Michael Goldberg Pleads Guilty In $100 Million Ponzi Scheme Featuring Bogus ‘Diamond’ Sales And Bogus Ties To JP Morgan Chase Bank; Gov’t Describes Scammer As Financial Predator And Pitchmen As ‘Feeders’
EDITOR’S NOTE: The story of Michael Goldberg’s long-running Ponzi scheme is one that also includes a form of domain-name fraud. Goldberg, for example, created a website that used the name of JP Morgan Chase. Scammers routinely seek to piggyback off well-known brands to separate people from their money, sometimes using the names of famous firms to cover their tracks or create “legitimacy” out of thin air. Such domain schemes may feature the unauthorized use of a company’s name in a domain registration or violate trademarks in other ways. Fraudsters also may registerÂ a .org domain to plant the seed that a purported business “opportunity” is connected with a charity or register a name that is very close to the name of a well-established company, perhaps by adding words to the company’s name or varying the spelling of a company’s name. If you’ve been following our coverage of Data Network Affiliates, Narc That Car/Crowd Sourcing International and MPB Today, for instance, perhaps you’ve noted that .org websites were used by affiliates to promote the companies — even though none of the multilevel-marketing (MLM) firms is a charity.
Here, below, the story of a Ponzi scheme that used domain fraud to fleece investors.
The wantonness of Michael S. Goldberg’s 12-year Ponzi scheme was stunning. He told clients he invested in “diamond contracts” when he did not.
And Goldberg, 39, of Wethersfield, Conn., also told clients he invested in “distressed assets from JP Morgan Chase Bank,” federal prosecutors said. Goldberg, though, did not invest in distressed Chase assets.
What he did, prosecutors said, was create a web domain that used the Chase name, supplementing his web of lies by creating documents that used Chase’s name and the URL of the bogus Chase website so investors could not discover the fraud, prosecutors said.
Not to be outdone, Goldberg also paid “finder’s” fees to attract new business and created bogus domains in the names of other companies, prosecutors said, referring to the compensated pitchmen as “feeders.”
“When an investor questioned Goldberg about his business relationships, either with Chase or with any other company, he often created false documents and other items to induce investors to believe that his business relationships were legitimate, including inventories and/or manifests, contracts, business checks, bank statements, business cards and company identification cards,” prosecutors said.
“Goldberg also created domain names in the names of actual companies, including Chase, that would be listed on false documents in case an investor attempted to verify the authenticity of the documents,” prosecutors continued. “In addition, Goldberg opened actual bank accounts in the names of the companies to whom he purported to be selling foreclosed business assets, without the permission of those companies, that could also be used to create the false impression that he had a business relationship with the companies.”
A top federal prosecutor described the fraud, which duped 350 people into plowing $100 million into nonexistent diamond contracts and nonexistent Chase deals that paid “returns” in Ponzi proceeds, as overwhelming.
â€œFor 12 years, this defendant lured hundreds of investors with one false promise after another, the end result being financial misery for many of them,â€ said U.S. Attorney David B. Fein of the District of Connecticut.
Losses may total more than $30 million, prosecutors said.
Meanwhile, a veteran FBI agent described Goldberg as a financial predator.
â€œMichael Goldbergâ€™s actions have devastated the financial security of hundreds of innocent investors,â€ said Kimberly K. Mertz,Â special agent in charge of the New Haven division. â€œThe FBI, along with our law enforcement and regulatory partners, will continue to police the actions of those preying upon the investing public.â€
Aside from a brief period in 1997, Goldberg hadn’t dabbled in diamonds — and “he did not have any relationship with Chase,” prosecutors said.
Goldberg, who confessed to the scheme last year, faces up to 60 years in federal prison after his guilty plea to three counts of wire fraud. Sentencing is scheduled for December. The investigation was conducted by elements of President Obama’s Financial Fraud Enforcement Task Force.