SACRAMENTO--United States Attorney John K. Vincent and FBI Special Agent-in-Charge
Michael A. Mason announced that a Federal grand jury in Sacramento yesterday
indicted Alyn Richard Waage, 56, of Canada, and James Michael Webb, 40,
of California, in a twenty-four count indictment alleging fraud and money
laundering charges relating to one of the largest Internet investment
fraud cases in the country. The Indictment also seeks the forfeiture of
millions of dollars worth of real properties in Costa Rica and Mexico,
a yacht, a helicopter, over a dozen cars, and millions of dollars in bank
accounts in Latvia, Mexico and Costa Rica.
The defendants were extradited from Costa Rica to Sacramento in December
2002 to face federal charges relating to the Tri-West Investment Club,
an Internet-based investment fraud scheme that allegedly netted more that
$60 million from 15,000 investors worldwide. Both defendants remain in
custody pending trial.
The FBI, in cooperation with authorities in Costa Rica, arrested the defendants
in San Jose, Costa Rica, in September 2001. Waage is alleged to be the
schemes leader, while Webb is alleged to be the designer of the
fraudulent Web site.
If convicted, the defendants face 5 years in prison for each of six mail
and ten wire fraud counts, and 20 years in prison for each of six money
laundering counts and a conspiracy to commit money laundering count. Defendants
also face fines up to twice the amount involved in the scam, which is
alleged to exceed $60 million. Assistant U.S. Attorney Courtney J. Linn
is prosecuting two related forfeiture actions against the defendants.
Arraignment of both defendants is scheduled for January 7, 2003.
Fictitious "Prime Bank Notes" Sold on the Internet
The extraditions and criminal Indictment follow an international effort
by the United States, Costa Rica and Canada to investigate the activities
of Tri-West, which solicited investments in "prime bank notes"
at www.triwestinvest.com from 1999 to 2001. Visitors to the Web
site were promised an annualized rate of return of 120 percent plus return
of their principal at the end of a year, as well as substantial referral
fees of 15 percent of all referred investments. The Web site, which contained
alleged testimonials describing instant wealth from early investors, also
told investors that their investments were "guaranteed." The
Web site claimed that a 30-year-old "Panamanian Investment Company"
called the Haarlem Universal Corporation executed all the trades for Tri-West.
The Web site further claimed that the "day to day operations are
conducted by Jason Kingsley, Mark Goldman and Alan Richards."
Based on these representations, the Indictment alleges that investors
contributed $60 million in funds to Tri-West by mailing checks to Post
Office boxes in Belize and The Bahamas, where they were forwarded to Tri-West
operatives in Mexico and Costa Rica. The investors money was thereafter
sent to Latvian banks, which in turn sent some of the money to a bank
in New York, where "dividend" checks were distributed to certain
investors.
International Ponzi Scheme
According to the Indictment, the representations on the Tri-West Web site
were fraudulent. Tri-West never actually invested any of the investors
money in any "prime bank note" program, but instead used new
investor funds to make "dividend" payments to earlier investors
to give the false impression of profitability. The balance of the funds
were used by Waage, Webb and others to purchase millions of dollars of
real properties in Mexico and Costa Rica, as well as a yacht and helicopter,
and to funnel money to dozens of shell companies created in Costa Rica
to conceal the defendants ill-gotten gains. Contrary to the Web
site, the Indictment also alleges that Haarlem Universal Corporation was
incorporated in 1999, not 1969, and is not registered as an investment
company. The managers of Tri-West identified on the Web site are also
alleged to be fictitious, and simply aliases for defendants Alyn Richard
Waage and James Michael Webb.
A previous complaint alleged that in April 2001, Mexican police arrested
Alyn Richard Waage on immigration charges when he arrived in Guadalajara,
Mexico, carrying $4.5 million in undeclared checks from Tri-West investors.
After posting bail, Waage was released and then relocated to Costa Rica,
where he was arrested by Costa Rican authorities with the assistance of
the FBI in September 2001.
Millions of Dollars of Frozen Assets in Costa Rica, Mexico and Latvia
At the time of their arrests, Costa Rican authorities also seized and
froze nearly $15 million dollars of assets, including $7 million held
in bank accounts and millions more in real properties and assets such
as the boat, helicopter, and new cars. Requests for international assistance
have also resulted in the freezing of millions of dollars of real properties
and bank accounts in Latvia and Mexico.
Charges Against Other Defendants
In April 2002, Cary Alyn Waage, 26, of Canada, pled guilty to mail fraud
and money laundering charges relating to the Tri-West scam. The younger
Waage, who is cooperating with authorities, admitted the involvement of
his father and Webb at the time of his guilty plea. A criminal complaint
filed in October 2001 also charges Michelle Higgins, Alyn Waages
wife; Lynn Waage Johnston, Alyn Waages sister; and Evan Theodore
Pryor Smith with involvement in the scam. Those three individuals remain
fugitives.
The Indictment and complaints contain only allegations and the defendants
are presumed innocent until proven guilty at trial.
This case has been investigated with the assistance of the Federal Bureau
of Investigation, Internal Revenue Service -Criminal Investigation, and
the U.S. Securities & Exchange Commission. The U.S. Marshals Service
assisted with the extradition of the defendants from Costa Rica to the
United States.
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