Bloomfield Hills Investment Planner Pleads Guilty to Ponzi Scheme Fraud
|U.S. Attorney’s Office December 18, 2009|
A 67-year-old Bloomfield Hills, Michigan investment planner pled guilty to an Information charging him with devising a Ponzi scheme and committing mail fraud in carrying it out, United States Attorney Terrence Berg announced today.
Pleading guilty before United States District Judge Stephen J. Murphy was Richard Taft Johnson of Orchard Lake, Michigan.
The fraud arose when Johnson, doing business in Bloomfield Hills, Michigan as Investor Planning Services, represented to potential investors that they could invest in a low-risk program called the ”American Charitable Program” with a very competitive rate of return that would be tax deferred, and the principal would be secure and could be withdrawn at any time. It also included the purchase of an insurance policy that would provide a future benefit to a charity or qualified non-profit organization. Based on defendant’s representations, investors in the American Charity Program believed that, ultimately, their investments would benefit charitable organizations such as universities or other educational institutions. In the interim, the investors understood they would receive a rate of return of 10 percent per quarter and that their principal investment could be withdrawn if necessary. Investors were also provided with fraudulent periodic statements showing the purported increasing value of their investment accounts.
According to the information presented to the Court at the time of the plea, between 1998 and 2009, over 120 investors are known to have provided millions of dollars to Mr. Johnson to be invested in his American Charitable Program. The investors are primarily from Michigan, but a number reside in Florida and other states.
As in all Ponzi schemes, Mr. Johnson would pay out earlier investors, or investors who demanded a return of their money, with newer investors’ monies. But he also diverted significant funds to his personal use. The defendant’s scheme began to unravel in 2008 and 2009. The Court will determine which investors are entitled to restitution of their principal.
United States Attorney Terrence Berg stated that, “This was an insidious Ponzi scheme because investors were told it was a safe, secure investment that would ultimately help charities. Like most Ponzi schemes, it went undetected for a number of years, allowing some investors to reap a profit on their investments, and encouraging others to invest. It can be very disturbing for a victim to discover that he has innocently caused friends or relatives financial ruin. In the end, a number of the investors, some quite elderly, lost everything because their monies were used to keep the scheme going until the inevitable collapse. In the course of this investigation, we will be attempting to help ascertain what, if anything, the victims’ might be able to salvage of their financial worth. In addition to the FBI, I wish to thank and commend the investigators of the State of Michigan Office of Financial Insurance Regulation and the State of Florida Division of Insurance Fraud who worked very hard to investigate and compile the information about Mr. Johnson’s fraudulent activities.”
The count to which defendant pled guilty, carries a maximum sentence of 20 years' imprisonment and a $250,000 fine. Johnson’s sentencing is scheduled for Friday, February 26, 2010 at 10 a.m.
The investigation of this case has been conducted by Special Agent Daniel J. Troccoli of the FBI and prosecuted by Assistant U.S. Attorney Ross I. MacKenzie.