Raleigh man arrested in $80M Ponzi scheme
Posted September 21, 2009 11:11 a.m. EDT
Updated September 21, 2009 6:48 p.m. EDT
Raleigh, N.C. — A Raleigh man has been charged in an $80 million scheme to defraud people investing in automated teller machines, authorities said Monday.
Vance Moore II, 55, was arrested Friday at a warehouse at 1000 Management Way in Garner. A second man charged in the case, Walter Netschi, 62, of McKinney, Texas, surrendered Monday to federal authorities in New York and was released on a $3 million bond, authorities said.
Moore has residences in both Raleigh and Florida, according to court documents, but a search of Wake County property records turned up nothing under his name.
The U.S. Attorney's Office in Manhattan unsealed an indictment Monday charging the pair with nine counts of wire fraud and one count of conspiracy to commit wire fraud.
Authorities said the men solicited money from investors from 2005 to January 2008 by claiming they were placing about 4,000 ATMs in retail locations throughout the country. They told prospective investors that the machines would generate revenue streams by charging fees for withdrawals. About 90 percent of the machines didn't exist or were never owned by Moore and Netschi, authorities said.
The men would use money from new investors to provide returns to earlier investors, authorities said, and Moore would make up excuses when investors questioned discrepancies in their monthly reports or asked about ATMs they thought they had purchased. In one instance, authorities said, Moore told an investor that an ATM had been moved to a new location in Florida after the person visited a hotel where the machine was purported to be and couldn't find it.
"The defendants claimed the revenue in their investment opportunity derived from ATM fees. In fact, it was a classic Ponzi scheme," Joseph Demarest Jr., assistant director of the FBI in New York, said in a statement. "The scheme itself, until discovered, was one giant cash machine."
Raleigh lawyer Kieran Shanahan said he was brought into the case last year by a group of California investors who had lost $30 million in the alleged ATM scheme.
"These guys who have been indicted sold the same machines to multiple people, and it was a pure greed-driven Ponzi scheme," said Shanahan, a former federal prosecutor.
He said he hopes authorities can recover some of the investors' money, but said it's unlikely that will happen.
"It is my experience, both as a federal prosecutor and having looked at these transactions, that it is doubtful these investors will ever see their money again," he said.