BOSTON, Nov. 16 – LAWFUEL – The Law News Network — Arrests were executed yesterday on a Criminal complaint charging three individuals with mail fraud in connection with a Ponzi scheme that at this time is estimated to have bilked hundreds of investors, mostly from the Cambodian community, of a total of at least $5
United States Attorney Michael J. Sullivan; Kenneth W. Kaiser, Special
Agent in Charge of the Federal Bureau of Investigation in New England; and
Rebecca A. Sparkman, Special Agent in Charge of the U.S. Internal Revenue
Service, Criminal Investigation, announced that JAMES BUNCHAN, age 50,
formerly of Attleboro, now living in North Miami, Florida and CHRISTIAN
ROCHON, age 54, of 50 Maynard Street, Attleboro, Massachusetts, were arrested
yesterday on a criminal Complaint charging them with mail fraud. A third
defendant named in the criminal Complaint, SENG TAN, remains at large.
According to an affidavit filed in support of the Complaint, TAN, ROCHON,
and BUNCHAN are principals of WMDS, Inc., a/k/a World Marketing Direct Selling
Inc., and an affiliated company, OneUniverseOnline Inc., also known as 1UOL
with offices based in Canton, Attleboro, and Boston. It is alleged that TAN,
ROCHON and BUNCHAN have been operating an illegal “pyramid scheme” through
these companies in which investors are lured into making investments with a
promise of a return on their investment. It is alleged that in reality their
“returns” have simply been payments of their own principal and the principal
of later investors brought into the program. Victims of the fraudulent scheme
appear to be largely from the Cambodian community. Based on the investigation
thus far, it is believed that the fraud scheme involves hundreds of victim
investors who were defrauded of a total in excess of $5 million.
According to the Complaint, WMDS and 1UOL purport to be in the business of
selling healthcare and dietary products through a multi-level marketing
program. It is alleged that the real business of WMDS and 1UOL, however, has
been and continues to be the creation of a pyramid scheme that markets
investments by offering unrealistic rates of return, has taken in millions of
dollars from investors, and has misappropriated investor funds. According to
the Complaint, the defendants, primarily through TAN and BUNCHAN, solicited
investments in WMDS and 1UOL in unit amounts of approximately $26,000. In
return for such an investment, WMDS promised investors that it would make an
initial lump sum payment to them of, for example, approximately $2,400, and
thereafter would pay the investor $300 per month for life, a monthly payment
that would then purportedly pass on to the investors’ children. While the
WMDS and 1UOL websites refer to multi-level direct marketing operations, the
investments solicited by WMDS did not require participation in the marketing
operation by prospective investors. Rather, it is alleged that the monies
solicited were characterized as, and at least for some periods, acted as
“investments” or investment contracts.
According to the Complaint, for a limited time WMDS and 1UOL made the
promised payments, both to lull investors into thinking that the investment
contracts they had entered into were legitimate and to entice them unwittingly
to recruit additional investors into the fraudulent scheme. Investors who
marketed on behalf of WMDS and 1UOL and brought in new investors were promised
additional investment income by virtue of profits realized by the investors
Ultimately, it is alleged that WMDS and 1UOL ceased making the promised
payments to investors. According to the Complaint, WMDS and 1UOL first
claimed that technical difficulties prevented them from making the promised
payments, then they based the cessation of payments on claims that the
investors were not complying with the terms of the investment contracts,
thereby completing the misappropriation of the investors’ monies.
ROCHON, who was arrested yesterday in Attleboro appeared before U.S.
Magistrate Judge Robert B. Collings and remains in custody pending a detention
hearing today. BUNCHAN, was arrested yesterday in Miami. He also remains in
federal custody pending a detention hearing in Florida. If convicted, the
defendants each face up to 20 years’ imprisonment, to be followed by 3 years
of supervised release, and a $250,000 fine or twice the gross gain to the
defendants or gross loss to the victims.
The investigation is ongoing.
The case is being investigated by the Federal Bureau of Investigation in
Massachusetts and Rhode Island, as well as the U.S. Internal Revenue Service,
Criminal Investigation in Rhode Island. The U.S. Attorney would like to thank
the Securities Exchange Commission Boston District Office for its assistance
in this investigation. It is being prosecuted by Assistant U.S. Attorney Jack
W. Pirozzolo in Sullivan’s Economic Crimes Unit.