KC man indicted for $3.3 million investment fraud schemeStaff writer ▼ |
Accusations A man formed approximately 20 companies
Tammy Dickinson, U.S. Attorney for the Western District of Missouri, announced that a Kansas City, Mo., man was indicted by a federal grand jury for engaging in a nearly $3.3 million fraud scheme against a victim who invested more than $8.6 million in his companies.
This indictment alleges that Williams formed approximately 20 companies to perpetuate a fraudulent investment scheme between July 2005 and May 2014. Williams raised more than
8.6 million from his victim investor, identified in the indictment as “JM.” Williams fraudulently spent or diverted nearly $3.3 million of those funds for his own personal use during the nine-year investment fraud scheme, the indictment says.
Williams convinced JM to invest more than $2.6 million in an entity named Energy Operations, the indictment says, which Williams established to offer investors revenues derived from certain mineral rights concessions for gold and manganese mines in Central America. Williams allegedly claimed he intended to extract gold and manganese from mines located in Panama and Peru.
According to the indictment, JM travelled with Williams to Panama to visit some of the mines purportedly controlled by Energy Operations. After JM’s visit to Panama, Williams asked JM to make additional equity investments in Energy Operations.
Unbeknownst to JM, the indictment says, all of the trips to Panama, including all travel expenses for Williams, the consultants and JM, were paid for with JM’s investment funds. JM never authorized Williams to use investment funds to pay for travel expenses or to pay himself a salary in connection with the investment in Energy Operations.
Williams raised $5.5 million from JM for another entity named American Hydraulic Power, LLC, the indictment says, which Williams founded to develop and commercialize an energy-efficient technology.
Williams told JM the technology licensed from the EPA would allow for large commercial vehicles, such as delivery vehicles and trucks, to store energy generated by hydraulic braking systems. Williams further stated the stored energy would allow vehicles to run more efficiently by storing energy instead of relying alone on hydrocarbon- powered engines.
American Hydraulic Power entered into an agreement with a multinational automotive engineering firm to develop and commercialize the hydraulic braking technology. Williams agreed to raise additional capital to pay for the costs of developing the hydraulic braking system and he told JM he had other investors willing to invest.
In reality, the only investor Williams secured was JM. American Hydraulic Power quickly ran out of money, stopped paying the engineering firm, and ceased all operations in early 2014. FEV (a company in Michigan that manufactures small engines) incurred a loss of approximately $17 million for work performed on behalf of American Hydraulic Power due to Williams’ misrepresentations.
Williams raised $5,000 from JM in connection with an investment to develop an island off the coast of Panama (Bona Island), the indictment says, and $36,000 for Namasta, which Williams claimed was an investment to gain access to a large bank account in the Netherlands that would ultimately secure additional funding for American Hydraulic Power.
Instead of using JM’s funds as Williams claimed for these investments, the indictment says, Williams misappropriated and diverted $3,299,953 for his own personal expenses, household expenses, travel expenses, his daughter’s wedding expenses and other expenses incurred by family members. This accounted for more than 38 percent of the total funds raised by Williams.
Williams allegedly used $1.1 million of the funds he misappropriated from JM to pay for a variety of personal expenses, including payments of at least $67,500 to his domestic partner for household expenses and other financial obligations, transferring approximately $32,000 of investor funds to bank accounts that he shared with his daughter, and paying $10,000 for his daughter’s wedding.
Williams allegedly used at least $437,500 of the funds he misappropriated from JM to pay for such personal expenses as credit card bills, restaurant and grocery bills, healthcare expenses, holiday gifts and entertainment expenses.
In addition to using JM’s funds to support his lifestyle, the indictment says, Williams diverted JM’s investment money to fund other projects he promoted in the Democratic Republic of the Congo, Central America, and elsewhere.
Williams allegedly diverted over $1.6 million of JM’s investment funds to pay for several projects unrelated to the investments. Williams allegedly transferred $124,000 of JM’s funds to a California-based water engineering firm. He allegedly diverted an additional $307,000 of JM’s money to Namasta.
He allegedly spent $100,000 of JM’s funds to invest in a fraudulent scheme halted by the Securities Exchange Commission in 2013. Williams allegedly diverted $309,500 to Gargoyles, a company that was convicted of securities and mail fraud in an FBI investigation in Maryland in 2011.
This indictment charges Williams with 10 counts of wire fraud and four counts of money laundering.
The indictment also contains a forfeiture allegation, which would require Williams to forfeit to the government any property derived from the alleged offenses, including $3.2 million.
Dickinson cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence. ■
What to read next