Byron Center Man Guilty in $46 Million Investment Fraud Scheme
|U.S. Attorney’s Office May 09, 2014|
GRAND RAPIDS, MI—U.S. Attorney for the Western District of Michigan Patrick Miles announced today that David W. McQueen, age 43, of Byron Center, Michigan, was convicted of six counts of mail fraud, six counts of money laundering, and three tax counts stemming from a $46,000,000 Ponzi scheme that spanned three years. He was acquitted of one fraud count and two money laundering counts. The scheme affected more than 800 families and preyed upon unsophisticated, often elderly investors. He faces up to 20 years on each fraud count, up to 20 years on some of the money laundering counts (up to 10 years on others), and one year on each tax count.
The evidence at trial showed that, as with many investment frauds, McQueen likely did not set out to create a criminal enterprise that would result in a financial tragedy for his investors. In 2006, McQueen, who made an adequate living in sales, used borrowed funds to invest in a company called Multiple Return Transactions (MRT). MRT was owned and operated by Jim Clements. Clements promised returns of 10 percent per month or higher to McQueen. After a few months of making such returns, McQueen decided to capitalize on his apparent investment success and invited others to invest through him. McQueen created a company called Accelerated Income Group (AIG), through which he promised returns as high as five to six percent to investors. In addition, McQueen recruited insurance agents to sell his investments to their clients. For a short time, AIG was very successful (at least on paper). McQueen used MRT’s promised returns of 10 percent to make AIG’s promised returns of five percent. McQueen could meet his five percent obligations to his investors and then keep five percent for himself.
In mid-2007, MRT stopped making payments and meeting redemption requests. MRT was merely a Ponzi scheme, and their money was gone and would never be recovered. Instead of notifying AIG investors that MRT had failed, however, McQueen continued to tell investors that their money was safe and growing. Without MRT making its monthly payments, McQueen and AIG could not meet their five percent monthly obligations to investors based on investment earnings. Instead, McQueen used the only funds he had available to make promised interest payments—money from new investors.
Instead of shutting down AIG, or at least notifying his investors of MRT’s cessation of interest payments, McQueen falsely touted his investment success and raised millions of dollars of additional money. In addition to AIG, McQueen created three other funds, International Opportunity Consultants (IOC), Diversified Liquid Asset Holdings (DLAH), and Diversified Global Finance (DGF), that were nothing more than sham corporations designed to raise millions of dollars from investors. McQueen commingled the investor money between his various and purportedly distinct funds and used it to make bogus interest payments and redemption requests to investors, pay commissions to agents that sold the funds on McQueen’s behalf, or simply spend the money. Despite knowing that he had absolutely no revenue coming in, McQueen took $100,000 of investor money per month tax free for his own personal use and enjoyment.
Recognizing that his scheme would collapse without actual investment success, McQueen placed approximately 30 percent of the investor funds in a series of highly speculative investments or scams. Unsurprisingly, this effort did not generate significant returns, and many lost all of the funds invested. To perpetuate his fraud, McQueen sent out monthly or quarterly account statements communicating to investors that their investments were safe and growing. Investors relied on those account statements and believed they accurately depicted the balance in their accounts. McQueen promised investors that they could liquidate their accounts at any time, but most did not because they believed that their account statements were accurate and that they had made a solid investment. In July and August 2009, McQueen sent out his final account statements showing that investors had tens of millions of dollars safe and growing in their “separate accounts.” Those statements concealed the truth—that McQueen had nearly run out of money.
On August 24, 2009, the IRS and FBI executed search and seizure warrants signed by Magistrate Hugh W. Brenneman. The government seized approximately $430,000 from McQueen’s accounts. Unbeknownst to the government, McQueen later brought the remaining investor funds (approximately $440,000) back from an account located in New Zealand and used it for personal expenses and to make some last ditch investments, which failed.
After the jury rendered their verdict, Defendant McQueen was remanded to the custody of the U.S. Marshals Service. A sentencing date has not been set.
This case was investigated by the IRS and FBI and prosecuted by Assistant U.S. Attorneys Matthew G. Borgula, Sally J. Berens and Heath Lynch and Securities and Exchange Commission Trial Attorney Timothy Leiman.