September 21, 2009
On paper, it looked like a "can't miss" investment. Own a piece of
4,000 ATMs in high traffic locations around the country and share in
the transaction fees from the thousands of consumers in need of
cash.
Maybe such an investment would pay off, but it didn't for the investors who poured money into what federal prosecutors say was an $80 million Ponzi scheme. The U.S. Attorney for Manhattan has charged two men -- Vance Moore of Raleigh, North Carolina, and Walter Netschi of McKinney, Texas -- with nine counts of wire fraud and one count of conspiracy.
"Moore and Netschi knew when they collected these funds that the promises on which the fund-raising was based were false," according to an indictment unsealed in Manhattan federal court.
According to the FBI, the defendants never purchased more than a few ATMs. Instead, they used some of the money to pay generous returns to early investors. Those early investors, convinced they were in on a great thing, helped spread the word, convincing others to invest as well.
"The defendants claimed the revenue in their investment opportunity derived from ATM fees," said FBI Assistant Director-in-Charge Joseph Demarest. "In fact, it was a classic Ponzi scheme, and the phantom revenue came from new investors. The scheme itself, until discovered, was one giant cash machine."
A lawyer representing Netschi said his client is innocent and said he intends to take the case to trial.
