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The Blotter Report: A Host of Superior Scams

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Murder He Wrote

A Jacksonville, Fla.-based financial advisor will spend 30 years in prison for a fraud scheme that turned to murder, according to the U.S. Attorney’s Office for the Middle District of Florida.

A Florida judge threw the book at Paul S. Kruse on Thursday, after a federal jury found him guilty of wire fraud, wire fraud conspiracy, attempting to murder a government witness and murder-for-hire in February.

According to prosecutors, Kruse and his brother established a sham investment firm called Yorkshire Financial Services. They then pretended to invest clients’ funds in stocks, bonds and currencies, but actually spent the money on a luxury lifestyle, eventually swindling 21 investors out of more than $930,000, the indictment claimed.

The brothers’ scheme unraveled in 2011, after Kruse hired an assistant who witnessed the illegal activities and reported the two to the FBI. Kruse’ brother committed suicide in 2012, but Kruse—while on pre-trial detention—hired two hit men to kill his former assistant, who was to star as a key witness for the prosecution.

Not only did Kruse want to stop the former employee from testifying, he told the hit men—who were actually undercover agents—the murder would avenge his brother’s death. Kruse also ordered hits on two former business partners who allegedly had cheated him. 

 

Real Estate Racket

A former financial advisor and a real estate developer are in hot water after New York authorities arrested the two for running a $96 million Ponzi scheme.

Investment fund manager and former broker Brian R. Callahan allegedly raised more than $118 million from at least 40 investors, according to an indictment unsealed Thursday. But instead of investing clients' money, he funneled the cash into the Panoramic View, an unprofitable 117-unit beachfront resort and residence development in Montauk, N.Y., which he co-owned with his brother-in-law and co-defendant Adam J. Manson. 

Callahan also spent investors’ millions on expensive cars and homes in Old Westbury and Westhampton, N.Y. To avoid detection, he faked account statements and lied to clients about the status of their investments. The two were charged in a 24-count indictment with conspiracy to commit securities and wire fraud. Meanwhile authorities have already confiscated $1 million in proceeds. 

 

Trouble in Paradise

A Hawaii-based advisor allegedly scammed $2.2 million out of more than 20 active and retired city employees.

Former ING North America Corp. advisor Bruce M. Harada pled guilty on Tuesday to securities fraud and money laundering, according to the Honolulu newspaper Star Advertiser.

Between April 2007 and May 2012, Harada convinced 22 clients to transfer funds from their deferred compensation to a mutual fund allegedly authorized by ING, according to prosecutors. But Harada allegedly funneled the money into his personal accounts, rather than investing it as promised.

The charges carry up to 30-years prison sentence and a $75,000 fine. Harada’s sentencing hearing is scheduled for Jan. 14, 2014, the newspaper reported. 

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