Dear Mr. Receiver,
Please Sir, we are in extreme need of getting our money back. When will we begin to see a distribution? It is very hard to hold on financially.
In need,
Sammy
Department of Justice
FOR IMMEDIATE RELEASE
THURSDAY, March 8, 2007
WWW.USDOJ.GOV/USAO/GAM
CONTACT: Patrick Crosby
PHONE: (404) 581-6016
FAX: (404) 581-6160
HEAD OF PURPORTED REAL ESTATE INVESTMENT FUND INDICTED IN $69 MILLION PONZI SCHEME; MAKES FIRST APPEARANCE IN COURT
Defendant Gene O'Neal Guaranteed A 25% Return On Investment In 60 Days
Atlanta, GA - GENE A. O'NEAL, 36, of Atlanta, Georgia, made an initial appearance today before a United States Magistrate Judge on federal charges of mail and wire fraud. O'NEAL allegedly ran a scheme that defrauded investors in Pinnacle Development Partners, LLC ("Pinnacle"), a purported real estate investment fund based in Atlanta. O'NEAL was indicted by a federal grand jury on the charges earlier this week.
"O’Neal’s promises of huge returns in a short period opened the floodgates to investment," said United States Attorney David E. Nahmias. "He allegedly raised more than $69 million in 15 months by making promises of exorbitant returns from the purchase, improvement and sale of real estate. He then used the capital contributions of later investors to pay the returns promised to earlier investors. Contrary to what he told his investors, O'Neal allegedly did not realize the hefty returns he guaranteed but rather continued to draw in everincreasing amounts of investment from other investors and therefore ever-increasing amounts of unsustainable but undisclosed debt."
FBI Special Agent In Charge Greg Jones said, " This case not only demonstrates that the FBI is well suited to pursue such cases of large scale fraudulent investments or ponzi schemes, with their victims scattered over many states, it also demonstrates that we are committed to such a pursuit. The economic losses sustained by the victims of such schemes reverberates throughout our community in many ways. We hope that this investigation and the resulting indictment will serve notice to others contemplating any similar type financial schemes."
Inspector-in-Charge Martin D. Phanco said, “From the boiler room to the boardroom, United States Postal Inspectors work around the clock enforcing more than 200 federal laws in support of its mission by protecting the nation’s mail system from criminal misuse. We will always remain steadfast in our efforts to investigate those 2 individuals or corporations who are responsible for illegally using the U.S. Mail in the furtherance of their fraudulent schemes.”
According to the indictment and the documents and information presented in court: Beginning in July 2005, Pinnacle, which was founded by O'NEAL and headquartered in Atlanta, allegedly began telling investors they could make a 25% profit in 45 days, which later became a 25% profit in 60 days, upon investment in partnerships Pinnacle formed to acquire real property. Investors were told that Pinnacle was in the business of purchasing distressed, foreclosed or bank-owned real estate, which Pinnacle intended to “flip” for a profit after making minor repairs and cosmetic improvements. Pinnacle solicited investment by running more than $2.5 million worth of advertising in national and local media publications. As a result of his aggressive advertising campaign promising 25% returns in either 45 or 60 days, O'NEAL induced more than 2,000 investors from throughout the United States and some foreign countries to invest more than $69 million in just 15 months.
Pinnacle allegedly represented in its offering materials that its real property had been and continued to be sold at a substantial profit to third parties, that it contributed 50% of its own capital to the acquisition costs of its real property and that its investors were secured by being individually named on the deeds to Pinnacle real estate. The indictment alleges that, in fact, Pinnacle never sold, or for that matter significantly developed or improved, any of the real property it bought with investor funds and therefore never generated any income with which to pay the 25% profits, plus a return of principal, O'NEAL had guaranteed his investors. To pay the false returns promised to Pinnacle investors, which upon reinvestment was compounding 25% every 60 days, O'NEAL allegedly “recycled” more than $25 million in invested capital from later investors to earlier investors, who were falsely told that their returns were being paid from the development and sale of Pinnacle real property.
According to the indictment, over a period of time, as huge amounts of investment poured in, Pinnacle allegedly acquired larger and considerably more expensive, both in terms of acquisition and development costs, parcels of real estate. Investors were told that this real estate would be developed in phases, with Pinnacle partnerships holding the properties, for 60 days at a time, during the various stages of development. In fact, however, of the 21 real estate parcels Pinnacle bought, only half were assigned to a Pinnacle partnership and less than half of the partnerships Pinnacle formed ever appeared as record owners or partial record owners of Pinnacle real property, meaning that investors associated with the majority of Pinnacle's partnerships were never assigned to a property, much less individually named on its deed. In addition, the multi-family structures and raw land Pinnacle purchased (using 100% investor assets) required extensive and lengthy rehabilitation and development to ever generate income or be sold at a profit. To conceal the fact that Pinnacle was neither selling nor otherwise developing its properties, O'NEAL allegedly directed that certain of them be transferred between and 3 among Pinnacle partnerships. Although these were merely paper transactions and did not involve an actual sale, the transfer prices were as much as 10 times the initial acquisition price, thereby fostering the illusion that properties were being developed and sold at significant profits.
Aside from the $2.5 million spent on advertising, O'NEAL also allegedly used investor assets to pay more than $2.5 million in salary and commissions, more than $700,000 to furnish Pinnacle's offices, and more than $3.5 million in general and administrative expenditures. Pinnacle's investors also bought, among other things, a $72,000 Land Rover, a $69,000 Cadillac Escalade and, for O'NEAL's personal benefit, a $117,000 Maserati and $26,000 worth of jewelry.
The indictment's 19 mail and wire fraud counts each carry a maximum term of imprisonment of 20 years and a maximum fine of $250,000 per count. The indictment also seeks forfeiture of all proceeds of the alleged fraud.
The U.S. Securities and Exchange Commission filed a lawsuit against the Defendant and Pinnacle Development Partners, in October 2006, seeking an injunction against the alleged fraudulent activity, appointment of a receivership, and other relief. A federal judge in Atlanta issued a preliminary injunction and appointed a receiver, who has taken charge of the business and assets of Pinnacle Development Partners. The pleadings and reports filed by the receiver are publicly available in the court's docket, under the civil action entitled U.S. Securities and Exchange Commission v. Pinnacle Development Partners LLC and Gene O'Neil, 1:06-CV-2431-JTC (N.D.Ga October 11, 2006).
Members of the public are reminded that the indictment only contains charges. The defendant is presumed innocent of the charges and it will be the government's burden to prove the defendant's guilt beyond a reasonable doubt at trial.
This case is being investigated by Special Agents of the Federal Bureau of Investigation and Postal Inspectors with the United States Postal Inspection Service.
Assistant United States Attorneys Justin Anand and Paul Monnin are prosecuting the case.
For further information please contact David E. Nahmias (pronounced NAH-meus), United States Attorney, or Charysse L. Alexander, Executive Assistant United States Attorney, through Patrick Crosby, Public Affairs Officer, U.S. Attorney's Office, at (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney's Office for the Northern District of Georgia is www.usdoj.gov/usao/gan.
Please Sir, we are in extreme need of getting our money back. When will we begin to see a distribution? It is very hard to hold on financially.
In need,
Sammy
Does any one have any news or received anything in the mail? :cry:
According to G. Hays and his secretary whom I spoke to last Wednesday, they were sending out letters to all of us on Thurs, and Friday. We should be getting them any day now. More info is in the letters. The payouts will be a flat % for all, but I don't know what the % is. Maybe the letter will say. Also the payouts aren't coming the end of May.......but soon!
Soon, as in, before death???....... or "soon" as in, before my wife asks for the 50th time this month, "get my money back from Pinnacle yet?" :protest:
I could use some of that money since some jack@$$ cop gave me a $130 ticket for having a brake light out....as if I had gone to the back of my truck, taken the bulb out and smashed it on the ground, then put it back in the receptacle. The light was fixed w/in 5 minutes of getting the citation, yet I still have to pay the fine. What a crock Texas is. It's probably because I had a FL tag, and maybe his ex wife took his dog Flash, and ran off to Florida.
I know, all that has nothing to do w/ Pinnacle, but maybe that's what we all need right now.
Take care all
Chris, Floridian livin' in Texas
Instead of the letter it would be great just to get the money!
I hate red tape! At least it is on the horizon! Those on the east coast let us, on the west coast know when you get. These horses out here deliver much slower...
Has anyone received information in the mail?
I received my letter today in the mail. Does not give an exact date of the payout, but looks like we should have something more definitive within 45 days of this notice.
This is not fair, Another 45 days? Come on. please rush this process.
Sammy :cry:
:mrgreen:
They are working like little Elves to get us some funds.... It is not that easy. "The check is in the mail" :crying:
Has anyone contacted Hays and asked them why they don't post something on their site or on this blog to let us know what is going on? I will do so, but I have a feeling that they are getting a lot of calls from us. If the letter doesn't say when or how much what good is the letter?
Thanx
i have not received anything yet! The receiver should post the letter that was sent out to everyone. How can California get it before florida? Are we suppose to get another letter, after the 45 days? This is torture, I have many bills to catch up with. Please, Mr. Receiver give us some news on your website.
I would appreciated deeply
I received the letter today. It went over what my "net" claim was, and said that that amount was not necessarily the amount I would get back. There was no percentage or any discussion of it. It simply said something along the lines of, a distribution has been approved by the courts and we should get more information in the next 45 days. I don't have the letter in front of me, as I'm working, but thats the gist of it. If any of you have any specific questions about the letter, I'd be glad to give more info when I get home to the beloved parcel. But I'd encourage patience. We all are in the same boat here, and if you look on Hays' site, you'll see that alot of the companies involved in these things, the recovery and closure is taking much longer than where we are right now. I'd be willing to bet this will get dragged on for quite a while.
OK, the letter gives info on your personal account.....your claim, and how much of that they intend to base your distribution off of. It then goes on to say that if you would like to dispute their amount, you can file a disputed claim form. Then "within 45 days of the date of this Notice, we plan to file with the court a list of all non-disputed claims and to seek the Court's approval to make interim distributions on thos claims. An initial interim distribution will be made within 14 days of the Court's approval. The timing of distributions on disputed claims cannot be predicted at this time. Prior to making any distributions on a disputed claim, all objections raised by a timely files disputed claim form must first be resolved."
So, as you can see, approximately 45 days from now, they plan on filing the non-disputed claims w/ the court. Then who knows how long it will take for them to get (hopefully) approved. Once that's done, our initial distributions will be sent out w/in 14 days. So right now, we're looking at an absolute minimut of 59 days, and that's only if the court were to actually approve the distributions on the same day the documents were submitted. And we all know the chances of that happening.
OK, so I hope this helps some of you who are feeling left in the dark. STAY STRONG!
Yes, Thanks chris for the update. :D
OK, for those of you who are frustrated.....join the club. But any frustration thrown at Mr Hays is clearly misplaced. Without Hays as our Receiver, we would clearly be fighting this battle with our own attorneys, 1 schmuck at a time, with different outcomes. And Lord knows, that as each of us has our own financial situations, some of us couldn't afford the type of attorney necessary to WIN this battle. So although it may seem that Mr Hays is "dragging out" this process, I'm sure they are doing the most thorough job necessary to complete this process. And whatever of "YOUR" money they might be getting for their services, without them you wouldn't have seen it anyway. I personally am going to try to take a month off from this forum and just let my mind get away from it all. Maybe a trip to Omaha for the College World Series!!!!!!!!!!!! Mr Hays, keep up the good work, I expect a full refund w/in the next year:) Actually, since I lost my wife's money....SHE expects a full refund....no pressure:)
Well said chris4.. Hays is on our side & remember theres over 2,000 investors & cliams to sort thru not to mention it all has to go thru the courts for approval.. Hays has also negotiated the termination of several big ticket items (leases, corp jet, etc) that would have otherwise come out of your/our money.
That being said, I have come across a real estate offering in my same local paper where I found Pinnacle. What they are offering it seems is to pay me & a few other investors a flat fee of $7,500 to $10,000 to be named partners in an LLC that will be buying property (primarily apt. complexes). I put no $$ upfront.. they just want the partners to sign off as the mortgagees. They say they will re-finance or sell the properties within a year, thereby removing us off the mortgage.
They sent me some documents but I havent drilled them yet. Even if it checks out Im not sure how I feel about having my credit on the line for a year. My #1 questions for them is cant they find tons of people they already know with good credit to do this for them??