Gainesville man pleads guilty to $60M in fraud. Another Ponzi!!!

[napi21]

http://atlanta.bizjournals.com/atlanta/stories/2009/03/23/daily25.html?ana=e_du_pap

Wendell Ray Spell, 50, pleaded guilty Tuesday in federal district court to running a Ponzi scheme through his construction equipment business that defrauded investors out of more than $60 million.

February 2005 through October 2008, Gainesville, Ga., resident Spell bought and sold construction equipment in Gainesville. Spell did business in the names of North Georgia Equipment Sales LLC and Cornerstone International Investments LLC. In order to keep his failing businesses afloat, Spell sought and obtained from investors funds to buy additional construction equipment, which he said he could re-sell to third parties for a substantial profit. Spell promised some of the investors he would split the profits with them on a 50/50 basis, and he promised other investors that he would pay them interest at the rate of 36 percent a year.

I realize he's a piker next to Madoff, but it makes me wonder how many more of these greedy btd's there are out there?

[RT Atlanta]

1. 36% interest?

If that isn't a red flag for you, the investory, then you need to get your head checked. Caveat Emptor!

[soothsayer]

2. are you kidding? payday loan places are ALLOWED to charge like 199% interest

The mob used to get jacked up for that but our corrupt reps think it's fine.

[Tangerine LaBamba]

3. Bring back the usury laws

Here in Virginia, the first of this year finally brought laws that capped the interest rate those places can charge.

I don't remember what it was, but it was hardly the bullshit rates they'd been charging before the law went into effect. For a time, it would have been cheaper to go to Mob for the money.

We need the old laws against usury because, without restraint, the worst of the greed that defines some people will prevail. This is the free market at work, folks.

Not too pretty, is it?

[RT Atlanta]

4. No, I'm not

the difference being that apparently this was sold to willing investors. To sell those kinds of securities legally (which clearly didnt happen), the issuer generally has to provide a form of private prospectus. A 36% rate of return should be enough to give any "reasonable" investor pause for consideration.

As I see it, the difference with your reference to payday loans is that under those circumstances many people are forced by circumstances to go to those lenders. In this circumstance, it appears folks voluntarily "invested" their money.

[SoCalDem]

5. In Boom-times, the Ponzis bloom

There are many more to be uncovered:(