Home Los Angeles Press Releases 2010 Residents of Oxnard, California and Myrtle Beach, South Carolina Arrested for Operating $26 Million Ponzi Scheme that...
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Residents of Oxnard, California and Myrtle Beach, South Carolina Arrested for Operating $26 Million Ponzi Scheme that Defrauded Hundreds of U.S. Investors

FBI Los Angeles August 16, 2010
  • Public Affairs Specialist Laura Eimiller (310) 996-3343

Two residents of Oxnard, California and a South Carolina man were taken into custody after being charged with operating a $26 million investment scheme that allegedly victimized hundreds of investors throughout the United States, announced André Birotte Jr., United States Attorney in Los Angeles, Steven Martinez, Assistant Director in Charge of the FBI in Los Angeles, and B. Bernard Ferguson, U.S. Postal Inspector in Charge in Los Angeles.

Nancy C. Khalial, 62, of Oxnard, California, Alan G. Flesher, 62, of Oxnard, California, and Wayne D. Flesher, 59, of Myrtle Beach, South Carolina, were taken into custody by agents with the United States Postal Inspection Service and the Federal Bureau Investigation during the past week for their roles in the investment scheme.

According to a 17 count indictment returned by a federal grand jury in Los Angeles on August 4th, 2010, the defendants allegedly committed mail fraud by soliciting as many as 700 victims around the country to invest in a fraudulent scheme. Victims were asked to invest in one of two companies operated by the defendants, known as Unlimited Cash, Incorporated (UCI) and Douglas Networks Enterprises (DNE). The defendants allegedly instructed sales people they recruited to advise potential victims that their money was to be invested in advertising campaigns that utilized computer monitors known as “ad toppers.” Investors were told that the ad-toppers would be placed on objects such as gas pumps, automated teller machines (ATMs) and vending machines, and that advertising on them would be purchased by companies including Coca-Cola, Gold's Gym and Paramount Pictures, among others. Victims were told that the advertisements would generate monthly revenues of $54 per month, per machine.

From approximately 2001 to 2005, the defendants’ companies took in an estimated $26 million from hundreds of investors nationwide. The indictment alleges the majority of the money was used by the defendants for personal expenses and to continue operating the fraudulent scheme by paying personal salaries, sales commissions and by making Ponzi-style payments. In a typical Ponzi scheme, money collected from later investors is used to make payments to earlier investors who are told that the funds are actual returns on their investments, rather than new investor money.

The indictment alleges that the defendants misled investors by greatly inflating the amount of income the ads generated, since the companies did not assemble enough ad-toppers to account for the number sold to investors. Neither UCI nor DEN had a significant number of advertisers, if any, who paid to display ads on the ad Toppers, yet defendants convinced investors that the ad toppers were a safe investment, according to the indictment.

Nancy C. Khalial, 62 years, of Oxnard, self-surrendered Friday morning to agents with the FBI in Westwood. Khalial had an initial appearance in U.S. District Court last Friday afternoon and was released on bond. Alan G. Flesher, 62 years old, of Oxnard, CA, self-surrendered to agents with the U. S. Postal Inspection Service on Thursday, 8/12, and had an initial appearance in U.S. District Court. Flesher was released on bond.

A third defendant, Wayne D. Flesher, 59 years old, of Myrtle Beach, South Carolina, was arrested by agents with the U.S. Postal Inspection Service in South Carolina on Wednesay, 8/11; he remains in custody pending removal to the Central District of California Los Angeles

This investigation was conducted by the FBI, the United States Postal Inspection Service and the Securities Exchange Commission (SEC). The SEC conducted the initial investigation in 2006 and filed a civil complaint against the companies UCI and DNE.

This case will be prosecuted by the United States Attorney’s Office in Los Angeles

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty.