Aspect III of III in this collection of posts on Ponzi schemes will look at a true world, ongoing rip-off, the con gentleman guiding it and a handful of of the hundreds of investors victimized by his criminal enterprise, Millennium III Corporation.

History: At an early age, Gregg Scott Luce was falsely led to believe that that his Maine primarily based blood line was immediately connected to the storied Time-Life Henry Luce legacy. It is unclear whether this fallacy was instilled within just him by own dementia or a collective familial dementia. Luce fled his really dysfunctional spouse and children at age nineteen and began trafficking in marijuana. Inside a five year time period, petty trafficking grew to main distribution: cargo planeloads of solution, much of it brought in straight from Jamaica.

Ten several years into this undertaking, Luce realized that a considerably larger revenue margin was to be recognized in trafficking cocaine. It was the early 1980’s and cocaine was a preferred and recognized recreational drug amongst the institution. There was not the stigma connected to the narcotic that exists currently. Luce was driven to the brief fix by impatience, an entrepreneurial spirit, ruthless and boundless ambition, and an insatiable craving for the recognition, funds and cache that experienced eluded his spouse and children for the far better part of a generation as it strived, futilely, to discover by itself with the gilded Time-Everyday living Luce lineage.

Sociopathology, one minded target and indifference to the body rely in his wake, the two basically and figuratively talking, allowed Luce to establish a port of entry distribution hub in Seattle, Washington, and fast dominate the unclaimed US Northwest territory. Coming from a relatives of commercial fishermen, Luce was very well versed in nautical maps. The Pacific Northwest’s unsettled, remote shoreline permitted inconspicuous ingress and egress of transportation planes from Colombia. Luce leased a pier and houseboats off Lake Washington, hosting cocaine fueled functions frequented by prominent region artists, organization leaders, lawyers, politicos and bankers.

In just a five year interval of time, the distribution network prolonged north to Canada and as much Southwest as Aspen, Colorado, in which his cartel’s administrative workforce oversaw functions. The rising business enterprise invested in a Nascar race workforce. Solution was transported to merch fall factors in trailers used to ferry autos and pit equipment from metropolis to town.

As with most narco-centric firms, Luce’s venture operated on borrowed time. When the DEA and Feds broke up the drug ring, all senior personnel, conserve for one personal, escaped. The captured operative refused to turn state’s proof, permitting his associates to quietly request out other enterprise alternatives. Luce took a two 12 months hiatus lying lower and pored around modern financial tendencies. It was the early nineties and the Nasdaq bubble had started to gestate. Silicon Valley, Boston, Austin and Seattle have been the new Wild West. Greed and green ended up in the air. In the fast paced environment of new media startups, the “cocktail napkin to boardroom” paradigm ruled, as did medications, violence, treachery, and authorized manipulation: if not recognized as 20-Very first Century corporate very best procedures. Quick bargains have been the forex of good results futures contracts and penny shares were the new blow. The mindful vetting of company programs demurred to the haste of currently being initial to market place with a specified product or service . Venture capitalists indiscriminately showered IT neophytes and veterans alike with additional seed dollars than most could realistically hope to match in income. Increase-bust higher tech gold fever was in full force. Luce couldn’t have scripted a much better entree into legit company.

Ponzi Plan: Therefore marked Gregg Luce’s emergence from the arranged crime of drug trafficking to the structured criminal offense of Wall Avenue. The founding of Millennium III Corp. (MIII) commemorated Luce’s introduction to Fortune 500 modern society at the VC cotillion. In purchase to fly less than the radar of SEC regulations and regulators, the newly minted CEO of MIII, a broadband media streaming business, confined his first investor pool to 30-five non-accredited shareholders. He later on violated the SEC Rule 505 exemption provision with inclusion of an more 10 buyers. Instead than concern shares to traders, Luce issued “convertible note mortgage agreements”: an instrument convertible to both buybacks or shares in MIII at maturation. Luce took his tortured small business product a move even further, arguing the company maintained a non-profitable have confidence in that secured investor monies. In this and subsequent drawbacks, Luce argued, with poetic license, that the preliminary company kind would somehow morph into a “financial institution”, therefore ensuring the liquidity of MIII’s capital funds and the protection of investor monies.

In trying to keep with Millennium III’s smoke and mirrors business framework, its CEO was functionally illiterate in New Technological innovation: the firm’s core merchandise providing. Luce was ready to properly pass himself off as an IT avatar by bordering himself with skilled, genuine technological know-how specialists, offering the Ponzi plan with a patina of legitimacy. He preserved an entourage of tech savvy progress people, lest his shareholders and clientele know that the emperor had no dresses.

Seven a long time after the founding of MIII, I was retained to evaluation intellectual house challenges. Roughly twelve months into my work, primary take note holders started speaking to me, expressing worry that they experienced gained no yearly statements from MIII — for that make any difference, no communication at all from the board of directors or company officers for a number of years. Much more troubling, to a man, each investor had demanded buyback on maturation of their convertible note mortgage agreements. Luce refused to honor the promissory notes. The paper path confirmed Luce used cash from the non-accredited trader pool to line his possess pockets, and funds from new traders to pay out contracted employees that held inventory solutions thereby, perpetuating the ruse. A textbook definition of the classic Ponzi scheme with a slight twist: working with funds from new traders to pay back dividends to initial traders.

I approached the CEO with my considerations. He was non-responsive, as was the board. The newly enacted Sarbanes-Oxley Act provided new treatments for lawyers caught in this dilemma, allowing them the ability to whistleblow devoid of dread of reprisal for breach of lawyer-customer privilege. The new regulation permitted me to inform the shareholders and law enforcement to Luce’s misuse of company cash. Legal professional-client privilege was a lesser problem, as Luce had long considering the fact that waived any privilege enjoyed when he actively solicited me, demanded essentially, that I launder corporate receipts for his conversion to own use. As I dug further into the CEO’s historical past, unearthing a deep checklist of accounting firms, law corporations and contractors owed dollars, I came to study that this was one particular of Luce’s tricks: secreting funds in his attorneys’ shopper rely on accounts, recognizing that the attorney would be obliged to release the money to Luce as customer, no matter of whether the income was filthy. In addition to confronting shareholders with Luce’s malfeasance, I described his actions to lawyer general places of work in two states. Formal investigations into Millennium III and its CEO had been underway.

With warmth turned up by law enforcement and shareholders, Luce did a dollars seize, embezzling from his have company, and fled the point out to set up shop in Arizona. Luce did not see working off with investors’ income as theft. His attitude was this sort of that he was constitutionally incapable of distinguishing amongst company assets and personalized assets. As he saw it, MIII’s assets were his belongings for this reason, there was no theft in this distorted earth see. This would be a recurring concept in his subsequent Ponzi techniques. His flight remaining dozens of buyers in Washington State, Nevada and Idaho keeping the bag — out all their cash. To this day they have not recouped a penny, even with two eighteen thirty day period extended concurrent investigations by AG offices in the two Washington and Arizona.

A fantastic con male seldom stays static in product or presentation. This is specially real right after a Ponzi plan has been exposed. Immediately after Luce was chased out of Washington Condition and started off anew in Arizona, he transformed his complete enterprise design to cater to the New Age Sedona group. Con guys gravitate towards items and providers the place effectiveness are not able to be calculated empirically. New Age meditations, administrations and potions proved a marketplace ripe for exploitation, considering the fact that it was largely faith based mostly and not governed by the Food and drug administration or AMA. Underneath the banner of a MIII Corp. overseas company registered in Arizona, Luce started to solicit buyers for ventures ranging from the mundane — self-advancement courses — to the fantastical — space tourism. He held out his partner’s Flagstaff genuine estate as his own, working with it to collateralize investments. His shotgun strategy to presenting a multiplicity of providers unsuccessful. Right after five a long time with out observing a return and suffering a reduction in excessive of $500,000 USD, Luce’s husband or wife gave him the boot, forcibly evicting him from the house. To this day, Luce retains out the residence as his individual, irrespective of the actuality his identify is not on the title and a court docket get was awarded for unlawful detainer.

Luce then ventured even further south to Santa Fe, New Mexico, this time altering his actual physical visual appeal to a startling degree: Luce retired the Brooks Brothers satisfies and button-down conservatism for ‘aging rock star’ couture and a metaphysical slant in pitching his “marks”, entirely modifying his look and merchandise. The person seemed like Rod Stewart. On a lousy working day. Where he was reserved and presentable while functioning and living in Seattle, Luce now came across as a raving lunatic devoid of someone experienced, articulate and well balanced fronting him at the bargaining table. These handlers had been defecting in lockstep with their CEO’s deteriorating psyche Luce’s entourage of skilled progress guys was fast thinning the patina of legitimacy showing additional trompe l’oeil. To see just how “crazy” nuts is, peruse the nonsensical manifesto that seems on his MySpace page: myspace.com/duraingo. Online video clips and shots of Luce executing his different drawbacks are connected to his homepage. Courtesy of his formidable ego, this is a rare opportunity to see a con male in motion.

Around Los Alamos, the MIII CEO tapped into a team of retired physicists and businessmen functioning on new encryption engineering. Luce managed to convince them he was an Information Technological know-how visionary with the skill to pair products developers with financiers. Despite his new eccentric look, he practically pulled this off, mesmerizing a young, naive investor from Los Angeles that ponied up $75,000 USD with the pledge of a a lot larger, next angel trader look at. Right before proffering this second look at, the trader had the belated excellent perception to run the attendant paperwork by his attorney. The attorney experienced the joyless process of informing his consumer that, not only was his income absent, there was no basis for criminal or civil suit because of to the nebulous mother nature of the “products and services deal” he entered into with MIII. The deal did not bind the con guy to any identifiable, legally binding unique general performance. As a authorized document the deal was meaningless. It was convoluted enough to convince the investor to aspect with his funds: which is where by its value finished. In short, from a authorized standpoint, the $75,000 was no more than a “present” from 1 unique to a further.

Existing working day: Phrase of Luce’s reemergence in New Mexico achieved my legislation workplaces this previous thirty day period. I was set in make contact with with attorneys representing equally traders and innovators to the deal. Neither lawyer was surprised to discover Luce was a con person, as they experienced arrived at that summary with no my help. They were, even so, shocked that he experienced such a prolific and recidivist history as an professional assurance man. I provided them with documentation outlining Luce’s Ponzi strategies in Washington and Arizona. A mere 7 days later, Luce surfaced in Santa Monica, California, in which he had settled in as interminable residence guest at the demi-mansion of a prosperous, nicely-intentioned New Age marketer. In limited get he experienced tapped into the marketer’s specialist network where by he succeeded in both equally co-opting and alienating small business contacts.

Like a parasite looking for out a host physique, Luce would not only insinuate himself into the company life of his marks but their personal life, as perfectly. The key to his con — and that of quite a few self-assurance adult men — was to ideal the skilled and social networks of his victims in purchase to feed his fraud. If just one trader dries up, yet another in the network is primed and can be approached.

As a consequence of his romantic relationship with Luce, the marketer was losing believability, standing and relationships in the tight knit naturopathic neighborhood. Even further fomenting discord was Luce’s volcanic mood. He had a record of violent outbursts, lashing out at those people that would dilemma him, specifically minorities and women. Not just constant with the New Age humanist point of view. Luce’s correct character was uncovered when his temper flared. Regardless of the grave legal responsibility he presented his host, the businessman was so taken in by the fraud artist’s charisma that he was in denial.

The marketer’s superior buddy, another well known businessman in Los Angeles’s homeopathic group, was not so enamored by Luce or deluded by his charisma. In fact, when introduced to the con gentleman at a Hollywood Hills social gathering, he uncovered his pitch far too superior to be accurate and Googled Luce’s name on his Blackberry: up popped my identify with a warning to prospective Millennium III buyers. He known as my business the pursuing day, sharing his concern for his friend’s nicely becoming. It took recurring sit downs and client conversations with the marketer, armed with documentation I furnished him, to objectively format Luce’s history and machinations. Even with tough, tangible information in front of him, the marketer remained incorrigible. It took a second spherical of files and direct correspondence from my desk to the marketer’s in get to shake him no cost from the con man’s Svengali-like choke maintain on his reasoning capability. The marketer kicked Luce to the suppress.

In the past five years, Luce has effectively mounted three separate economic frauds, even staying so brazen as to threaten legislation suits towards traders who severed ties with him following acknowledging they had been swindled. Constant with all prosperous con gentlemen, Luce has a keen eye for pinpointing a require in his mark, then convincing the mark that he is uniquely positioned to satisfy that will need –in spite of lacking the intent, capacity or desire to provide on his claims.

Luce is starting to unravel and grow ineffectual. The con male has become entangled in his very own website of deceit. Unable to preserve his lies straight, he contradicts and exposes himself at each and every flip. His temper, misogyny and racism have surfaced consistently as the intensifying scrutiny of law enforcement, bilked traders, legal professionals and accountants attenuates strain by directing klieg lights on his many Ponzi schemes.

Con adult males are typically tough to apprehend, mainly because they are not driven by monetary achieve, on your own. They are sustained in big component by the adrenalin rush expert moving in for the kill, gutting then hanging their prey to bleed out. Luce is especially skewed in this respect, often forfeiting the significant score in purchase to slink away and mount a different fraud in an additional point out. Stealing just enough cash to continue on the ruse, but not so substantially bounty that felony or civil suits are filed as a make any difference of study course.

Leave a Reply

Your email address will not be published. Required fields are marked *