntington Beach and Laguna Beach while the venture operated out of Orange County.
Lipton and a third defendant, fund manager Richard B. Leonard, 71, formerly of Littleton, Colo., were taken into custody at the coastal resort town of Tango Mar. Preston was arrested at his home in San Jose, Costa Rica.
http://www.latimes.com/business/investing/la-me-genesis22may22,1,5062698.story?coll=la-headlines-business-invest