FBI RAIDS MULTIMILLION DOLLAR SOUTHERN CALIFORNIA INVESTMENT FIRM

AP Breaking News ^ | 23 December 2003 | Don Thompson

[MeneMeneTekelUpharsin]

SACRAMENTO (AP) - The FBI raided a Southern California investment company Monday, alleging that more than 1,800 clients who invested tens of millions of dollars were victims of a long-running confidence scheme. No charges have been filed, but the FBI is investigating Financial Advisory Consultants as a possible "Ponzi scheme," where early investors are paid with money from later investors, said FBI spokeswoman Laura Bosley.

James Lewis, who variously lists himself as the firm's president or, more recently, its funds manager, told an investor in August that his "growth fund" alone had $62 million in assets, according to an FBI affidavit. Lewis also operated an income fund that clients said is worth tens of millions of dollars. His firm had more than 1,800 clients across the nation, one of Lewis' assistants told the FBI.

The Associated Press disclosed earlier this month that Lewis, 57, has been investing millions of dollars for clients and claiming extraordinary financial returns for 20 years, without being licensed or regulated as required. Moreover, the firm has never provided clients with any details on how it invests their money. Since July, Lewis has been delaying withdrawal requests with the excuse that millions of dollars in investments have been frozen by the Department of Homeland Security - a freeze the AP reported does not exist. Those details were confirmed in a sworn affidavit used to obtain the search warrant from a federal magistrate.

"There is probable cause to believe that FAC and Lewis, through the use of the mails, engaged in a scheme to defraud investors in FAC's Income and Growth Funds by operating a Ponzi scheme," FBI agent Brad Howard said in his affidavit. He further alleges that Lewis and the firm used the U.S. mail to sell securities without registering with the federal Securities and Exchange Commission. Investors previously said they had been interviewed and provided financial records to investigators from both the SEC and the state Department of Corporations, although the FBI acted alone Monday.

Chuck Woolstenhulme of Temecula invested $100,000. He tried to get his money back, but failed. "I'm glad it's come to this," Woolstenhulme said Monday. "It's an important step, I think, to see if there's any money left and how it gets distributed." Lewis has not responded to multiple telephone messages left by the AP over two weeks, nor to letters sent to him by registered mail and overnight delivery. In a letter faxed to investors Friday, Lewis said his firm has "never charged for financial advice, nor have we ever sold any securities." He said that means he doesn't need to be registered with the SEC nor the state Corporations Department.

But in its reports to investors, the Orange County firm says it charges a 5 percent "management fee" on any profits it earns for its clients. The state Corporations Department has identified investors in Idaho, Utah, Oregon, Colorado, Georgia and California, according to the FBI affidavit. The AP has had calls from investors living as far away as Michigan.

[MeneMeneTekelUpharsin]

Uh oh...another big "millions lost" story. Perhaps some public hangings are in order...

[coloradan]

No charges have been filed, but the FBI is investigating Financial Advisory Consultants as a possible "Ponzi scheme," where early investors are paid with money from later investors, said FBI spokeswoman Laura Bosley.

Q: And this differs from Socilaist Insecurity how?

(A: Because many billions, not a few millions, are at stake.)

[2banana]

alleging that more than 1,800 clients who invested tens of millions of dollars were victims of a long-running confidence scheme.

Will Social Security offices be next?

[AD from SpringBay]

The FBI raided a Southern California investment company Monday, alleging that more than 1,800 clients who invested tens of millions of dollars were victims of a long-running confidence scheme.

They raided a Social Security office?

[MeneMeneTekelUpharsin]

You are so close to being correct. I used to work for Social Security. If people knew, we would have a major revolt on our hands.

[SierraWasp]

Well... Again! Let me pose the ultimate question: Do Americans have a "right" to expect to be "protected" from every charlatin that walks the streets without ever asking to see his license or permit and not even making one phone call to check it out?

I want some legitimate answers here!!!

[Grampa Dave]

Investment firm and its winning record questioned
... California Department of Insurance records show a James Paul Lewis at the same address
as Financial Advisory Consultants had his insurance license revoked in ...
http://www.redding.com/news/business/past/20031211bus039.shtml

North County Times - North San Diego and Southwest Riverside ...
... In a letter faxed Friday to investors, James Lewis said Financial Advisory Consultants
has "never charged for financial advice, nor have we ever sold any ...

http://www.nctimes.com/articles/2003/12/21/business/news/12_20_0316_19_13.txt

SignOnSanDiego.com > News > Business -- Investment firm probed by ...
... they have no incorporation, licensing or registration for Financial Advisory Consultants
or Lewis ... at the sole discretion of the Funds Manager, James P. Lewis Jr ...

http://www.signonsandiego.com/news/business/20031211-9999_1b11invest.html

[SierraWasp]

"...had his insurance license revoked in ... "

1989!!!

I rest my case... yer honor!!!

[Steve_Seattle]

This story must be a mistake. The Dems told us that the Bush administration would give a green light to white-collar, corporate crime.

[Poohbah]

I had a friend from my Marine Corps days who invested in one of these things about a decade ago, in Century City (incidentally, the scammers were in the building used to film "Die Hard.")

He heard it was a fraud, and went to demand his money back--in person.

He got some song and dance.

"I didn't ask for excuses, I asked for my money."

More excuses.

"Um...you DO know that we're on the 23rd floor, and that it's 230 feet to the ground? And that, if I don't get my money in thirty seconds, I'm perfectly capable of and perfectly willing to throw your (Biblical beast of burden) through that window?"

He had the cash in hand in 20 seconds (c8

[razorback-bert]

Lewis, 57, has been investing millions of dollars for clients and claiming extraordinary financial returns for 20 years, without being licensed or regulated as required

A twenty year run as a Ponzi scheme has to be the second longest on record.

Should we mention that in twenty years no government bureaucrat checked the license records. Naw.

[cynicom]

What is the old saw about a fool and his money????

[BlackbirdSST]

Well... Again! Let me pose the ultimate question: Do Americans have a "right" to expect to be "protected" from every charlatin that walks the streets without ever asking to see his license or permit and not even making one phone call to check it out? I want some legitimate answers here!!!

Well let"s see. Lawyer's, Doctor's, Home Remodeler's, and for that matter a number of other "Professions" require License from the State to operate. Why would a License mean you aren't dealing with a charlatan? At some point, some people decide, Licensed or not, to screw over other people. Why shouldn't there be some form of redress? Blackbird.

[SierraWasp]

"Why shouldn't there be some form of redress?"

Why shouldn't there be some form of elementary education so our government institutions of indoctrination don't turn out educated idiots destined to be victims for lawyers and government officials to capitalize on "saving" from their own sins of ommission as government dependents/slaves on the government plantation?

Every "Financial Professional" is MANDATED to print their license number clearly and prominently on all business cards and stationery and Gore got all our government sponsored librarys "wired" for free access to internet search engines in which to plop that license number into to detect any and all prior suspicious activity!!!

Nice try, but I asked for "legitimate answers," not rhetorical questions!!!

[BlackbirdSST]

Actually, you don't know what the hell you're after! Evident in your response. Blackbird.

[SierraWasp]

The question is... What the hell are you "after?"

[Liz]

EXCERPT--SAN DIEGO UNION: "When contacted for comment, company receptionists said only President James Lewis could answer questions. He did not respond to numerous messages left with his office or on his cell phone, though his staff said he had received them. He also had received but did not respond to letters sent by certified mail and overnight mail, although the certified mail receipt indicated it was received by the company and his staff said he had picked them up. The Associated Press' offer to talk with a company attorney or other representatives drew no response. "

Not to worry. He'll turn up anyday now --phoning in from his yacht moored safely offshore out of the reach of authorities--with a perfectly good explanation (/sarcasm). Oh, and watch for the movie version of Lewis' life and exploits now under discussion.