NEW YORK (Reuters) – Two men swindled $80 million from investors who thought they were putting their money into a business that bought and installed automated teller machines across the United States, prosecutors charged yesterday.
The office of the US Attorney for Manhattan and the FBI said Vance Moore of Raleigh, North Carolina, and Walter Netschi of McKinney, Texas, were charged with nine counts of wire fraud and one count of conspiracy.
“Moore and Netschi knew when they collected these funds that the promises on which the fund-raising was based were false,” according to an indictment unsealed in Manhattan federal court.
“These funds were not used to purchase Automated Teller Machines as promised by Moore and Netschi. They were used to further the fraudulent scheme and to enrich Moore and Netschi at the expense of the investors,” the indictment said.
It accused the two men of telling investors they had collectively bought about 4,000 ATMs, but about 90 percent of the machines did not exist or were never owned by Moore and Netschi.
The two are accused of running the fraud from 2005 to January 2008. They presented themselves as owners or managers of various companies, including ATM Financial Services, prosecutors said.
Each count in the indictment carries a maximum penalty of 20 years in prison and hundreds of thousands of dollars in fines. The government is also seeking forfeiture of $80 million from the two accused.
An attorney for Netschi, 62, said his client would plead not guilty and go to trial. A lawyer for Moore, 55, could not immediately be reached for comment.
Netschi’s lawyer, Michael Washor, said that “having been involved in lengthy discussions with the government over 10 months, I believe that after trial he will be exonerated.”
The FBI and prosecutors described the purported fraud as a Ponzi scheme, traditionally one in which early investors are paid with the money of new clients.
“The defendants claimed the revenue in their investment opportunity derived from ATM fees,” FBI Assistant Director-in-Charge Joseph Demarest said in a statement. “In fact, it was a classic Ponzi scheme, and the phantom revenue came from new investors. The scheme itself, until discovered, was one giant cash machine,”
The indictment cited nine wire transfers from three banks between March 17, 2006, and August 14, 2007. The banks were JPMorgan Chase & Co and Citigroup Inc’s Citibank in New York, and LaSalle Bank in Chicago. LaSalle is now part of Bank of America Corp.
