SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16368 / November 23, 1999
Securities and Exchange Commission v. World Financial & Investment Co., Inc. and Victor M. Wilson, U.S. District Court, E.D.N.Y., No. 99-CIV-7608 (ILG)
The Securities and Exchange Commission today filed fraud charges against a Brooklyn lawyer and his investment advisory firm, for their role in a Ponzi Scheme conducted through a supposed bank chartered by the non-existent "Dominion of Melchizedek." Named in the Commission's Complaint filed in the U.S. District Court for the Eastern District of New York are:
The Complaint alleges as follows:
Acting directly and through "sub-agents" on the Caribbean island of Dominica, Wilson raised approximately $1.2 million from hundreds of investors in the United States and Dominica from March 1997 through April 1998. The money was invested in a so-called "60-40 program" promoted by Credit Bank International Co. ("Credit Bank") and its founder, Roger E. Rosemont. Credit Bank is purportedly chartered in Melchizedek, and Rosemont claimed he was Melchizedek's "ambassador at large" to the Carribbean. In truth, the 60-40 program was a Ponzi scheme, Credit Bank is not a bank, Melchizedek is not a country, and Rosemont is no ambassador.
Wilson received approximately $175,000 in fees for his role in the scheme. He played a central role by soliciting U.S. investors and channeling funds to bank accounts controlled by Rosemont. Wilson told investors that they would obtain returns in excess of 300% to be disbursed over a period of several months. The astronomical returns would purportedly result from profits Rosemont would generate by pooling and reinvesting funds in unspecified financial instruments. The relatively small number of investors who entered the scheme in its early stages obtained tremendous returns, including Wilson himself, who reaped $23,800 in profits from his early investment of $4,166. Most investors, however, received no disbursements and lost all the money they invested.
Wilson promoted the scheme despite receiving strong signals indicating that it was a fraud:
Wilson also knew, or recklessly disregarded, that there is no such country as Melchizedek. Before entering into the scheme, Wilson tried unsuccessfully to locate the nation of Melchizedek on a map and in an encyclopedia. He knew from an associate of Rosemont that Melchizedek existed only as an Internet site, www.melchizedek.com. Indeed, since 1991, numerous press reports have identified Melchizedek as a base for fraudulent schemes involving purported bank charters and other bogus corporate documents. There is no recognized governmental authority that actually charters banks in the name of Melchizedek.
Wilson, a U.S. citizen, was born and raised in Dominica. In addition to the many residents of Dominica solicited by Wilson's sub-agents, most of the U.S. investors recruited by Wilson were immigrants from Dominica and other Caribbean islands. With many victims drawn from the same ethnic group, this case is another in a series of "affinity fraud" enforcement actions brought by the Commission. See the Commission's recent investor alert, www.sec.gov/investor/pubs/affinity.htm, which explains how to avoid becoming a victim of an affinity fraud.
The Complaint charges Wilson and World Financial with violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The Commission seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties against both defendants.http://www.sec.gov/litigation/litreleases/lr16368.htm