Another extension for Mike Kelly

[jeffgrohs]

looks like another extension for Mr. Kelly. I'm still waiting to hear the final disposition of Avanti Motors - and the parts ( luckily Ford had a replacement side-view mirror when my wife ripped one off her car backing out of the garage!)

http://www.lesliestipek.com/michaelekelly.asp

[Ernie]

From WSBT, Channel 2 News. The article includes a color picture of MEK standing in front of a large "Avanti" sign:

Federal authorities filed additional charges against former Avanti owner Michael E. Kelly.

By Jim Pinkerton

Story Created: May 9, 2008 at 10:49 PM EDT

Story Updated: May 10, 2008 at 12:23 PM EDT

CHICAGO — Federal officials filed new charges against former Avanti owner Michael Kelly in a $500 million fraud scheme. Investigators say he sold bogus time shares.

They say Kelly swindled thousands of investors across the country, including some from his South Bend office. He was originally arrested in 2006 on 10 counts of mail fraud.

The charges added Friday were two counts of wire fraud and two counts of securities fraud.

The Department of Justice says it's one of the largest investment fraud schemes ever filed in Chicago federal court.

Kelly faces up to 240 years in prison and millions in fines.

READ THE FEDERAL GOVERNMENT'S NEWS RELEASE BELOW:

CHICAGO – A former South Bend, Ind., businessman who owned hotel properties in Mexico was charged today with swindling thousands of investors throughout in the United States in a $500 million fraud scheme, federal law enforcement officials announced. The defendant, Michael E. Kelly, and others associated with him allegedly used a significant portion of the funds raised from investors for their own personal benefit, including the purchase of hotels, businesses, homes, boats, automobiles, an airplane, a night club and an interest in a real estate development project in Cancun, Mexico, where Kelly resided for several years before he was arrested in December 2006. The alleged fraud scheme resulted in outstanding losses of more than $300 million to investors. The case is one of the largest investment fraud schemes ever charged in Federal Court in Chicago.

Kelly, 58, who holds citizenship in the United States, Mexico and Belize, was charged in a 14-count criminal information filed today in U.S. District Court in Chicago, announced Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois, and Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. FBI agents in South Bend, Ind., also participated in the investigation. Kelly was initially charged in a criminal complaint when he was arrested on Dec. 22, 2006, in Jacksonville, Fla., after entering the United States from Mexico for what was to have been a brief visit.

The information charges Kelly with 10 counts of mail fraud, two counts of wire fraud and two counts of securities fraud. It also seeks forfeiture of approximately $500 million. Kelly will be arraigned at a later date in U.S. District Court in Chicago.

Kelly has remained in federal custody without bond since he was arrested. The time period for filing today’s charges was extended, according to court documents, to allow the government, Kelly and his attorneys time to explore possible resolution of the case, including means for making money and assets located outside the United States available for restitution to the thousands of victims. Those efforts, and the investigation itself, are continuing, officials said.

The charges allege that beginning in 1998 Kelly defrauded purchasers and prospective purchasers of two types of investments – one, a nine-month promissory note, and the second, a so-called “universal lease.” Kelly was the president and sole shareholder of Yucatan Investment Corp., and Resort Holdings International, Inc., both of which at various times offered and sold either the promissory notes or universal leases.

Kelly allegedly fraudulently obtained approximately $34 million from the sale of the promissory notes, which guaranteed an annual rate of returns as high as 10.75 percent of the purchase price, and could be renewed for one or multiple terms.

Through various companies and a network of salesmen, Kelly allegedly fraudulently obtained more than $450 million from the sale of universal leases, which had a 25-year term and purported to relate to particular rooms for particular time periods in particular Mexican hotels operated by Kelly. A lease investor had three options: 1) use the room; 2) rent the room; or 3) allow a purported independent third-party management company, World Phantasy Tours, Inc., doing business as Majesty Travel, Viajes Majesty or, later, Galaxy Properties Management, to rent the room in exchange for guaranteed payments to the investor. Almost all of the lease purchasers chose the third option under which World Phantasy Tours guaranteed investors an annual return as high as 11 percent, regardless of whether the room was actually rented. Kelly and others promoted the investment as carrying little risk by promising to buy back the universal lease at any time at a slight discount and further promising to pay back 100 percent of the purchase price in as little as either two or three years, according to the charges.

Between 1999 and 2004, Kelly regularly met with salesmen and prospective purchasers to explain the lease terms, often as part of an all expenses paid trip to Cancun. Many of the leases were sold to retirees who found the promised high fixed rates of return, coupled with the reported safety of the buy out (or repurchase) provision, to be an attractive investment. In the offer and sale of both the promissory notes and the leases, Kelly and others allegedly made and caused to be made material misstatements and omissions about the return on investments, the guaranteed nature of the returns, and the liquidity and risks of the investments. Kelly and others concealed from investors that the ability to make promised payments depended on continually raising funds from new investors and using those funds to pay earlier investors, the charges add.

Anyone who suspects that he or she might be a victim in this case and has not already received a victim survey from the U.S. Attorney’s Office, should submit their name and address to usailn.victim.mk@usdoj.gov . Persons without internet access may call a toll-free number – (866) 364-2621 – and leave a message with the spelling of their name and an address, and a form will be mailed to them within two weeks.

The government is being represented by Assistant U.S. Attorneys Edward Kohler, Daniel Gillogly and Benjamin Langner.

If convicted, 10 of the mail and wire fraud counts each carry a maximum penalty of 20 years in prison and a $250,000 fine, while two other mail fraud counts each carry a maximum of 5 years in prison and a $250,000 fine. The two securities fraud counts each carry a maximum penalty of 10 years in prison and a $250,000 fine. As an alternative, the Court may impose a maximum fine equal to twice the loss to any victim or twice the gain to any defendant, whichever is greater. Restitution is mandatory and the Court would determine the appropriate sentence to be imposed under the advisory United States Sentencing Guidelines.

The public is reminded that an information contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

http://www.wsbt.com/

Edited May 10, 2008 by Ernie

[Ernie]

ENFORCEMENT PROCEEDINGS - Michael E. Kelly, Former South Bend Indiana

Wednesday, May 14, 2008; Posted: 08:23 PM

May 14, 2008 (SECURITIES AND EXCHANGE COMMISSION RELEASE/ContentWorks via COMTEX) -- -- The Commission announced today that on May 9, 2008, the United States Attorney's Office for the Northern District of Illinois filed a 14-count criminal information against Michael E. Kelly, a former South Bend, Indiana businessman that the Commission previously charged with securities fraud in a civil action filed in September 2007. The information alleges that Kelly engaged in a fraudulent investment scheme by offering and selling through fraudulent means approximately $34 million in promissory notes and more than $450 million in investments called Universal Leases. The criminal information charges Kelly with 10 counts of mail fraud, two counts of wire fraud and two counts of securities fraud and also seeks the forfeiture of approximately $500 million. Kelly was initially charged in a criminal complaint when he was arrested in December 2006.

The criminal charges against Kelly are based on the same conduct underlying the SEC's September 5, 2007 civil action filed against Kelly and 25 other defendants. The SEC's complaint alleges that Kelly and the other defendants participated in a massive fraud on U.S. investors that involved the offer and sale of securities in the form of Universal Leases. Universal Lease investments were structured as timeshares in several hotels in Cancun, Mexico, coupled with a pre-arranged rental agreement that promised investors a high, fixed rate of return. The SEC's complaint alleges that from 1999 until 2005, Kelly and others raised at least $428 million through the Universal Lease scheme by making material misstatements and omission to investors throughout the United States.. The SEC's action, which is pending, seeks injunctions against each of the defendants from further violations of the charged provisions of the federal securities laws, disgorgement of ill-gotten gains, and civil penalties. For additional information, see Litigation Release 20267 (Sept. 5, 2007) [sEC v. Michael E. Kelly, et al., Civil Action No. 07-CV-4979 (N.D. Ill.)]. [uSA v. Michael E. Kelly, Case No. 1:06-CR-964 in the United States District Court for the Northern District of Illinois; SEC v. Michael E. Kelly, et al., Case No. 1:07-CV-4979 in the United States District Court for the Northern District of Illinois] (LR-20573)

ALSO: http://www.sec.gov/litigation/litreleases/2008/lr20573.htm

Edited May 17, 2008 by Ernie

[Ernie]

More Security and Exchange Commission litigation against a firm that sold for MEK:

http://www.sec.gov/litigation/litreleases/2008/lr20664.htm

[Ernie]

Another article from the Security Exchange Commission court hearing:

http://shareholdersfoundation.com/?p=2685

[billmdonn]

looks like another extension for Mr. Kelly. I'm still waiting to hear the final disposition of Avanti Motors - and the parts ( luckily Ford had a replacement side-view mirror when my wife ripped one off her car backing out of the garage!)

http://www.lesliestipek.com/michaelekelly.asp

Bernie Madoff's 50 billion dollar ponzi scheme makes Michael Kelly look like a piker. Bernie is out on bail, and under house arrest. Maybe we should start a "FREE MICHAEL KELLY MOVEMENT". Then Avanti might rise up again like a Phoneix. I think I would like to see a 2010 Avanti. How about you.

[Guest DRN]

Maybe we should start a "FREE MICHAEL KELLY MOVEMENT". Then Avanti might rise up again like a Phoneix. I think I would like to see a 2010 Avanti. How about you.

I'd like to see new Avanti's too, but not that way. If Kelly is guilty, he must be punished and his assets sold to pay restitution. I would like to see a new, honest, earnest owner (like Newman and Altman were) buy what remains and pick up where Kelly left off.

[Ernie]

The Security and Exchange Commission has made a permanently enjoining order on April 14, 2009, for Michael E. Kelly:

http://shareholdersfoundation.com/news/cou...sal-lease-inves

[Charlie Kile]

Maybe he should try to get a "Bail Out" From the government!!

Charlie

[Ernie]

Maybe he should try to get a "Bail Out" From the government!!

Charlie

Would the UAW in Cancun agree?????

[Ernie]

UPDATE: Michael Kelly is still at the Metropolitan Correctional Center in Chicago. He has now been in federal custody for 39 months, and Avanti production has ceased for 39 months.

[Ernie]

Michael E. Kelly co-defendant in civil Security Exchange ruling of April 8, 2010:

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 21481 / April 8, 2010

SEC v. Michael E. Kelly, et al., Case No. 1:07-CV-4979 in the United States District Court for the Northern District of Illinois

Court Enters Final Judgment Against Meridian, Idaho Resident John E. Tencza and his Company American Elder Group, L.L.C.

The Securities and Exchange Commission announced today that on April 5, 2010, Judge Elaine Bucklo of the United States District Court for the Northern District of Illinois entered a final judgment against John E. Tencza, of Meridian, Idaho and formerly of Scottsdale, Arizona, and American Elder Group, L.L.C. (AEG), Tencza's business. The final judgment: (1) enjoined Tencza and AEG from violating Sections 5(a), 5© and 17(a) of the Securities Act of 1933, Sections 10( and 15(a) of the Securities Exchange Act of 1934, Rules 10b-5 and 10b-10 promulgated thereunder and enjoined Tencza from aiding and abetting violations of Rule 10b-10 of the Exchange Act; (2) ordered Tencza and AEG to pay disgorgement in the amount of $1,661,837.07, plus prejudgment interest of $759,082.71, for a total of $2,420,919.78; and (3) ordered Tencza to pay a civil penalty in the amount of $120,000 and AEG to pay a civil penalty in the amount of $600,000.

The SEC's complaint in this matter charges that Michael E. Kelly and 25 other defendants, including Tencza and AEG, participated in a massive fraud on U.S. investors that involved the offer and sale of securities in the form of Universal Leases. Universal Lease investments were structured as timeshares in several hotels in Cancun, Mexico, coupled with a pre-arranged rental agreement that promised investors a high, fixed rate of return. The SEC's complaint alleges that from 1999 until 2005, Kelly and others, including Tencza and AEG, raised at least $428 million through the Universal Lease scheme from investors throughout the United States, with more than $136 million of the funds invested coming from IRA accounts. The SEC further alleges that a nationwide network of unregistered salespeople who sold the Universal Leases, including Tencza and AEG, collected undisclosed commissions totaling more than $72 million. The SEC also alleges that Kelly and others ran the scheme from Cancun, Mexico, through a number of foreign entities in Mexico and Panama. According to the SEC's complaint, Kelly and others told investors that Universal Leases would generate guaranteed income through the leasing of investor timeshares by a large, independent leasing agent. In fact, the complaint alleges, the leasing agent was a small Panamanian travel agency controlled by Kelly, and for most of the scheme its payments to investors came from accounts funded by money raised from new investors. Further, the complaint alleges that Kelly and the other defendants, including Tencza and AEG, failed to disclose key facts about the Universal Lease investment, including the risks of the investment and that Kelly was paying commissions as high as 27% to the selling brokers. The SEC's action against the remaining defendants is pending.

For further information, see Litigation Release Nos. 20267 (Sept. 5, 2007), 20573 (May 14, 2008) , 20578 (May 15, 2008), 20579 (May 15, 2008), 20664 (July 31, 2008), 20679 (August 12, 2008), 20708 (Sept. 9, 2008); 20709 (Sept. 9, 2008), 20799 (November 6, 2008) and 21003 (April 15, 2009); [sEC v. Michael E. Kelly, et al., Civil Action No. 07-cv-4979 (N.D. Ill.]

http://www.sec.gov/litigation/litreleases/2010/lr21481.htm

[Ernie]

Michael E. Kelly plead guilty on the first of many felonies. Kelly is offically a felon. It has been SIX years since his arrest.

Ernie N.

.......................................................................

A press release from the U.S. Attorney’s Office:

FORMER MEXICAN HOTEL OPERATOR PLEADS GUILTY IN FIRST STAGE OF RESOLVING $500 MILLION SCHEME TO DEFRAUD THOUSANDS OF U.S. INVESTORS IN SALES OF PROMISSORY NOTES AND TIME-SHARE LEASES

CHICAGO — Partially resolving one of the largest investment fraud cases ever in Federal Court here, a defendant who owned hotel properties in Mexico pleaded guilty yesterday to securities fraud, admitting that he fraudulently obtained approximately $500 million from some 8,000 investors throughout in the United States.

The defendant, MICHAEL E. KELLY, was sentenced today to the maximum term of five years in prison, ensuring that final orders of restitution and forfeiture will be imposed despite Kelly’s ill health. Meanwhile, Kelly still faces additional charges carrying substantial additional periods of incarceration.

On Nov. 20, U.S. District Judge Ronald Guzman, ordered the first distribution of $50 million in restitution to more than 7,000 victims, who collectively lost more than $340 million as a result of Kelly’s fraud scheme.

Kelly has remained in federal custody in Chicago since he was arrested in December 2006.

Since then, authorities, including a court-appointed special master, have worked to untangle and liquidate a complex web of businesses and properties in Mexico and Panama to provide restitution to victims.

Judge Guzman stressed today that these developments are only a “small step” in the overall proceedings against Kelly.

Kelly, 63, formerly of South Bend, Ind., who holds citizenship in the United States, Mexico and Belize, and others associated with him used a significant portion of the funds raised from investors for their own personal benefit, including the purchase of hotels, businesses, homes, boats, automobiles, an airplane, a night club, and an interest in a real estate development project in Cancun, Mexico, where Kelly resided for several years before he was arrested.

Kelly’s guilty plea to one count of securities fraud was designed to be the first step in resolving his entire prosecution since final orders of restitution in criminal cases may only be issued at the time of sentencing.

As part of today’s sentencing, Kelly agreed to, and Judge Guzman ordered, restitution totaling $342,143,221, minus any credit for funds distributed by the court-appointed special master overseeing the liquidation of Kelly’s assets.

Before imposing the five-year sentence, which exceeds the amount of time Kelly has been in custody, Judge Guzman granted Kelly’s request to be released temporarily under home incarceration, with global position electronic monitoring, for up to four months or no longer than necessary to receive medical treatment for colon cancer at his own expense without using any investor or government funds.

Kelly’s relatives co-signed a $10 million signature bond and posted properties in Lakeville, Ind., and Double Springs, Ala., to secure his release.

Kelly still faces 13 additional counts of mail, wire, and securities fraud, which remain pending until they are resolved by a trial or a second guilty plea at a later date.

If convicted of those counts, Kelly will be subject to substantial additional terms of imprisonment.

Gary Shapiro

The guilty plea and sentence were announced today by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and Thomas R. Trautmann, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. FBI agents in South Bend, Ind., also participated in the investigation. The U.S. Securities and Exchange Commission also cooperated with the investigation.

In pleading guilty, Kelly admitted that beginning in 1998 he defrauded purchasers and prospective purchasers of two types of investments — one, a nine-month promissory note, and the second, a so-called “universal lease.”

Kelly was the president and sole shareholder of Yucatan Investment Corp., and Resort Holdings International, Inc., both of which at various times offered and sold either the promissory notes or universal leases.

Between January 1998 and June 1999, Kelly fraudulently obtained approximately $34 million from the sale of the promissory notes, which guaranteed an annual rate of return as high as 10.75 percent of the purchase price, and could be renewed for one or more additional nine-month terms.

Through various companies and a network of salesmen, Kelly fraudulently obtained approximately $500 million from the sale of promissory notes and interests in universal leases, which had a 25-year term and purported to relate to particular rooms for particular time periods in particular Mexican hotels operated by Kelly.

A lease investor had three options:

1. use the room;
   
2. rent the room; or
   
3. allow a purported independent third-party management company, World Phantasy Tours, Inc., doing business as Majesty Travel, Viajes Majesty or, later, Galaxy Properties Management, to rent the room in exchange for guaranteed payments to the investor.
   

Almost all of the lease purchasers chose the third option under which World Phantasy Tours guaranteed investors an annual return as high as 11 percent, regardless of whether the room was actually rented.

Kelly and others promoted the investment as carrying little risk by promising to buy back the interest in the universal lease at any time at a slight discount and further promising to pay back 100 percent of the purchase price in as little as either two or three years.

Between 1999 and 2004, Kelly regularly met with salesmen and prospective purchasers to explain the terms of the universal lease investments, often as part of an all expenses paid trip to Cancun.

Many of the investments were sold to retirees who found the promised high fixed rates of return, coupled with the reported safety of the buy-out (or repurchase) provision, to be an attractive investment.

In the offer and sale of both the promissory notes and the interests in the leases, Kelly and others made material misstatements and omissions about the return on investments, the guaranteed nature of the returns, and the liquidity and risks of the investments.

Kelly and others concealed from investors that the ability to make promised payments depended on continually raising funds from new investors and using those funds to pay earlier investors.

The government is being represented by Assistant U.S. Attorneys Edward Kohler and Daniel Gillogly.

The case falls under the umbrella of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: www.StopFraud.gov.