In the late 1990’s James Eberhart and Eugene M. Carriere operated a fraudulent Newport Beach, CA company called Yes Entertainment Network, Inc. These two ran a scam that took in over $13 million of dollars from ordinary Americans.
Their office (just a short distance from our own Newport Beach corporate office) was one of many “boiler room” firms with expertise in telemarketing. Investors greedily put their money into a program that was allegedly creating a multi-channel, family-owned website that would produce and carry entertainment programs. Investor’s profit would be generated from the sale of advertising on the website. Both men claimed that an initial public offering of the stock would be imminent and thus generate millions for investors.
Nothing could have been further from the truth.
We had clients that paid us to perform background checks on these guys and the company. Those clients that initially paid us a few hundred dollars to investigate this company ended up saving hundreds of thousands of dollars by listening to our advice. The “website” was a fake. It was simply used to help bring confidence and convince investors that their money was safe. Further investigation revealed that Eberhart was previously under investigation by Federal authorities for similar fraud schemes.
As the scheme unraveled, it was revealed that hardly any funds went to the website. About 50% of the monies collected went into the pockets of the telemarketers. The vast remaining sums were funneled into bank accounts located into Hong Kong and Singapore.
Eberhart and Carriere soon disappeared off the planet, or so they thought. Eberhart remained a fugitive for twelve years before being arrested in Malaysia in 2012.
District Judge Cormac J. Carney recently sentenced Eberhart to twelve years in prison.
Carrie was a fugitive for six years before authorities found him in Thailand in April of 2005. Carrie was sentenced to three years in prison in 2007. Both men were ordered to pay over twelve million in restitution to the investors.
The court documents in this matter revealed that there were over 800 victims across the United States. There is no number of how many people did not become victims because they were intelligent enough to hire a private investigators to “investigate before they invest.” I have lectured on this subject and have participated in dozens of radio and television shows pleading with people not to be greedy and conduct a little due diligence before they give away their hard earned money. Some listen, unbelievably, most do not.
This would be a great ending to a case study if the story ended there. If we are to be truthful and report the investigative facts that we have gleaned over the past forty years you might be shocked. As we have reported previously, ninety percent of the the clients who have us perform a background investigation or a due diligence report on a financial “expert” and/or their company, do so AFTER they have invested their money. It is only the rare ten percent who come to us before they invest. Both categories have clients who pay for our advice and then ignore it completely. These unfortunate souls are just plain greedy.
Those who have invested and are told the bad news that the financial company is a fraud are often too afraid to ask for their money back. Many are also driven by placing a blind-eye to our findings in the hope of garnishing that great 15-20% return. Those that haven’t invested are often lured to the financial banquet of plenty and still invest their money even after we totally expose that their funds are at 100% in jeopardy.
There is a television show called American Greed. The main focus of the show is to expose the scum, vermin and trash of our society that has perpetrated these frauds on our naive and often too unsuspecting public. The greed part of the show applies to both the bad guys and the victims. The show has a never ending cast of bad characters to portray.
We will continue to write and be vigilant in exposing these “financial wizards” that prey upon our society. Will 2015 and beyond ever bring an awareness to the public about all of these scams, schemes and ultimately, broken dreams? I highly doubt it as the misguided need for the quick dollar and high interest rates will trump reality and common sense.