7 September – LAWFUEL – The Law News Network – Two Orange County men were arraigned today on federal fraud charges stemming from their operation of a scheme that defrauded elderly and retired victims, many of whom lived in Orange County, out of nearly $1.7 million.
Richard Francis Banville, 48, of Laguna Hills, and Harold William Howell, 57, of Rancho Santa Margarita, each pleaded not guilty to conspiracy and mail fraud charges contained in a three-count indictment. The case against Banville and Howell this morning was assigned to United States District Judge Alicemarie H. Stotler, who scheduled an October 25 trial date.
Banville and Howell were arrested by federal authorities last week after they were indicted on August 17 by a federal grand jury in Santa Ana. The indictment accuses them of conspiring to commit mail fraud and wire fraud, as well as two substantive counts of mail fraud. Banville has been ordered held without bond, and Howell was released Wednesday on a $50,000 bond.
Beginning in mid-1999 and continuing to approximately September 2000, Banville and Howell operated a company called Trading West, Inc. (TWI), which was incorporated in Nevada and originally was based at Howell’s residence. TWI was set up to solicit investments for foreign currency exchange trading. Banville was the president and Howell was the vice-president.
Promising huge returns on investments, Banville and Howell personally solicited investors, and had their consultants solicit investments on their behalf, by telling potential investors that a world-renowned trader – the non-existent David Zachary of La Jolla, California – would be doing the trades. Banville and Howell told investors that this was a remarkable opportunity because Zachary had a fantastic track record for getting large returns. Banville and Howell, and consultants acting on their behalf, promised returns of 10 percent to 40 percent per month.
Investors received occasional account statements in the mail that stated they were receiving the promised high rates of return on their investments. The account statements allegedly misrepresented profits because TWI took much of the money and diverted it to Banville and Howell for personal gain. The money that was actually invested in brokerage houses for the purpose of foreign currency trading allegedly sustained huge losses that were not disclosed to investors.
Additionally, TWI allegedly continued to solicit investors long after TWI had stopped making investments. According to the indictment, the money from these newer investors was never invested, yet they received account statements indicating their money had been invested. When victims asked to withdraw their monies, Banville and Howell explained that an “early withdrawal penalty” of up to 75 percent of the principal would be assessed in order to disguise the fact that the scheme diverted victims’ monies for the personal benefit of Banville and Howell.
Beginning in the summer of 2000, as the TWI scheme was beginning to unravel, Banville and Howell allegedly each solicited TWI investors to invest in two new companies, Forex Group, Inc. (FGI) and Hougland Howell, Inc. (HHI). Once it became apparent to investors that their money in TWI was lost, Banville and Howell allegedly each represented to victims that the only way to recoup their money was to invest in the new companies.
During the course of the scheme, Banville and Howell solicited more than $1.7 million from investors, including elderly individuals. From that total, approximately $500,000 allegedly was diverted to Banville and Howell.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
If convicted of the three counts in the indictment, each defendant faces a maximum statutory penalty of 45 years in federal prison.
This case was investigated by the Federal Bureau of Investigation.