My grandma got wrapped up in an illegal money-making scheme once. She started taping movies off TV, editing out the commercials, hand-labeling the VHS tapes, and selling them for $3 out of a cardboard box on her driveway.
When I caught her, I quickly shut her new business venture down. Luckily, it's 2016 and none of her neighbors own VCRs anymore, so that limited her distribution...
It seems like everyone is trying to make a quick buck these days, whether it's violating copyright law, scamming online dates, starting a Ponzi scheme, or dodging taxes.
SEC Charges Guy with Online Dating Scam
I've been on a few bad online dates, including one where the guy answered a call from his mother about thirty minutes in, but at least nobody's ever tried to sell me a timeshare or a fraudulent investment opportunity.
According to the SEC, Thomas J. Connerton convinced fifty people, including six women that he met on an online dating site, to invest in his surgical glove company. He also convinced fourteen of those women's friends and family to invest.
Connerton told investors that his company Safety Technologies LLC was developing a material to make surgical gloves better resistant to cuts or punctures. He claimed that several major glove manufacturers wanted the technology and Safety Technologies was on the brink of imminent deals that would result in large payouts for investors in his company. But no deals have ever been anywhere close to materializing, and Connerton has emptied the company’s bank account by writing a series of checks to himself and using investor funds for his own expenses.
One of these investor-funded expenses? A $20,000 engagement ring for one of the women he met (and subsequently defrauded) on the dating site.
Imagine that conversation. “Um, so, Sweetheart. About your engagement ring...”
Fake CPA Accused of Ponzi Scheme
Lawrence Paul “Larry” Stephens was arrested at the end of April for running a Ponzi scheme out of his California CPA office. The evil twist here? Stephens was never a licensed CPA.
(Protip: If you're not a CPA, don't operate as a CPA.)
When the California Board of Accountancy learned that Stephens was using “someone else's CPA license to operate Brylaw Accounting, the company was placed on probation.”
But not before he could defraud six investors of $4.475 million.
The charges allege that between 2008 and 2011, "investors were led to believe that a toll road was being built between I-15 and the 241 in Orange County. A 'hundred millionaire' named 'Chris Cooper' was said to be running the project.”
However, “there was no Black Canyon Project, and Chris Cooper was not a real person.” Nor was Chris Cooper a “hundred millionaire.” SURPRISE!
In 2012, when the scheme's victims began filing civil suits against Stephens to recup their lost money, Stephens filed for bankruptcy...
A year later, however, the discharge was revoked after investigators found that he “made false oaths and accounts” when filing, according to the Bankruptcy Court’s complaint for revocation.
(Protip: If you're filing for bankruptcy, don't lie to the court.)
A person filing for bankruptcy is required to disclose all of his or her assets, but the complaint says Stephens neglected to disclose his connections with two businesses [...] and failed to disclose transfers out of his bank accounts totaling $117,500 within two years of filing for bankruptcy.
Whoops. So now I guess he does still owe the money. Stephens faces up to seventeen years in prison and $13.4 million in fines for his role in the Ponzi scheme.
A Tax-Evading Stripper
Veronica Fairchild is serving a three year jail sentence – not for prostitution – but for dodging Uncle Sam. She was convicted back in 2014:
Veronica Fairchild, 42, collected $1.1 million between 2005 and 2008, mostly from a wealthy client named David Karlen.
She declared only 45 percent of that money as income on her tax returns for those years, which she didn't file until 2010. The remaining $643,648 was declared as a gift.
At her trial in June, Karlen testified that he'd paid Fairchild to dance, and later for sex. He claimed to have paid between $1,000 and $5,000 for a variety of sexual acts.
Fairchild denies ever sleeping with Karlen, and she says much of the money was meant as a loan. She said Karlen invented the stories about sexual encounters to cover for his failure to pay taxes on the monetary gifts.
The jury sided with Karlen, convicting Fairchild on four felony counts of filing a false return.”
The court ultimately sentenced her to 33 months in prison for tax evasion... which is 33 months more than Tim Deegan, the CPA who kidnapped and imprisoned three prostitutes.
Earlier this year, she lost an appeal to the US 8th Circuit Court of Appeals. If only Fairchild had consulted a tax professional like this porn star who asked an accountant for some tax advice on video. (It's not porn, but it has a porn star in it, so I'd say it's NSFW.)