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Two Charged With $80 Million ATM Ponzi Scam – US Attorney Manhattan – LawFuel.com

LawFuel.com –
PREET BHARARA, the United States Attorney for the
Southern District of New York, and JOSEPH M. DEMAREST, JR., the
Assistant Director-in-Charge of the New York Office of the
Federal Bureau of Investigation (“FBI”), announced the unsealing
of a ten-count indictment charging VANCE MOORE II and WALTER
NETSCHI for allegedly perpetrating an $80 million Ponzi scheme
involving investments in Automated Teller Machines (“ATMs”).
MOORE was arrested Friday afternoon in Garner, North Carolina.
NETSCHI is expected to surrender to federal authorities in
Manhattan this morning.
According to the Indictment unsealed in Manhattan
federal court:

From 2005 through January 2008, MOORE and NETSCHI
solicited over $80 million dollars worth of investments in ATMs
purportedly placed in various retail locations around the
country, including convenience stores, gas stations, malls, and
hotels. MOORE and NETSCHI claimed that the ATMs would generate
revenue streams for the victims based on fees charged for
withdrawals of cash. In truth and fact, MOORE and NETSCHI did
not use the victims’ funds to purchase ATMs, but rather used the
money to further the fraudulent scheme and to enrich themselves.
MOORE and NETSCHI entered into contracts with victims
falsely representing that the victims collectively had purchased
approximately 4,000 ATMs. In truth and fact, approximately 90
percent of the machines purportedly sold to the victims either
did not exist or were never owned by MOORE or NETSCHI. To
further the fraudulent scheme, MOORE transmitted monthly reports
and monthly payments to the victims purportedly relating to their
investments in the ATMs. In reality, the reports contained false
information and the payments were not revenues from ATMs but were
simply monies received by NETSCHI from new investors.

MOORE made additional misrepresentations to victims who
noticed discrepancies in the monthly reports or inquired about
problems concerning ATMs they believed they had bought. For
example, in the fall of 2006, a victim visited the location of an
ATM in Florida that he thought he had purchased from NETSCHI’s
company and that was purportedly being serviced by MOORE’s
company. The investor could not find the ATM and was informed by
the hotel where the ATM was supposedly located that no such ATM
existed. MOORE then falsely represented to the investor that the
ATM in question had been relocated elsewhere in Florida.

MOORE and NETSCHI each are charged in the Indictment
with one count of conspiracy to commit wire fraud and nine counts
of wire fraud. Each count in the Indictment carries a maximum
potential penalty of 20 years in prison and a fine of the greater
of $250,000 or twice the gross gain or loss derived from the
offense. The Indictment also seeks $80 million in forfeiture
from MOORE and NETSCHI.

MOORE, 55, of Raleigh, North Carolina, is expected to
be presented in federal court in the Eastern District of North
Carolina later today. NETSCHI, 62, of McKinney, Texas, is
expected to be presented in Magistrate’s Court in Manhattan
federal court later today.

Mr. BHARARA praised the work of the FBI in the
investigation of this case. He added that the investigation is
continuing.

“Vance Moore II and Walter Netschi used false promises
and fake returns to steal tens of millions of dollars from their
victims. We will continue to use the full resources of our
Office to expose the perpetrators and vindicate the victims of
complex financial frauds,” said United States Attorney PREET
BHARARA.

“The defendants claimed the revenue in their investment
opportunity derived from ATM fees. 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,”
said FBI Assistant Director-in-Charge JOSEPH M. DEMAREST, JR.

The case is being handled by the Major Crimes Unit of
the United States Attorney’s Office. Assistant United States
Attorney ANTONIA M. APPS is in charge of the prosecution.
09-305 ###

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