Chicago Man Pleads Guilty to Selling $8.6 Million in Fraudulent International Bank Certificates of Deposit to Senior Citizens, Reports U.S. Attorney

Apr 11, 2001, 01:00 ET from U.S. Attorney

    BOSTON, April 11 /PRNewswire/ -- United States Attorney Donald K. Stern
 and Charles S. Prouty, Special Agent in Charge of the Federal Bureau of
 Investigation in New England, announced today that MICHAEL D. RICHMOND, age
 51, of Orland Park, Illinois pled guilty in federal court to seventeen counts
 of mail fraud arising out of the sale of over $8.6 million in certificates of
 deposit issued by his international "bank".
     "This scheme was especially shameful because the defendant targeted senior
 citizens and stole their life savings through his lies and deception," stated
 U.S. Attorney Stern.  "Dozens of decent people, many in their twilight years,
 have been wiped out by this defendant.   I urge the public to keep their guard
 up and remember the maxim, 'if it sounds too good to be true, it probably is.'
 If you're not sure, call the Better Business Bureau, the state Attorney
 General's office, or an independent financial analyst."
     At today's hearing a federal prosecutor described for U.S. District Court
 Judge Joseph L. Tauro the elaborate scheme to defraud which RICHMOND designed
 and executed.  In 1997, RICHMOND incorporated an entity named Royal Meridian
 International Bank ("RMIB") in the south Pacific country of Nauru.  At the
 time, RICHMOND was also running Liberty Estate Planning and the Liberty
 Institute, organizations which trained estate planners.
     Using his network of Liberty Institute financial planners, RICHMOND
 promoted the sale of RMIB certificates of deposit, which promised a guaranteed
 12% annual rate of return, with no risk to the investor's principal.  RICHMOND
 prepared and distributed RMIB brochures and launched an RMIB web-site,
 "RMIB.com", in order to sell these certificates of deposit.
     RMIB's promotional materials falsely represented that RMIB had offices in
 several countries, that investor funds never left the bank, and that RMIB held
 $1.25 in asset reserves for every dollar invested with RMIB.  RICHMOND is also
 charged with falsely representing that RMIB had institutional relationships
 with established banking entities and that the RMIB certificate of deposit had
 received a "Gold Recommendation" from an "international due diligence firm."
     Based on these representations, in a period of just ten months, RICHMOND
 sold over $8.5 million worth of RMIB certificates of deposit to over 170
 individuals located in more than a dozen states, including many in
 Massachusetts.  Approximately 70% of the people who invested in RMIB are over
 sixty years old and dozens are in their seventies and eighties.
     Contrary to the representations made about RMIB, it was not a bank.
 Investor funds were simply deposited into a New York money market account
 RICHMOND controlled.  RMIB did not have offices in any of the foreign
 countries RICHMOND claimed and RMIB did not maintain any cash reserves, much
 less the $1.25 for every dollar invested, as promised.   RMIB also did not
 have relationships with the financial institutions as claimed in both the
 brochures and on the web-site.
     Rather than maintaining investor funds in the "bank", as was promised,
 RICHMOND transferred nearly $6 million in RMIB funds to an entity known as
 Zone Productions based in Florida.  Zone Productions promised to pay RICHMOND
 annual returns in excess of 360% on the RMIB funds he invested with Zone.  No
 RMIB investor was ever told, however, that RMIB was going to take their money
 and invest it in something called Zone Productions or in an investment that
 promised obviously speculative returns, such as 360% a year.
     In addition to diverting money to Zone, RICHMOND also used RMIB money for
 his personal benefit, including a $700,000 waterfront home in Clearwater,
 Florida, $30,000 in home furnishings, a $400,000 Illinois farm for his Liberty
 business partner, a new power boat, and $570,000 in transfers to an account
 Richmond controlled in the Bahamas.
     Judge Tauro set sentencing in this matter for July 11, 2001 at 1:00 pm.
 RICHMOND faces a maximum penalty of 5 years' imprisonment and a $250,000 fine,
 as well as restitution, on each mail fraud conviction.
     The case was initiated by a civil action brought by the Boston Office of
 the Securities and Exchange Commission and was investigated by the Federal
 Bureau of Investigation.  It is being prosecuted by Assistant U.S. Attorneys
 Joshua S. Levy and Diane C. Freniere of Stern's Economic Crimes Unit.
 
 

SOURCE U.S. Attorney
    BOSTON, April 11 /PRNewswire/ -- United States Attorney Donald K. Stern
 and Charles S. Prouty, Special Agent in Charge of the Federal Bureau of
 Investigation in New England, announced today that MICHAEL D. RICHMOND, age
 51, of Orland Park, Illinois pled guilty in federal court to seventeen counts
 of mail fraud arising out of the sale of over $8.6 million in certificates of
 deposit issued by his international "bank".
     "This scheme was especially shameful because the defendant targeted senior
 citizens and stole their life savings through his lies and deception," stated
 U.S. Attorney Stern.  "Dozens of decent people, many in their twilight years,
 have been wiped out by this defendant.   I urge the public to keep their guard
 up and remember the maxim, 'if it sounds too good to be true, it probably is.'
 If you're not sure, call the Better Business Bureau, the state Attorney
 General's office, or an independent financial analyst."
     At today's hearing a federal prosecutor described for U.S. District Court
 Judge Joseph L. Tauro the elaborate scheme to defraud which RICHMOND designed
 and executed.  In 1997, RICHMOND incorporated an entity named Royal Meridian
 International Bank ("RMIB") in the south Pacific country of Nauru.  At the
 time, RICHMOND was also running Liberty Estate Planning and the Liberty
 Institute, organizations which trained estate planners.
     Using his network of Liberty Institute financial planners, RICHMOND
 promoted the sale of RMIB certificates of deposit, which promised a guaranteed
 12% annual rate of return, with no risk to the investor's principal.  RICHMOND
 prepared and distributed RMIB brochures and launched an RMIB web-site,
 "RMIB.com", in order to sell these certificates of deposit.
     RMIB's promotional materials falsely represented that RMIB had offices in
 several countries, that investor funds never left the bank, and that RMIB held
 $1.25 in asset reserves for every dollar invested with RMIB.  RICHMOND is also
 charged with falsely representing that RMIB had institutional relationships
 with established banking entities and that the RMIB certificate of deposit had
 received a "Gold Recommendation" from an "international due diligence firm."
     Based on these representations, in a period of just ten months, RICHMOND
 sold over $8.5 million worth of RMIB certificates of deposit to over 170
 individuals located in more than a dozen states, including many in
 Massachusetts.  Approximately 70% of the people who invested in RMIB are over
 sixty years old and dozens are in their seventies and eighties.
     Contrary to the representations made about RMIB, it was not a bank.
 Investor funds were simply deposited into a New York money market account
 RICHMOND controlled.  RMIB did not have offices in any of the foreign
 countries RICHMOND claimed and RMIB did not maintain any cash reserves, much
 less the $1.25 for every dollar invested, as promised.   RMIB also did not
 have relationships with the financial institutions as claimed in both the
 brochures and on the web-site.
     Rather than maintaining investor funds in the "bank", as was promised,
 RICHMOND transferred nearly $6 million in RMIB funds to an entity known as
 Zone Productions based in Florida.  Zone Productions promised to pay RICHMOND
 annual returns in excess of 360% on the RMIB funds he invested with Zone.  No
 RMIB investor was ever told, however, that RMIB was going to take their money
 and invest it in something called Zone Productions or in an investment that
 promised obviously speculative returns, such as 360% a year.
     In addition to diverting money to Zone, RICHMOND also used RMIB money for
 his personal benefit, including a $700,000 waterfront home in Clearwater,
 Florida, $30,000 in home furnishings, a $400,000 Illinois farm for his Liberty
 business partner, a new power boat, and $570,000 in transfers to an account
 Richmond controlled in the Bahamas.
     Judge Tauro set sentencing in this matter for July 11, 2001 at 1:00 pm.
 RICHMOND faces a maximum penalty of 5 years' imprisonment and a $250,000 fine,
 as well as restitution, on each mail fraud conviction.
     The case was initiated by a civil action brought by the Boston Office of
 the Securities and Exchange Commission and was investigated by the Federal
 Bureau of Investigation.  It is being prosecuted by Assistant U.S. Attorneys
 Joshua S. Levy and Diane C. Freniere of Stern's Economic Crimes Unit.
 
 SOURCE  U.S. Attorney