NEWS & MEDIAOSgold co-founder, David Reed, arrested (DOJ Press Release)
24 February 2009
REED, 38, was arrested this morning in Columbia, South Carolina, where he moved recently after having lived in Mexico for years. REED is charged with conspiracy to commit money laundering and wire fraud. If convicted, the defendant faces a maximum sentence of 40 years' imprisonment. This case has been assigned to United States District Judge JOHN G. KOELTL. REED will be presented later today in Columbia, South Carolina. more...
Has your financial adviser got a licence? (ASIC)
24 May 2006
ASIC Chairman, Mr Jeffrey Lucy, today reminded consumers that anyone providing financial advice or offering financial products needs to be licensed through ASIC. more...
April 15, 2005
Nineteen corporations and individuals stole $250 million in a mammoth Ponzi scheme involving the sale of a nonexistent gold-backed Internet currency, investors claims in a RICO lawsuit in Seattle Federal Court. Named as defendants in the 147-page lawsuit are One Groupe International, Osgold.Com, Osopps.Com, David C Reed, Randy L Johnson Jr., Latvian Economic Commercial Bank, ECommerce Exchange, ECurrency Exchange, Pinnacle Dynamics LLC, James Shupperd, Goldnow Corp., Frank Zuchristian, Graham Kelly, Gaithmans Gold Nation LTD, Eric Gaither, GoldToday, Michael Moore, Pecunix, Inc., and International Negotiations Team.
Lawsuit alleges 'online currency' scam (CNET)
Thu Jan 27,2005
A lawsuit claiming that a "gold backed" Internet currency scheme bilked investors out of more than $250 million can proceed against a bank implicated in it, a federal judge has ruled. At the height of its popularity, the OSGold currency boasted more than 60,000 accounts created by people drawn to promises of "high yield" investments that would provide guaranteed monthly returns of 30 percent to 45 percent.
But around July 2002, the eve of the maturity date for the investment program, the company that offered the accounts suddenly ceased payouts. David Reed, who had founded the company called One Groupe International, eventually was discovered to have relocated from the United States to Cancun, Mexico.
Concluding they had been fleeced, a group of OSGold investors banded together to sue Reed and 19 other defendants including two Latvian banks that allegedly lent their imprimatur to the project. It was "fronted by the sale of a nonexistent gold-backed Internet currency and was fueled by a mammoth 'Ponzi' scheme disguised as a guaranteed high-yield investment program," the OSGold investors say in court documents.
U.S. District Judge Lewis Kaplan ruled on Friday that the lawsuit could proceed against the Latvian Economic Commercial Bank (Lateko), which had attempted to dismiss the charges. Kaplan, in New York, dismissed some charges against Lateko, including breach of fiduciary duty, but permitted the rest to stand.
"Lateko's apparently false denials to a possibly important business partner and its continued cooperation with (Reed and other defendants) even after the scheme suspiciously began to collapse tend to show conscious disregard or recklessness and give rise to a strong inference of fraudulent intent," Kaplan wrote.
Lateko's involvement began in December 2001, when it allegedly inked a deal with Reed and other defendants to provide anonymous debit cards that could be used to withdraw money from OSGold accounts from ATMs linked to the Cirrus network. Lawyers for Lateko in the New York offices of Baker & McKenzie did not respond to an interview request.
Suspecting something odd was going on, some companies involved in providing gold-backed Internet currencies tried to distance themselves from OSGold early on. In May 2001, the Gold and Silver Reserve (responsible for the e-gold currency) announced it would no longer link to companies that did business with "or make reference to" OSGold.
A Ponzi scheme is an illegal pyramid scheme in which some early investors are paid off with money from later investors in an attempt to make the system look legitimate. But when later investors demand their money, the fraud collapses. This type of scheme is named for 1920s-era swindler Charles Ponzi, who promised investors a 40 percent return in 90 days.
Information Wanted: Did You Lose Money With Osgold?
Did you use Osgold exchange makers Michael Moore / gold-today.com or Graham Kelly / GoldNow for your Osgold account?
If you have information about the Osgold Ponzi and Australian Osgold market makers - Michael Moore / Goldtoday or Graham Kelly / GoldNow - what was offered, how much was lost, what happened etc. report it.
The Osgold Ponzi went belly up mid 2002 and information is being sought on the Australian arm of the Osgold marketing and exchange maker network.
Additionally information is needed on the eCurrency Trade Association and Frank Zuchristian. Email Your Information
in a nut shell the osgold ponzi case:"This action involves a fraud as vast and far-reaching as the Internet itself. The Defendants' scheme was founded upon a fraudulent operation fronted by the sale of a non- existent gold-backed internet currency and was fueled by a mammoth "Ponzi" scheme disguised as a guaranteed high-yield investment program. As a result of this fraud, the accounts and investments of the victims of this elaborate fraud, once estimated to be valued in excess of $250,000,000.00, are now effectively worthless."
Case Number: CV05-0706, Washington State filed April 2005
Michael Moore Case Allegations: 2005
Extracts of allegations against Michael Moore / Goldtoday from Case Number: CV05-0706, Washington State filed April 2005.
The law suit was filed in the State of Washington in 2005 by seven people who had invested in One Groupe International, Inc., or OSGOLD.com (also known as Off-Shore Gold). The suit alleges that One Group International operated a Ponzi scheme and that the scheme involved those who significantly aided it, including Michael Moore and his business Gold Today.
EXTRACTS FROM THE COMPLAINT :
IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON
COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF (RICO claims; federal and state securities violations; federal common law fraud; supplemental jurisdiction re* violation of Washington Unfair Business Practices Act claims; constructive trust; attorney's fees and costs; injunctive relief). Jury Trial Demanded
BRETT CLIFTON, a married man; SHIRLEY GORAN, a married woman;; HAROLD KERN, a married man; NATHAN KERN, a single man; WENDELL MYERS, a married man; LARRY SEVEDGE and DORIS SEVEDGE, husband and wife;
ONE GROUPE INTERNATIONAL, INC., a/k/a One Groupe and its founders, officers and directors; OSGOLD.COM, a/k/a OFFSHORE GOLD, a/k/a OSGOLD, its founders,; officers and directors; OSOPPS.COM, a/k/a OFF-SHORE OPPORTUNITY, a/k/a OSOPPS, its founders, officer and directors; DAVID C. REED in his individual capacity and in his capacity as co-founder of GSGold and OSOpps; RANDY L. JOHNSON, JR. in his individual capacity and in his capacity as co-founder of OSGold and owner of ECommerce Exchange, Inc.; LATVIAN ECONOMIC COMMERCIAL BANK, a/k/a LATEKO Bank; ECOMMERCE EXCHANGE, INC., its founders, officers and directors; ECURRENCY EXCHANGE, INC., its founders, officers and directors; PINNACLE DYNAMICS, LLC, d/b/a FASTGOLD, its Founders, officers and directors; JAMES SHUPPERD in his individual capacity and in his capacity as owner of Fastgold; GOLDNOW CORP., its founders, officers and directors; FRANK ZUCHRISTIAN in his individual capacity and in his capacity as President and owner of EURO GOLD LINE; GRAHAM KELLY in his individual capacity and in his capacity as owner of GoldNow, Corp.; GAITHMANS GOLD NATION LTD., its founders, officers and directors; ERIC GAITHER in his individual capacity, and his capacity as owner of Gaithmans Gold Nation, Inc.; GOLD-TODAY, its founders, officers, directors, and shareholders; MICHAEL MOORE in his individual capacity and his capacity as owner of Gold-Today; PECUNIX, INC., its founders, officers and directors; INTERNATIONAL NEGOTIATIONS TEAM, its founders, officers and directors; RICK YOUNG, in his individual capacity and his capacity as head of the International Negotiations Team; JOHN DOE DEFENDANTS 1-100 in their individual capacities and in their capacities as agents for John Doe, Inc.; JOHN DOE, INC. DEFENDANTS 1-100, their founders officers and Directors;
31. Defendant Michael Moore ("Moore") owned, directed, managed, supervised and participated in the day-to-day operations of Defendant Gold-Today. Defendant Moore was one of the largest Exchange Makers in the world, and served as Vice-President of the eCTA. Moore resides at 4 Chestnut Street, Carnegie 3463, Victoria, Australia.
32. Defendant Gold-Today ("Gold-Today") is a corporation registered under the laws of Australia. At all relevant times, Defendant Gold-Today had its principal place of business in Victoria, Australia and conducted business through its Internet web site, http://www.gold-today.com.
33. Defendants Zuchristian, Kelly, Shupperd, Gaither, Moore, Euro Gold Line, GoldNow, Fastgold, Gaithmans and Gold-Today (collectively, the "Exchange Makers") were in the business of providing exchange services in various gold-backed e-currencies, including exchanges of other currencies for OSGold ("in-exchange"), and exchanges of OSGold for other currencies ("out-exchange").
d. Gold Today
100. At all relevant times, Defendant Michael Moore owned and operated the GBIC exchange service provider, Gold-Today. Gold-Today was, at all relevant times, an approved OSGold exchange service provider, as a product of which the OSGold website provided a convenient link to the Gold-Today websites, so that OSGold and OSOpps account-holders might transact business with Moore. Defendant Moore was one of the largest and most reputable Exchange Makers in the world, and at all relevant times, sat on the board of directors of the eCurrency Trade Association (the "eCTA").
101. Upon information and belief, Defendants Moore and Gaither entered a "strategic partnership" between their companies Defendants Gold-Today and Gaithmans Gold Nation, Defendants Moore and Gaither also sat on the board of directors of the eCTA with Defendant Zuchristian.
102. Upon information and belief, Defendant Moore is also associated with Defendant Pecunix, having issued a Pecunix press release, dated August 14, 2001, in his name, having posted the press release on the eCTA website, and having been one of the very first Exchange Makers to promote Pecunix on his Gold-Today website.
103. Investors who wished to purchase or redeem OSGoId could conduct an in-exchange or out-exchange through Defendant Gold-Today, but Gold-Today, in turn, was required to transfer the funds, whether hard currency or another e-currency, through OSGold's "gate-keeper," ECommerce Exchange. To effect an in-exchange, Defendant Moore instructed investors to deposit fiat currency, whether by check, credit card or wire transfer, into one of several bank accounts he held in his name, or in the name of Gold-Today, in various banks around the world, including but not limited to banks located in the United States.
104. At all relevant times, Defendant One Groupe was affirmatively misrepresenting to investors that OSGold was at least 100% backed by gold bullion, and that likewise, OSOpps was a legitimate, viable and secure investment opportunity.
105. Defendant Moore, in his dealings as an approved Exchange Maker for OSGold and as a result of the direct link between the OSGold and Gold-Today websites, persuaded investors to deposit money into the OSGold system and/or purchase interests in OSOpps. In doing so, Defendant Moore collected a commission for his services, and voluntarily assumed a fiduciary duty to his clients.
106. Upon information and belief, Defendant Moore promoted OSGold and/or OSOpps, despite his concerns that there was actually no gold-backing, as had been represented by One Groupe. This is reflected in an Internet discussion group posting, dated March 21, 2001, in which Defendant Moore questions OSGold's legitimacy: "No indication of where 'the gold' is. Just says in an 'offshore bank'."
107. Upon information and belief, Defendant Moore failed to conduct the most cursory due diligence required to protect his customers' interests. Upon information and belief, had Defendant Moore conducted even the slightest investigation, he would likely have discovered that OSGold and OSOpps were not backed by gold bullion. Upon information and belief, Defendant Moore would likely have discovered that the OSGold and OSOpps were a front for an elaborate "Ponzi" scheme.
108. Defendant Moore's failure to conduct due diligence and his failure to warn investors regarding these misrepresentations caused Plaintiffs to continue to deposit and invest money in the One Groupe companies only to have these funds become irretrievable when OSGold and OSOpps collapsed.
The law suit goes onto allege that the same principles -- David Reed and Randy Johnson -- put together a new company several months after One Groupe Internaltional collapsed; and that Michael Moore promoted this new firm, called Pecunix, despite the recent failure of its predecessor. The complaint states that Mr. Moore was the Director of Public Relations for Pecunix at that time.
234. Defendant Moore provides a significant amount of information about Pecunix on his Gold-Today website at http://www.gold-today.com/whatispecunix.html (visited Nov. 5, 2002). Upon information and belief, Defendant Moore is the Director of Public Relations for Pecunix.
The counts against Michael Moore in this suit are:
- COUNT I: Securities Exchange Act, 15 U.S.C. § 78j.
- COUNT II: Racketeer Influenced and Corrupt Organizations Act (RICO).
- COUNT IV: Aiding and Abetting Common Law Fraud.
- COUNT V: Negligent Misrepresentation.
- COUNT VI: Breach of Fiduciary Duty.
- COUNT IX: Deceptive Acts and Practices.
- COUNT X: Breach of Contract.
- COUNT XI: Unjust Enrichment.
- COUNT XII: Imposition of a Constructive Trust.