An alleged scam revealed by a shorts seller ended in a shootout

Matthew Beasley was not surprised when three FBI agents rang his doorbell. Agents asked questions about an investment plan with a high return and zero risk that his law firm helped manage. They have already visited his partner.

They also had secret recordings of the sale attempt from a sting operation by a civilian that included a disgruntled comedian, a rented business plane and a reputable investment house from New York.

Beasley came to the front door of his Las Vegas home and opened it with his face to the side. As he turned and stood in front of the agents, they saw that he was holding a gun to his temple.

He then threw the gun at agents, a federal prosecutor told a court hearing earlier this month. Agents fired at him twice, prosecutor said, but Beasley retreated into his home.

The FBI sent a hostage expert to the scene. Beasley said he would have the agents kill him – he would rather die than go to jail, the prosecutor said.

Bleeding wounds in his chest and shoulder, he confessed: the investments were a Ponzi scam. The prosecutor said Beasley told the FBI to check his bank records, and everything would be clear.

After nearly four hours, the FBI commando team managed to get Beasley out of his house alive.

He was charged with assaulting a federal agent. He has not yet been charged with a financial offense. The FBI is continuing its investigation into the alleged Ponzi plan, people familiar with the matter said.

A lawyer representing Beasley declined to comment. He told the judge on March 8 that Beasley’s actions indicated remorse and an “extreme and one-time mental crisis.”

“Surprising and shocking events”

Individuals have allegedly put in hundreds of millions of dollars in what has been described as high-repayment and low-risk contracts to finance injury-related claims through two companies, J&J Purchasing and J&J Consulting Services, based on secretly recorded conversations with marketers and company president Jeffrey C. ‘Ed. The money was sent to a bank account controlled by Beasley’s firm on behalf of the two companies, according to investment documents.

None of the J&J or Judd companies have been charged with any offense.

“The events surrounding Beasley’s lawyer are both surprising and shocking,” said Nick Oberhiden, a lawyer representing Judd. His client will investigate what happened and expose those who harmed his business, Oberhaden said.

J&J Consulting and its investors were victims of Beasley, says Kevin Anderson, a lawyer representing the company in civil matters.

In recent years, Beasley and Judd and related entities and trusts have purchased a multi-million dollar private property, Nevada and Utah real estate and luxury cars including a Rolls-Royce, two Bentley cars, a Porsche, an Aston Martin and a half-million-dollar trailer. Judd’s lawyer declined to comment for these purchases.

The strategy that Judd promoted “was the clearest Ponzi scam we’ve ever seen,” said Nate Anderson, the founder of the investment house that researched it. In an announcement to find victims of the alleged scam, the FBI also called it a Ponzi scam. Ponzi scams are investment scams in which early investors receive refunds from the money of investors who come in after them. The money raised is usually not invested anywhere.

Anderson’s Hindenburg Research is a Wall Street shortcut fund that investigates potential scams in public companies and bets that their stocks have fallen.

Anderson’s girlfriend was the one who previously raised questions about the electric truck company Nicola. Among other things, she revealed that Nicolas rolled a truck from a hill in a video designed to show that the company has a functioning vehicle. Nicola paid a $ 125 million fine related to the allegations without admitting or dismissing them.

Refunds are too good to be true

Anderson began learning about scams while researching Ponzi scams, including working with Harry Markopoulos, who had warned regulators for years about Bernie Madoff’s multi-billion dollar scam but his warnings were not heeded.

As in Madoff’s scam, the returns here were too good to be true. J&J claimed that short-term loans are made to people waiting to be paid from personal injury claims, so it can be understood from recorded conversations, documents, interviews with potential investors and a court hearing after Beasley’s arrest.

The contracts were supposed to give a repayment of 12.5% ​​after the loan was repaid within 90 days. They were sold free of any risk. “We’ve never had one – more than 16,000 in a little over six years – that didn’t work,” Judd said in a sales call secretly recorded by the Anderson Foundation in February.

Investors, most of whom were Mormons living throughout the western United States, often heard about J&J from family and friends. J&J and correspondence with the marketers.

Judd and some of the marketers also identified as Mormons. In one of the recorded conversations, a marketer who wanted to spread the investment opportunity as a way to fund the construction of a church.

Both Beasley and Judd have no financial background. Beasley dealt with family law and civil litigation, his former colleague said. Judd was marketing drugs.

Since 2017, more than $ 300 million has been transferred to a bank account at Beasley’s law firm that was affiliated with J&J, prosecutors said.

In January, Hindenburg received a tip from an accountant who said some of his clients had invested in J&J. One gave him the investment documents. Anderson decided to investigate.

J & J’s investments were private, so Anderson’s company could not make a profit by betting against them. The company filed a corruption exposure complaint with the Securities and Exchange Commission (SEC), which placed it in a position where it would receive a certain award in case the government fined the company it complained about a significant amount.

Operation Sting

In Hindenburg, they set up a sting operation to capture Jad, who rarely meets with investors, in a recording in which he promotes the investment strategy. One of the partners in Hindenburg met a member of Judd’s class. The same person, Mark Holt, did not know Judd personally but they had several dozen mutual friends on Facebook. They both once dated the same woman, Holt said.

For Holt, helping to capture a crook was also a personal matter. More than a decade ago, he gave money to a man who said his investments in oil wells in Canada would pay back 25% as long as the price of oil remained above $ 30 a barrel.

After receiving the first repayments as promised, Holt recommended the investment to his mother. She put a large portion of her savings into it, and the man disappeared after a few months.

“There is guilt and shame and remorse here, everything is mixed together with bitterness,” Holt said. “It’s an unending feeling of sacrifice.”

Holt, a former technology director who now runs a private jet rental company, told J&J marketers he had a large sum to invest. He flew to Las Vegas in a rented private jet that Hindenburg secretly mounted microphones and cameras on, before meeting with J & J’s resellers.

At the meeting he took advantage of his managerial experience but also a decade of improvisation on stage.

“I created an improvisation scene with people who did not know they were playing in the scene,” he said. “I was a little apprehensive that it would look too sophisticated, but it turns out that playing the same jerk is not that difficult.”

All the people got off the plane and stood on the ground. One of the marketers, who discussed the reactions they received to the offer, said “you know, we had people say it was a Ponzi scam,” as can be heard in the recording of the conversation.

After meeting on the plane, Judd agreed to talk to Holt. In a secretly recorded conversation, the two men are heard discussing their mutual friends, Judd’s recent purchase of a private jet and the details of his investment in J&J. Judd presented in the conversation some of the things in a similar way to what the marketers introduced him. He said in a conversation that he managed J&J himself, while Beasley managed the contracts and relationships with the lawyers.

Litigation financial investments as offered by J&J are no exception. The risk was what surprised. In Hindenburg they talked to professors who said that the insolvency rate on such types of contracts stands at about one percent. It was statistically almost impossible for J&J not to lose once out of 16,000 contracts, Hindenburg believed.

J & J’s size and consistency also stood out to Hindenburg. Anderson read a study by three academics that examined hundreds of agreements and found that the financing from an industry lender for settlement payments averaged $ 6,000, well below $ 80,000 or $ 100,000 in contracts that J&J claimed to have routinely funded.

In Hindenburg, they shared the findings with federal authorities. A few days after recording the conversation with Judd, FBI agents knocked on Beasley’s door.

Rumors of a confrontation between gunmen quickly spread among investors. The FBI posted a message on the FBI’s website asking to speak with people who were victims of what it calls a Ponzi scam. While J & J’s name was not mentioned, the details provided match those described in the investment documents viewed by the Wall Street Journal.

On Thursday, five investors who invested a total of $ 1.8 million in the two J&J companies filed against the companies in an involuntary bankruptcy. Two other J&J-related lawsuits have also been filed by investors.

By Editor

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