DAVID W. SCOFIELD - 4140 PETERS š SCOFIELD A Professional Corporation 7430 Creek Road, Suite 303 Sandy, Utah 84093-6160 Telephone: (801) 322-2002 Facsimile: (801) 912-0320 E-mail: [email protected]Attorneys for Brian Bagley and L. Carol Bee, Creditors IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF UTAH In re: BARRY DON HUNTER; and KIMBERLY CHAMPLIN HUNTER, Debtors. ________________________________ BRIAN BAGLEY AND L. CAROL BEE, Plaintiffs, -vs- BARRY D. HUNTER; KIMBERLY CHAMPLIN HUNTER; PORTFOLIO MANAGER INTERNATIONAL L.L.C.; ONEIROS TECHNOLOGIES L.C.; MICHAEL J. WRIGHT; CYNTHIA L. WRIGHT; GREGORY B. MADSEN; LUCIDITY MANAGEMENT, LLC; VOLITION TRADING COMPANY, LLC; CHURCH OF SCIENTOLOGY OF UTAH; CYNTHIA L. WRIGHT; CHURCH OF SCIENTOLOGY MISSION OF SALT LAKE CITY; CHURCH OF SCIENTOLOGY INTERNATIONAL; TOM BURTON; JAMES D'AREZZO; ALAN S. FARR; GEORGE HITES; GREG KINGDON; DAVID PETERSEN; ROBBY J. STOWE; SANDOR SZANISZLO, Defendants. Bankruptcy Case No. 12-26860WTT (Chapter 7) FIRST AMENDED COMPLAINT TO DENY DISCHARGE UNDER 11 U.S.C. § 727, TO DETERMINE NON-DISCHARGEABILITY PURSUANT TO 11 U.S.C. § 523 AND FURTHER RELIEF Adv. Proc. No. 12-02544 Honorable William T. Thurman [FILED ELECTRONICALLY] JURY TRIAL DEMANDED Case 12-02544 Doc 39 Filed 04/26/13 Entered 04/26/13 16:49:33 Desc Main Document Page 1 of 105
Transcript
DAVID W. SCOFIELD - 4140PETERS š SCOFIELDA Professional Corporation7430 Creek Road, Suite 303Sandy, Utah 84093-6160Telephone: (801) 322-2002Facsimile: (801) 912-0320E-mail: [email protected]
Attorneys for Brian Bagley and L. Carol Bee, Creditors
IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF UTAH
In re:
BARRY DON HUNTER; and KIMBERLY CHAMPLIN HUNTER,
Debtors.________________________________
BRIAN BAGLEY AND L. CAROL BEE,
Plaintiffs,-vs-
BARRY D. HUNTER; KIMBERLY CHAMPLIN
HUNTER; PORTFOLIO MANAGER
INTERNATIONAL L.L.C.; ONEIROS
TECHNOLOGIES L.C.; MICHAEL J. WRIGHT;CYNTHIA L. WRIGHT; GREGORY B.MADSEN; LUCIDITY MANAGEMENT, LLC;VOLITION TRADING COMPANY, LLC;CHURCH OF SCIENTOLOGY OF UTAH;CYNTHIA L. WRIGHT; CHURCH OF
SCIENTOLOGY MISSION OF SALT LAKE
CITY; CHURCH OF SCIENTOLOGY
INTERNATIONAL; TOM BURTON; JAMES
D'AREZZO; ALAN S. FARR; GEORGE
HITES; GREG KINGDON; DAVID PETERSEN;ROBBY J. STOWE; SANDOR SZANISZLO,
Defendants.
Bankruptcy Case No. 12-26860WTT(Chapter 7)
FIRST AMENDED COMPLAINT TO DENY
DISCHARGE UNDER 11 U.S.C. § 727, TO
DETERMINE NON-DISCHARGEABILITY
PURSUANT TO 11 U.S.C. § 523 AND
FURTHER RELIEF
Adv. Proc. No. 12-02544
Honorable William T. Thurman
[FILED ELECTRONICALLY]
JURY TRIAL DEMANDED
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Plaintiffs Brian Bagley (“Bagley”) and L. Carol Bee (“Bee”), for their claims
against defendants Barry D. Hunter (“Hunter”); Kimberly Champlin Hunter (“Kimberly”);
Portfolio Manager International L.L.C. (“PMI”); Oneiros Technologies L.C. (“Oneiros”);
Michael J. Wright (“Wright”); Cynthia Wright (“Cynthia”); Gregory B. Madsen (“Madsen”);
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Utah Church and the Church. Cynthia also owns, with Wright, the building from which
the Utah Church, the Utah Mission, PMI and Oneiros operated.
14. The Church, a California corporation, within the worldwide network of
Scientology corporations and entities, is officially referred to as the “mother church” of
the Church of Scientology. According to the official website of the Church of
Scientology, the Church “provides overall direction, planning and guidance for the
network of churches, missions, field auditors and volunteer ministers which comprise
the Scientology hierarchy it spans, and ensures these various organizations are all
working effectively together.” The Church “broadly plans and coordinates Scientology
expansion. This planning is then carried out by the individual networks of organizations
which comprise ecclesiastical management at the continental echelon. Through CSI’s
ecclesiastical management activities, Scientology churches receive guidance in
applying the scriptures both technically and administratively.” The Church “addition[ally]
guid[es] the growing Scientology hierarchy . . ..”
15. Burton is an individual and resident of the state of California. Burton was
ostensibly an original managing member of PMI but was purportedly removed from that
position as of December 31, 2007. At various times, including at the time of PMI’s
dissolution, it has been represented that Burton is a member of PMI. At other times, he
has been represented to be a creditor, having purported to loan PMI $44,500.00. Burton
entered into an agreement with PMI to function as the “establishment officer” (a
Scientology term) to oversee all of the activities required to put the organization in
place, including infrastructure, processes, technology and the like, to facilitate PMI’s
operations. In exchange for this agreement, Burton ostensibly received $40 per hour
7
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plus investment opportunities and “special perks” under this agreement. Burton is a
control person of PMI, having been represented to be on its board of “advisers.”
16. D’Arezzo is an individual and resident of the state of California. D’Arezzo
is represented to be, as of the time of PMI’s dissolution, a member of PMI. At other
times, he has been represented to be a creditor, having purported to loan PMI
$100,000.00. D’Arezzo is a control person of PMI, having been represented to be on its
board of “advisers” according to a Hunter email dated February 19, 2009. D’Arezzo
specifically advised PMI concerning its dealings with convicted felon co-schemer Hales.
17. Farr is an individual and resident of the state of Utah. Farr was at material
times a member of the Board of Directors of the Utah Mission. Farr is represented to be,
at the time of the dissolution of PMI, one of its members. At other times, he has been
represented to be a creditor, having purported to loan PMI $100,000.00. Farr’s wife,
Carol Farr, purports to have loaned PMI another $50,000.00. Farr is a control person of
PMI, having been represented to be on its board of “advisers.”
18. Hites is an individual and resident of the state of California. Hites is
represented to be a member of PMI as of the time of its dissolution. At other times, he
has been represented to be a creditor, having purported to loan PMI $85,000.00. Hites
purportedly entered a subscription agreement with PMI through his independent entity
Infinity Catamaran located in the Carribean on January 7, 2008. Hites is a control
person of PMI, having been represented to be on its board of “advisers.”
19. Kingdon is an individual and resident of the state of Utah. Kingdon is
represented to be, at the time of the dissolution of PMI, one of its members. At other
times, he has been represented to be a creditor, having purported to loan PMI
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$100,000.00. Kingdon is responsible for bringing Michael Baybak (“Baybak”) into PMI
to invest. Baybak is a major contributor to the Church and a variety of its entities. At
least one co-schemer has represented that Baybak contributed over $20 million to the
International Association of Scientologists (IAS). Kingdon solicited additional high-
wealth investors in PMI. Kingdon is also a control person of PMI.
20. Petersen is an individual and resident of the state of Utah. Petersen was
at material times a member of the Board of Directors of the Utah Mission. Petersen is
represented to be, at the time of the dissolution of PMI, one of its members, ostensibly
having invested $150,000.00 in PMI. At other times, he has been represented to be a
creditor, having purported to loan PMI $300,500.00. Hunter solicited Petersen to
become a managing member of PMI. Hunter also offered to give up a portion of
Hunter’s ownership of PMI, from the 100% Hunter represented he owned, such that
Hunter would keep somewhere between 70% to 90% of PMI. Petersen is a control
person of PMI, having been represented to be on its board of “advisers.”
21. Stowe is an individual and resident of the state of Utah. Stowe is
represented to be, at the time of the purported dissolution of PMI, one of its members.
22. Szaniszlo is an individual and resident of the state of California. Szaniszlo
is represented to be, at the time of the dissolution of PMI, one of its members and was
present during discussions in 2004 between the co-conspirators regarding the
organization and establishment of PMI for the purpose of soliciting investment funds to
trade using Oneiros’ software. Szaniszlo is a control person of PMI, having been
represented to be on its board of “advisers.”
9
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JURISDICTION
23. Hunter is a Co-Debtor in the main bankruptcy case, Case No. 12-26860
WTT, having filed a joint voluntary petition for relief under chapter 7 of Title 11 of the
United States Code on May 25, 2012 with his wife, Co-Debtor Kimberly.
24. The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334(a)
and (b) and 28 U.S.C. § 157(a), (b) and (c). The present adversary proceeding is
brought pursuant to Federal Rules of Bankruptcy Procedure 7001(1)-(2), (6)-(7), (9) and
includes core proceedings as defined in 28 U.S.C. § 157(b)(2)(A), (F), (H)-(K) and (O).
This Court has jurisdiction over the non-core claims under 28 U.S.C. § 1334(b) and may
hear them pursuant to 28 U.S.C. § 157(c) as “otherwise related” proceedings. The core
proceedings require that the Court assess such matters as the disregard of corporate
formalities in operating PMI and other entities, the use of PMI and other entities as
Hunter’s own pocket book, the use of PMI and other entities by Hunter and others for an
illegal and fraudulent purpose, viz., to operate High Yield Investment Programs and a
Ponzi scheme, that Hunter transferred money freely and without rhyme or reason
between PMI and himself and related persons and entities, that Hunter used other
persons and entities in an effort to evade the securities laws of the United States, ans
that Hunter violated the analogous securities laws of Utah as well as participating in
conspiracies to violate securities laws, claims arising under the Racketeer Influenced
and Corrupt Organizations (RICO) Act, 18 U.S.C. §§ 1961, et seq., and other intentional
torts and crimes. In the course of committing those violations, monies were procured,
used and transferred in such a fashion that all or a substantial part of such funds should
be recovered by the Debtors’ estate and used to pay plaintiffs and possibly other
10
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creditors who have not been named.3 The resolution of those other claims necessarily
relates to the determination of the objection to discharge generally and to the
dischargeability of the alleged debt in the core proceeding. The Court also has original
jurisdiction over the claims asserted under 18 U.S.C. 1964(c) pursuant to 28 U.S.C. §
1331 in that they arise under the Constitution, laws, or treaties of the United States.
Finally, because all other claims are so related to claims in the action within the original
jurisdiction of the district court under 28 U.S.C. §§ 1331 and 1334(a) that they form part
of the same case or controversy under Article III of the United States Constitution, this
court has jurisdiction over those claims pursuant to 28 U.S.C. § 1367.
25. This proceeding arises in and is related to Bankruptcy Case No. 12-
26860-WTT.
26. Venue is proper in this district pursuant to 18 U.S.C. § 1965(a), 28 U.S.C.
§§ 1331, 1391, 1409(a).
STATE COURT ACTION
27. On August 20, 2010, plaintiffs in this action filed a complaint against
Hunter, some of the other defendants in this adversary proceeding, and some other co-
schemers who, although not named in this adversary proceeding as parties, will be
identified for their roles in the overall criminal schemes, in the Third District Court, Salt
Lake County, State of Utah, Case No. 100915648 MI (the “State Court Action”). A
genuine copy of the Complaint in the State Court Action is attached hereto as Exhibit A,
and its allegations are incorporated herein by this reference.
3In addition to the powers of this court in proceedings under Title 11 to recoup assets of thedebtor, 18 U.S.C. § 1964(a) explicitly authorizes equitable relief involving divestiture, dissolution andreorganization as remedies for violations of section 1962.
11
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28. On September 20, 2010, Hunter, along with co-schemers Wright, Oneiros
and PMI, through their counsel of record in the State Court Action, Richard F. Ensor
(“Mr. Ensor”), filed his answer in the State Court Action.
29. As of on May 25, 2012, when Hunter, as a Co-Debtor with his wife,
Kimberly, filed their petition for relief in the main bankruptcy, Case No. 12-26860 WTT,
Hunter had been litigating in the State Court Action with the same plaintiffs as in this
adversary proceeding, for twenty (20) months, during all of which Mr. Ensor was
Hunter’s attorney.
30. When plaintiffs received notice, for the very first time, on July 24, 2012,
that Hunter and Kimberly had filed bankruptcy, plaintiffs notified Mr. Ensor that his client
had been in bankruptcy for two months. Mr. Ensor was as unknowledgeable as plaintiffs
had been.
31. Plaintiffs immediately withdrew written discovery which had just recently
been propounded in the State Court Action.
32. Much of the State Court Action involved attempts to pry loose from Hunter,
Wright, PMI and Oneiros documents that would reveal in more detail the scope and
breadth of the Ponzi schemes they operated and were operating, the identities and
roles of the participants and the source and trail of the monies and assets transported
through the persons and entities involved.
HUNTER’S PARTICIPATION IN AND THE OPERATIONS OFHIGH YIELD INVESTMENT PROGRAMS AND PONZI SCHEMES FOLLOWED
THE MODUS OPERANDI OF THE ORGANIZATION HE WORKED FOR– THE CHURCH OF SCIENTOLOGY
33. Scientology is an organization founded by science-fiction author L. Ron
Hubbard that focuses on the practice of Dianetics, or proclaimed spiritual healing
12
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“technology” by which “ailments such as unwanted sensations and emotions, irrational
fears and psychosomatic illnesses” can be alleviated.4
34. Scientologists receive counseling, or “auditing,” from an “auditor” who is
“trained and expert in the exact techniques of Dianetics and Scientology.”5
35. “Auditing is done in a gradient series of steps, which improve the
individual’s ability to confront and handle more and more parts of his existence and
achieve higher levels of spiritual awareness and well-being.”6
36. Scientologists claim that “[t]he goal and end result of Dianetics is the state
of Clear, attained through many hours of Dianetic auditing.”7
37. However, the “gradient series of steps” includes over 46 separate levels of
auditing, 12 steps beyond one’s achieving the state of “Clear,” and at least 16 steps are
remedial sessions for those who do not achieve “Clear” upon the first or subsequent
attempts.8
38. The Church of Scientology was founded in 1954, and has grown to include
more than 9,000 Scientology Churches, Missions, and affiliated groups in 165 nations.9
39. One factor of Scientology’s growth is the so-called “Birthday Game,”
celebrated in honor of the birthday of L. Ron Hubbard (“Hubbard”), the founder of the
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46. In order to obtain and maintain non-profit status with the Internal Revenue
Service (“IRS”), the Church refers to these costs as donations; however, the United
States Supreme Court has held that these so-called donations are not tax-deductible for
parishioners, since “benefits” are received for the contributions “as part of a
quintessential quid pro quo exchange.”15
47. Former parishioners contend the Church in recent years pressures its
members to give more than they can reasonably afford.16
48. Despite the exorbitant expense to become “Clear,” Scientology claims that
becoming a member does not require high cost, but that “[a] person who donates for
auditing receives one-to-one personal and effective assistance to solve problems in life,
to communicate more freely with others and to handle the upsets of life preventing his
true and spiritual freedom. Having achieved these lower levels a parishioner moves on
to more advanced levels on which he is literally seeking immortality, which is
priceless.”17
49. Even upon achieving a state of “Clear,” followers are warned that grave
spiritual dangers are eminent unless they continue on to the higher and more expensive
levels.18
15 Hernandez v. Comm'r, 490 U.S. 680, 691 (1989). “The legislative history of the ‘contribution orgift’ limitation, though sparse, reveals that Congress intended to differentiate between unrequitedpayments to qualified recipients and payments made to such recipients in return for goods or services. Only the former were deemed deductible.” Id. at 690.
addiction2.com, narcononcenter.com, narconon.org, National Association of Rights
Protection and Advocacy, National Coalition of IRS Whistleblowers, National Computer
Ethics & Responsibilities Campaigning, National Commission on Law Enforcement and
Social Justice, National Parents Association, Nations Foundation of Women Legislators,
Natural Health Food Associates, No-Treason.com, No-Hate.org, Office of Ethnic and
Cultural Affairs, Power Management Consultants, Progressive Academy Education
Society of Alberta, Prosperity Magazine, Psychiatric Institutes of America Survivors
17
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Support Group, Realworld Corp., The Religious Freedom Crusade, Religious
Technology Center, Set A Good Example (SAGE), Scientology Missions International,
Second Chance, Silhouet Holland, Silhouet Profil Analysis, Silkin Management Group,
Singer Consultants, Social Coordination Committee, Social Betterment Properties
International, Social Betterment Development Company, Stellar Management, Sterling
Management Systems, Stop Torture of Mental Patients (STOMP), Stryker Systems Inc.,
Truth Seeker, U-Man Belgium, Uptrends, Volunteer Ministers Association, The Way to
Happiness Foundation, World Institute of Scientology Enterprises (“WISE”), Writers of
the Future, World Literacy Crusade, Youth for Human Rights International.21 Many of
these organizations are independently chartered and often do not publicize their
affiliation with Scientology despite being staffed by Scientologists and paying license
fees for use of Scientology technology and trademarks.22
54. WISE is a direct appendage of the Church of Scientology International that
“provides a service to help create, produce and distribute materials and products which
quote from the works of L. Ron Hubbard or use related trademarks.”23 WISE injects
Hubbard’s high-pressure sales and management techniques, or the “tech,” which is also
considered part of Scientology scripture, into the business world.
21 http://www.lermanet.com/frontgroups.html
22"Unwitting highschoolers lured to forum by Scientologists"(http://www.smh.com.au/news/national/unwitting-highschoolers-lured-to-forum-run-byscientologists/2007/03/27/1174761471748.html) . The Sydney Morning Herald. 2007-03-27.http://www.smh.com.au/news/national/unwitting-highschoolers-lured-to-forum-run-byscientologists/2007/03/27/1174761471748.html. Retrieved 2007-07-17.
McEwen, Alan (2004-03-18). "Scientology-link group is banned"(http://edinburghnews.scotsman.com/index.cfm?id=314912004) . Edinburgh Evening News.http://edinburghnews.scotsman.com/index.cfm?id=314912004. Retrieved 2007-07-17.
25Smith, L. Christopher (December 2008). "Scientology's Money Trail: Celebrities! Tax shelters!Bart Simpson! A glimpse into the finances of the secretive church"(http://www.portfolio.com/newsmarkets/national-news/portfolio/2008/11/19/Monetary-Value-of-Scientology). Condé Nast Portfolio (2008 Condé Nast Inc).http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/19/Monetary-Value-of-Scientology. Retrieved 2008-11-19.
34 L. RON HUBBARD, INTRODUCTION TO SCIENTOLOGY ETHICS 295, 334-35 (Bridge Pub. Inc. 2007)(1968).
35 Id. at 295.
21
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66. During Plaintiffs’ interactions with Hunter’s co-schemer, Wright, Wright
represented that he was the president of the local Church of Scientology.
67. Hunter’s co-schemer Wright also represented that Wright had been
instrumental in Hunter’s recruitment from the LDS faith to become a member of
Scientology.
68. Each of the members of PMI are also Scientologists.
69. Scientology has a reported long history of using Ponzi schemes and
HYIPs not only to generate funds for the various Scientology organizations but also to
use as recruitment tools for co-schemers.36 It also has a reported history of obstructing
efforts to uncover such schemes.37
70. In a letter dated October 23, 2006, Wright admitted to Burton that “[t]he
legal structure we have outlined in the past has only served to create some legal
insulation between the entities. This is completely arbitrary since everything we do could
just as well be contained within a single company.” Later in the letter, Wright wrote
“[y]ou all know our church needs our help and I do not know about you but I personally
see no other group of individuals than ourselves that have an actual workable plan
underway,” conceding that the co-conspirators’ scheme was simply a plan to funnel
money to the Utah Church and Mission.
36 See, e.g., http://en.wikipedia.org/wiki/Reed_Slatkin; United States v. Slatkin, Case No.2:02-cr-00313-MMM-1, United States District Court for the Central District of California;http://en.wikisource.org/wiki/Why_the_United_States_must_investigate_the_crimes,_abuses_and_frauds_of_the_Scientology_enterprise; United States v. Fishman, Case Nos. 3:1988-cr-00616-DLJ-1 &3:1990-cr-00357-DLJ-1, United States District Court for the Northern District of California.
37See, e.g., http://www.justice.gov/usao/cac/Pressroom/pr2005/081.html; United States v. Janu,Case No. 2:03-cr-01222-MMM-1, United States District Court for the Central District of California.
22
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71. In early 2008, co-schemer Hunter sent a letter to co-schemer Petersen in
which he highlighted the purpose of PMI: “PMI is just a mechanism to fund the
foundation so we’re not expecting some grand windfall of profits from PMI.”
72. Co-schemer Hunter, together with co-schemer Wright, persistently
recruited co-schemer felon Hales and co-schemer Markus Trinity Williams (“Williams”)38
to become members of the Church of Scientology.
73. Co-schemer convicted felon Hales represented that he went through all
but two days of “purification” but could not complete the training.
74. Co-schemer Williams represented to Bee that Hales was “sick and
emotional” and that co-schemer Wright had convinced Hales to submit to the 8-hour-a-
day “purification” to help him overcome his infirmities.
75. Up until the time the State Court Action was filed, the Utah Church used
the building located at 353 East 400 South, Salt Lake City, Utah, a commercial property
owned by Wright and his wife, Cynthia, as its base of operations.
76. Not coincidentally, that building was the diabolical core of operations for
the High Yield Investment Programs and Ponzi scheme as the building was also the
office of PMI and Oneiros.
77. Just ten (10) days after co-schemer Wright filed his answer to the State
Court Action on September 20, 2010, Wright and Cynthia, on September 30, 2010,
executed a promissory note secured by a trust deed on that building to effectively
transfer control of its remaining equity to Herman L. Franks, Jr., Cynthia’s brother.
38Co-schemers Hales and Williams at all times were agents acting for and within the scope of theagency granted by Hunter, Wright, PMI and Oneiros.
23
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78. The Church then moved its operations to a new location at 1921 South
1100 East in Salt Lake City.
79. Co-schemer Hunter has admitted to having paid the Church of Scientology
Mission of Salt Lake City for religious services, and that the Mission receives payment
for the services it provides.
NATURE OF A HIGH YIELD INVESTMENT PROGRAM
80. A "High Yield Investment Program" ("HYIP") is a general term given to
fraud schemes that are known by various specific names, including without limitation
"Medium Term Note Programs" and "Roll Programs."
81. Such programs do not exist as legitimate investment vehicles.
82. In these schemes, the fraud perpetrator claims to have privileged access
to secret financial trading programs, which are falsely represented to be sanctioned by
the Financial Industry Regulatory Authority, the Securities and Exchange Commission,
the Commodity Futures Trading Commission, the National Futures Association, state
securities regulatory agencies, major brokerage houses and/or major financial
institutions, often but not always international in nature.
83. Scientology has a reported long history of using Ponzi schemes and
HYIPs not only to generate funds for the various Scientology organizations but also to
24
[Intentionally Blank]
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use as recruitment tools for co-schemers.39 It also has a reported history of obstructing
efforts to uncover such schemes.40
84. Scheme operators typically make claims that a privileged few are invited
to participate in the trading program and/or notes, stocks, commodities or debentures,
which can be bought at a discount and sold at a premium.
85. It is often claimed that there are only a few “traders” or “commitment
holders” in the world who are authorized to resell these bank securities between the top
25 or 50 banks in the world, often falsely referred to as “Prime Banks.”
86. By conducting multiple “trades” in rapid succession, they claim to be able
to produce extraordinary rates of returns, far beyond any normal investment.
87. It is often further claimed that one of the primary reasons these proprietary
trading programs exist is to generate funds for humanitarian purposes and that a portion
of the investor’s profits must be used to provide humanitarian relief and aid somewhere.
88. Perpetrators of HYIPs claim that a high degree of secrecy is required of
the unsuspecting investor in order to participate in the program, and require the
execution of various documents which have no meaning in legitimate financial
transactions.
89. Typically, the investor first is directed to provide a “Letter of Intent,” a
“Non-Solicitation Agreement,” a “Confidentiality Agreement,” a “Non-Circumvention
39See, e.g., http://en.wikipedia.org/wiki/Reed_Slatkin; United States v. Slatkin, Case No.2:02-cr-00313-MMM-1, United States District Court for the Central District of California;http://en.wikisource.org/wiki/Why_the_United_States_must_investigate_the_crimes,_abuses_and_frauds_of_the_Scientology_enterprise; United States v. Fishman, Case Nos. 3:1988-cr-00616-DLJ-1 &3:1990-cr-00357-DLJ-1, United States District Court for the Northern District of California.
40See, e.g., http://www.justice.gov/usao/cac/Pressroom/pr2005/081.html; United States v. Janu,Case No. 2:03-cr-01222-MMM-1, United States District Court for the Central District of California.
25
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Letter,” a “Bank Proof of Funds,” a “Client Information Summary,” and often a copy of
the investor’s passport.
90. The investor is typically told that he or she must go through “compliance,”
which will purportedly be done by the Federal Bureau of Investigation (FBI), Central
Intelligence Agency (CIA), Federal Reserve Bank (Fed) or some other government
“compliance officer.”
91. The investor is also told that his or her funds must be verified on a “bank
to bank” basis to make sure that they do exist and that the funds must be “good, clean,
clear funds of non-criminal origin.”
92. The investor typically is assured that his funds are absolutely safe and
never at risk in any way.
93. The scheme is designed to gradually progress to its ultimate goal, which is
for the co-schemers to gain control of all or a portion of the investor’s funds which are
94. In the very first meeting between co-schemers Wright and Hunter with Bee
and Bagley, Wright drew out a handwritten organizational chart and gave it to Bee. A
genuine copy of that chart is attached hereto as Exhibit B.
95. According to the chart that co-schemer Wright drew, and as he explained
it to Bee and Bagley, Oneiros, which was owned by Wright, was at the top of the
organization.
96. Exactly consistent with the model for HYIPs generally and as previously
were used, plaintiffs are informed and believe, to pump millions into the Church, co-
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schemer Wright represented that he had developed a secret and proprietary stock
trading program which would read stock market activity and make investments in stocks
according to parameters established by Wright.
97. Wright represented that he had transferred ownership of that secret
trading program to Oneiros, the organization at the top of the chart.
98. Wright represented that Oneiros, in turn, had granted an exclusive license
to PMI, owned by his co-schemer Hunter.
99. Wright then placed PMI on the chart directly under Oneiros and drew a
line between the two companies to represent their relationship by virtue of the secret
trading program license.
100. Wright represented to Bee and Bagley details about his co-schemer
Hunter’s future business plans for PMI, which Wright said was for PMI to trade in the
range of $5 million for its customers through the Oneiros-licensed PMI stock trading
program.
101. Co-schemers Wright and Hunter both represented that PMI needed
extensive capital in order to commence its operations and needed to procure investors
directly in PMI, so that it could acquire the needed hard assets to exploit the secret and
proprietary trading program, and to solicit wealthy individuals to use the secret trading
program, through which PMI would generate profits for itself.
102. Wright continued drawing the organizational chart, drawing another single
line downward from PMI to two other companies, “Volition” and “Lucidity.” Wright
represented that those entities were supposed to be “feeder funds” to facilitate trading.
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Underneath Volition and Lucidity, Wright drew a line directly to “Bentley Equities.”41
Bentley Equities was to be used to recruit investors in PMI for capital investment and for
trading through the feeder funds. To the right of Bentley Equities, Wright drew in “RPM
Investment Co.,” with reporting lines back to both Bentley Equities and the Volition and
Lucidity levels.
103. These were explained in substance as differing levels of the primary
funding sources for PMI’s operations, all under the control of, and reporting to Hunter,
who in turn reported to Wright.
104. The United States government, starting at the lower levels of the fraud
organization chart, has already taken action against those levels. Co-schemer Hales,
who along with co-schemers Williams and former mayor of the City of Cedar Hills, Eric
Richardson (“Richardson”),42 operated the Bentley Equities level, was convicted of bank
fraud. In co-schemer Hales’ Statement by Defendant in Advance of Plea of Guilt,
genuine copy attached as Exhibit C, Hales’ agreement with the United States included
this admission:
The United States agrees as follows: Waive on behalf of the U.S.Attorney's Office for the District of Utah any other criminal prosecution ofthe defendant for offenses regarding the defendant's conduct now underinvestigation, all of which were discussed during a recorded interview withthe defendant on February 22 and 23, 2011, though this conduct providesa basis for the Court to accept the plea agreement and for determiningrestitution:
41There were several “Bentley” entities created by Hales and Williams, including without limitation,Bentley Equities, LLC, Bentley Holdings & Investments, LLC and Bentley Holdings, LLC. For the purposesof this Complaint the name “Bentley Equities” or “Bentley Co-Schemers” will be used. The Bentley Co-Schemers at all times were alter egos of or agents acting for and within the scope of the agency grantedby Hunter, Wright, PMI, Oneiros, Volition, Lucidity, the Church, the Utah Church and the Utah Mission.
42Richardson at all times was an alter ego of or agent acting for and within the scope of theagency granted by Hunter, Wright, PMI, Oneiros, Lucidity, Volition, the Church, the Utah Church and theUtah Mission.
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105. Co-schemer Richardson has also pleaded guilty to bank fraud. Richardson
was just sentenced to one year and one day. See Judgment in Criminal Case, genuine
copy attached as Exhibit D.
106. The United States Commodity Futures Trading Commission (“CFTC”) filed
suit against co-schemers Hales, Richardson and Bentley Equities, alleging that they,
along with their related entity Freedom Wealth Group, committed fraud. Freedom
Wealth Group’s principals include Epicenter Trading, Inc., one of the founders of
Volition. Co-schemer Hales is also a founder of PMI’s underling, Lucidity. A genuine
copy of the CFTC’s complaint is attached hereto as Exhibit E.
JUST LIKE IN ALL HYIPs, PMI HAS A SECRET TRADING PLAN
107. PMI is a Utah limited liability company, organized on June 21, 2005, which
purports to be engaged in the business of exploiting technology developed by Oneiros
for the purpose of making investments on behalf of investors using a proprietary “trading
plan.”
108. Sometime in 2004, co-schemer Wright introduced co-schemer Hunter to
co-schemer Madsen and showed Hunter the results of the trading software Oneiros was
developing before PMI was established. Wright represented to Hunter that Wright and
Madsen had developed the software owned by Oneiros. Co-schemer Wright discussed
with Hunter the idea creating a PMI-type entity to utilize Oneiros’ purported trading
software, and sparked Hunter’s interest in running PMI as Wright described it.
109. Also in 2004, co-schemers Wright, Hunter, Madsen, Szaniszlo, and
Burton and another individual, Steve Nemeth, met in Salt Lake City and discussed
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creating a PMI-like entity which would solicit investment funds for Wright’s Oneiros LLC
entity and to be traded through purported software being developed by Oneiros. During
the meeting, Wright's vision to fund philanthropic foundation and helping Scientology
was discussed and incorporated in establishing the new PMI entity’s purpose.
110. PMI raised funds and simply transferred the money to Oneiros to
purchase servers and equipment without receiving anything of value from Oneiros in
return.
WRIGHT AND HUNTER SOLICIT SCIENTOLOGISTS AS MEMBERS OF PMI TOPREVENT LEGAL CLAIMS
111. Defendants Michael Wright and Barry Don Hunter, relying on Defendant
Wright’s position as President of the Church of Scientology of Salt Lake, solicited
Defendants Burton, D’Arezzo, Farr, Kingdon, Petersen, Stowe and Szaniszlo
(“Scientologist Defendants”), each being a member and subscriber to the tenets of
Scientology, to invest in PMI by making loans to the company. The following
transactions are believed to have occurred:
a. On January 23, 2007, Barry Hunter sent an email to James
D’Arezzo and identified $346,000.00 in loans to PMI from Greg Kingdon, Michael
Wright and Barry Hunter and also references loans to PMI from David Peterson,
Alan Farr, Tom Burton and Sandor Szaniszlo. Each agreement equals a
$100,000.00 equity investment in PMI and offers a position to each investor as a
non-managing member of PMI.
b. On or about October 12, 2007, PMI and David Petersen entered a
Design Build Services and Earnest Money Agreement for $15,000.00 to be
tendered at time of signing and another $15,000.00 due on November 15, 2007.
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In consideration of the up front costs to purchase equipment and labor costs, Mr.
Petersen agreed that $25,000.00 of the $30,000.00 investment is considered a
non-refundable fee.
c. On or about January 1, 2008, PMI and Infinity Catamaran Ltd., an
investment fund located in Road Town Tortola British Virgin Islands and owned
by George Hites, entered a Subscription Agreement in the amount of
$250,000.00.
d. On or about January 29, 2008, Barry Hunter communicated to Jim
D’Arezzo that PMI was managing $550,000.00 at that time.
e. On or about February 21, 2008, Alan Farr transferred $50,000.00 to
PMI, secured with a Promissory Note.
f. On or about March 5, 2008, Carol K. Farr, presumably Alan Farr’s
spouse or close relative of Alan Farr, transferred $50,000.00 to PMI, secured
with a Promissory Note.
g. On February 17, 2009, via an email communication with Barry
Hunter, Greg Kingdon committed to PMI an additional $23,611.95.
h. On or about March 3, 2009, Barry Hunter emailed David Petersen
with a spreadsheet attached showing payment from David Petersen to PMI in the
amount of $330,500.00.
i. On or about March 18, 2009, Barry Hunter and David Petersen
communicated via email regarding ownership interest in PMI and identifying
Barry Hunter initially as 100% owner of PMI and making reference to Barry
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Hunter’s CPA’s advice to include another managing member with at least 10%
ownership.
112. Plaintiffs are informed and believe that each of these Scientologist
defendants were assured by Wright and Hunter that both PMI and Oneiros were
established for the purpose of providing financially for the local Church.
113. Wright’s and Hunter’s plan to use PMI as a source of funding for the local
Church thereby provided the Scientologist Defendants with the understanding that their
investment in PMI would benefit the Church of Scientology International on the basis of
mandatory contribution from the local Church to the Church of Scientology International
and other associated Scientology entities.
114. Wright and Hunter represented to the Scientology Defendants that
accumulated excess funds from PMI would be used as “donations” to Church
foundation projects.
THE CONSPIRACY
115. In this particular case, it was the purpose of a conspiracy among the
defendants that the defendants would unjustly enrich themselves, and particularly the
Church entities, through the promotion of a fraudulent high yield investment program by
promising extremely high returns at little or no risk to principal.
116. The manner and means through which the purpose of the conspiracy was
to be accomplished in substance were as follows:
a. It was a part of the conspiracy that Wright, in order to develop
credibility and trust, would and did falsely claim to be an investing genius who
had developed a special and secret software program over many years. The
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results of the tests on the development of such software were falsely represented
in PMI investor materials to be that "[e]arly on in our development we noticed
something interesting; the widely accepted idea that it takes more risk to
generate higher returns wasn't proving to be necessarily so." Further, "[i]n years
of running real-time test cycles, on every consecutive and improved version of
the software, we have repeatedly validated that our technology has the ability to
generate higher returns without amplifying risk."
b. PMI represented itself as follows: "Portfolio Manager International
LLC is a registered and licensed investment advisor providing remote automated
portfolio management and market timing services to investment advisers, private
wealth managers, hedge funds, and high net worth individuals.”
c. PMI further represented about itself: "We developed our
applications to provide clients with a way to reliably and consistently generate
superior returns with substantially reduced risk. Period. Everything we do is
aimed at serving your investment objectives."
d. PMI and Oneiros represented their relationship to be as follows:
"Portfolio Manager International (PMI) retains the exclusive United States
software usage rights to Oneiros Technologies' quantitative portfolio
management and market timing software applications. PMI is licensed by
Oneiros Technologies to operate its software applications in the PMI data center.
PMI's technical staff is trained and certified by Oneiros Technologies."
e. In a twist on the classic HYIP fraud schemes, rather than
suggesting that the world's best financial institutions were part of the program,
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defendants pointed to those institutions as models for their own program: First
the defendants discussed the pre-eminent banks: "Many large banks with
proprietary trading departments, investment houses and hedge funds have spent
hundreds of millions of dollars developing extremely sophisticated technologies
that manage their portfolio monitoring and market timing operations. With
superior stock selection methods and real-time analytics of market data they are
able to gain a significant edge in the market, an edge most investors will never
be able to replicate." Then the defendants proffered themselves as having
identical capabilities: "Using real-time stock selection processes, we are able to
rapidly locate and take advantage of opportunities that would have otherwise
been missed. By constantly screening and evaluating securities that have a
higher than average expectancy for outperforming the market, we are able to
build optimally diversified portfolios. This helps reduce overall market risk and
generate better returns."
f. Defendants then falsely cloaked Wright's company, Oneiros, with
legitimacy and credibility, attributing to it the supposedly proprietary system
which allowed PMI to operate like the big banks: "The Oneiros system monitors
real-time up and down price movements in all stocks contained within an
optimally diversified portfolio. Tens of thousands of quantitative and analytic
calculations are applied to a portfolio each market day. These processes are
constantly working to capture exploitable pricing inefficiencies. During periods of
relatively little movement in a single stock or in the market, defensive aspects
built into the system protect and preserve accumulated equity."
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g. Defendants utilized a chart ostensibly showing the performance of
PMI active management using the Oneiros system with respect to 50 randomly
chosen stocks, versus using a "buy and hold" strategy on those same stocks,
and also purporting to show the performance of "the S&P 500 Index" all during
the same three-month time period between January 1, 2008 and March 27, 2008.
The chart purported to show negative returns on investment of (9.7%) and
(14.1%) for the S&P 500 Index and the buy and hold strategy, while showing a
15.7% return over those same three months using the PMI active management
strategy.
h. Defendants then repeated "Lower Risk Higher Returns" and stated:
"Lower volatility of returns indicates that the superior returns were created with
substantially reduced risk. This dispels the idea that an investor must take on
more risk if he wishes to receive a better return. Our software and electronic
infrastructure have essentially inverted this concept by showing it can provide a
far better return with considerably less risk."
i. It was a further part of the conspiracy that defendants PMI,
Oneiros, Wright, Hunter, Williams, Hales and Richardson would and did falsely
represent to plaintiffs that they had access to High Yield Investment Programs
that could yield anywhere between 5% per month to 24% per month with
extremely low risk.
j. At least the following representations about high yield returns were
made to plaintiffs, either for the purpose of inducing investment or in the process
of executing lulling schemes:
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i. In May 2008, Hales and Williams, at their Wylie Drive
residence, represented to Bagley, on the first occasion they spoke about
the investment opportunity, showed Bagley a PMI portfolio brochure
stating that investing money in the opportunity would provide a 5% to 8%
return on investment each month.
ii. In July 2008, Williams represented to Bee, in his first
conversation with her, that PMI was a good investment and that Bagley
and Bee could see an 8% to 12% return on investment each month and
that a 5% return on investment was guaranteed.
iii. In September 2008 Hales provided to Bagley, for the
purpose of showing to Bee, a PMI brochure which stated that a 15.7%
return over a three month period of paper trading was observed. During
the same time period, Hales represented to Bee that even if PMI didn't
make a 5% per month return on investment, which, he stated, was highly
unlikely, that Hales and Williams through Bentley Holdings and Bentley
Equities, would guarantee a 5% per month return on investment so that
Bee and Bagley had no need to worry about their money.
iv. On or about January 12, 2009, Bee and Bagley met with
Wright, Hunter, Hales and Williams at the PMI office. Wright gave a 45
minute presentation with several color bar graphs illustrating returns on
investment. Wright represented that PMI, through paper trading test runs,
had made up to 72% in a 3 month period. Wright represented that the
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potential was there for investors to make an excellent profit with relatively
no risk involved.
v. On or about January 16, 2009 Bee met with Williams at a
Beans and Brews. Williams represented that from the continual paper
trading tests that PMI was conducting a return on investment of 10% per
month could be expected.
vi. In or about July 2009, Richardson met with Bee and Bagley
at Mimi's Café at 5400 South and State Street in Salt Lake City.
Richardson represented that Bee and Bagley could expect a return on
investment of 5% to 10% per month once PMI got off the ground and that
PMI just needed to get all the documentation to cover certain Securities
and Exchange Commission requirements.
vii. In addition, during the period from May 2009 through
December 2009, Williams, Hales and Richardson sent multiple text
messages to Bee and Bagley, representing that similar high yield returns
on investment would be forthcoming.
k. It was a further part of the conspiracy that the ostensible
relationship between Williams, Hales, Erickson, Bentley Holdings & Investments,
LLC, Bentley Holdings, LLC, and Bentley Equities LLC (the "Bentley Co-
Schemers"), on the one hand, and PMI, Oneiros, Wright and Hunter ("the "PMI
Defendants"), on the other hand, was that the Bentley Co-Schemers would act in
the role of investment advisers who would bring (1) investors who would invest
directly in PMI; and (2) investors for the PMI/Oneiros trading program to PMI.
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l. It was a further part of the conspiracy that Wright would and did
falsely represent to plaintiffs that he had in fact realized a 72% return on
investment over a 3 month period in paper trading test runs.
m. It was a further part of the conspiracy that defendants would and
did use Richardson's position as a former registered representative of Fidelity
Investments to give their fraudulent scheme the appearance of legitimacy and
credibility.
n. It was a further part of the conspiracy that defendants, in an attempt
to give the appearance of legitimacy, would and did present confidentiality
agreements to plaintiffs before revealing to them the information about PMI,
Oneiros, the trading program and the terms of the investment program.
o. It was a further part of the conspiracy that defendants, in an attempt
to give the appearance of legitimacy, would and did suggest that PMI was
awaiting final documentation from the Securities and Exchange Commission to
commence trading.
p. It was a further part of the conspiracy that defendants would, and
did, hold an investor meeting at the offices of PMI, in an effort to cloak PMI( with
the appearance of legitimacy.
q. It was a further part of the conspiracy that defendants would, and
did, represent that a portion of the proceeds of the operation of PMI would be
used for humanitarian purposes, through the donation of water purification
systems and the building of housing in Africa, which Plaintiffs now understand to
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be related to the defendants’ plans to unjustly enrich the Church entities by using
investments in PMI as a funnel of funds to the Church entities.
r. It was a further part of the conspiracy that defendants would, and
did, claim to be honest, church going, legitimate business people.
s. It was a further part of the conspiracy that defendants would and
did ostensibly allow plaintiffs to invest in a "special" manner not available to other
investors, by allowing investment over time rather than a lump sum. Part of this
"special" manner of investing consisted of having Bagley use his good credit to
obtain a loan on a recreational vehicle, with the proceeds to go to Hales, in
exchange for Hales and Williams putting up $20,000.00 of Bagley's investment.
t. It was a further part of the conspiracy that when plaintiffs began to
inquire about their investments that the Bentley Co-Schemers, as investment
advisers, were to divert such inquiries by the use of fraudulent Note Trading
investment opportunities as a lulling scheme which they were to and did
represent would recoup monies quickly despite the delays in PMI's operations
commencing.
u. It was a further part of the conspiracy that defendants, in an attempt
to lull plaintiffs, represented that their investment funds remained intact and
secure in PMI and falsely representing that the delays being encountered in
getting PMI up and running were nothing unusual.
v. It was a further part of the conspiracy that defendants, in an attempt
to lull plaintiffs, represented that progress was being made toward completion of
the investment.
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w. It was a further part of the conspiracy that defendants, in an attempt
to lull plaintiffs, falsely agreed to return the investment funds.
x. It was a further part of the conspiracy that defendants in an attempt
to lull plaintiffs, represented that plaintiffs could obtain current high yield on new
investments in Note Trading.
y. It was a further part of the conspiracy that defendants, on
information and belief, would and did divert and convert to their own personal use
and benefit, or for other unauthorized purposes, the funds fraudulently obtained
from plaintiffs.
117. PMI solicited investments in it from Bagley and Bee, ostensibly so as to
obtain working capital to purchase and/or lease "servers" which constituted necessary
hardware for the operation of software and the execution of trade orders for its future
customers. Such investments in PMI were directly solicited from both Bagley and Bee
by each of Wright, Hunter, Hales and Williams. At the time of such solicitations and all
other actions and omissions described throughout this complaint, Wright was acting
within the course and scope of his agency for both Oneiros and PMI; Hunter was acting
within the course and scope of his agency for PMI; and Hales and Williams were acting
in the course and scope of their agency for PMI, and also for the Bentley Co-Schemers,
which entities in turn were acting within the course and scope of their agency for PMI;
and each of the defendants was acting in the course and scope of their agency to the
conspiracy which binds all of them together.
118. At the time of such solicitations, no registration statement for the sale of
securities in PMI was on file with the Utah Department of Commerce, Division of
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Securities ("Securities Division"), as required by UTAH CODE ANN. § 61-1-7, and no
exemptions applied to the requirements of that section.
119. Further, Wright, Hunter, PMI, Williams, Hales and Bentley Equities were
not, at the time of the solicitations, licensed with the Securities Division as
broker-dealers or agents, nor as investment advisers under UTAH CODE ANN. § 61-1-3.
120. Following certain false representations which had been made as
described above for the purpose of providing a false appearance of legitimacy, solvency
and credibility to defendants and the trading scheme, the first direct solicitation to
Bagley was made by Williams and Hales, who induced Bagley to invest $30,000.00 on
August 21, 2008. The circumstances surrounding that first investment are that, at the
urging of Williams and Hales, on July 17, 2008 Bagley wrote an equity line check to
himself in the amount of $30,000.00 from Wachovia Bank. He deposited that check into
his Wells Fargo account. Wells Fargo put a hold on the check because is was such a
large sum and verification of funds had to be completed before it could be withdrawn.
On August 21, 2008 Bagley was working at the Verizon store at the University Mall.
Bagley went to the University Mall Wells Fargo Branch on his break. Bagley obtained a
cashier's check in the amount of $20,000.00 payable to Williams and Bentley Holdings,
he also withdrew $10,000.00 cash. Bagley met Williams at the mall. Williams stated that
the cashier's check was made out incorrectly. He said it needed to be divided into two
separate cashier's checks, one payable to Hales for $10,000.00 and the other payable
to Williams for $10,000.00. Bagley had to return to work and the bank was closing so
Bagley met Williams after he finished working at the Wells Fargo branch inside the
Smith's Marketplace on 11400 South and State Street. Bagley deposited the cashier's
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check back into his account and had two new separate cashier's check issued as
Williams requested.
121. During October through December 2008 Hales and Williams put pressure
on Bagley to get Bee to invest in PMI.
122. Following certain false representations which had been made as
described above for the purpose of providing a false appearance of legitimacy, solvency
and credibility to defendants and the trading scheme, the first direct solicitation to Bee
was made in a meeting at Oneiros and PMI's offices, on or about January 11, 2009,
attended by Bagley, Bee, Wright, Hunter, Williams and Hales. During the meeting,
Wright identified himself as the Chief Executive Officer of Oneiros and Hunter identified
himself as the President, Program Manager and Director of PMI. The meeting had been
arranged by Williams and Hales for the purpose of having PMI solicit investments of
Bagley and Bee's retirement savings.
123. PMI required Bee and Bagley to execute Confidentiality Agreements prior
to the beginning of the meeting. During the meeting, Wright described the
interrelationship of Oneiros, PMI and Bentley Equities. Wright made it sound as though
Bentley Equities and its principals, Williams and Hales, were an integral part of the
trading business that was to be conducted using the computer servers. It was further
disclosed by Wright that a proprietary stock trading program had been developed which
would read stock market activity and make investments in stocks according to
parameters established by Wright. Wright made representations about PMI's future
plans for its business and numbers in the range of $5 million were discussed as
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amounts that were expected to be traded for customers through the PMI stock trading
program.
124. Bee and Bagley expressed concern in light of the fact that they were
investing funds earmarked for their retirement and due to the fact that neither Bee nor
Bagley had any substantial background in investing in the stock market.
125. It was then explained to Bee and Bagley that they could invest directly in
PMI, through the servers, or that they could invest in the stock market through the
proprietary PMI trading program.
126. Either way, it was represented to Bee and Bagley that Bentley Equities’
role would be to receive investment monies directly from Bee and Bagley on behalf of
PMI for the purpose of channeling it to PMI, as had been done for other investors. PMI,
Wright, Hunter and Oneiros thereby cloaked Hales and Williams, and their companies
including without limitation Bentley Equities, LLC, Bentley Holdings & Investments, LLC
and Bentley Holdings, LLC with the appearance of legitimacy and solvency and with an
agency relationship with PMI, Oneiros, Wright and Hunter, whom they had agreed to act
for as agents in collecting Bee and Bagley's investment funds. All of the representations
made by Wright during the meeting were confirmed by Hunter, Williams and Hales
overtly or through their silence.
127. The January 11, 2009 meeting was left off with Williams and Hales to
pursue the investment by Bagley and Bee.
128. Following up on the January 11, 2009 meeting, Williams arranged for a
meeting with Bee. Williams met with Bee or about January 16, 2009 at Beans and
Brews to deliver paperwork for Bee and Bagley to investment in PMI. Williams did not
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have the paperwork on him at the time of this meeting. Williams told Bee to make her
check payable to Hales and that the paperwork would be delivered within a week. Bee
gave Williams a check payable to Hales in the amount of $30,00.00, she also gave
Williams $20,000.00 in cash. The cash was money Bee had been saving up for
emergencies for the past 10 years.
129. Shortly thereafter, Hales requested of Bagley that he obtain financing
secured by a recreational vehicle by way of a loan from Zions Bank, for the purpose of
giving the financed funds to Hales for investment in PMI. Bagley was to receive from
Hales the sum of $20,000.00 for providing the creditworthiness for the transaction and
Hales agreed to apply that sum towards Bagley's investment in PMI. Bagley procured
such financing on or about January 31, 2009 and Bagley gave all the proceeds of that
loan, in the approximate amount of $45,071.29, to allow Hales to invest in PMI.
130. The January 2009 meeting with Williams was followed by an investor open
house at PMI in or about February, 2009. Wright, Hunter, and some persons
represented to be PMI technicians were in attendance. New servers appeared to be in
place and new technical personnel were represented to have been hired. Both Wright
and Hunter expressed excitement about getting the stock trading program started. At
the open house, Wright represented to Bee and Bagley that Richardson, the manager of
BE, had been an experienced and licensed stock broker with experience through a
major stock brokerage, Fidelity Investments.
131. Williams represented that PMI needed the funds now for the servers that
were needed before PMI could get on line. However, he assured Bee that she would be
paid on the investment just like the people who were investing in the actual trading plan.
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132. Hales and Williams wanted a $100,000.00 investment from Bee and
Bagley. Bagley and the defendants agreed that Brian would purchase an RV for the
benefit of the defendants. Defendants would pay the monthly payments and insurance
on the RV. After a few months the RV would be sold, the loan on the RV paid off and
Brian would receive $20,000.00 to invest in PMI for his assistance in obtaining the loan
and helping defendant's gain capital that they could invest. The original amount of the
RV loan was $45,071.29.
133. Promissory Note dated October 1, 2009 shows that Bentley Holdings &
Investments borrowed $100,000.00 from BeeBag Holdings & Investments LLC.
134. Bee and Bagley were also involved with note trading with Hales and
Williams for investing with Otis Oil. On April 22, 2009 Plaintiffs gave Hales a cashier's
check in the amount of $15,000.00. Plaintiffs were reimbursed without interest on April
27, 2009, but that check bounced. A new check in the amount of $15,000.00 was
deposited on May 11.
135. On May 13, 2009 plaintiffs gave Hales a cashier's check in the amount of
$15,000.00. Plaintiffs were reimbursed and deposited a check from Vision Capital in the
amount of $17,500.00, the amount of the original investment plus $2,500.00 in interest.
136. On May 22, 2009 plaintiffs gave Hale a cashier's checks in the amount of
$10,000.00 and $15,000.00 for a total of $25,000.00. Plaintiffs were reimbursed with a
check in the amount of $30,000.00. At that time Hales asked Bagley for $1,000.00 cash.
Bagley deposited the $30,000.00 into his Wells Fargo account and gave Hales
$1,000.00 in cash.
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137. On May 27, 2009 plaintiffs gave Hales a cashier's check in the amount of
$40,000.00. Defendants have failed to repay the principal amount and any interest.
138. On June 2, 2009 plaintiffs gave Hales cashiers checks for $8,000.00 and
$7,000.00. Defendants have failed to repay the principal amount and any interest
139. On June 10, 2009 plaintiffs gave Hales a cashier's check payable to Todd
Smith in the amount of $11,000.00. Defendants have failed to repay the principal
amount and any interest.
140. On June 18, 2009 plaintiffs gave a cashier's check to Hales in the amount
of $8,000.00. Defendants have failed to repay the principal amount and any interest.
141. Plaintiffs have given Williams, Hales and Smith $130,000.00. Plaintiffs
have received $55,000.00 back along with $6,500.00 in interest.
142. Bagley's original balance on the RV loan was $45,071.29, the payoff as of
August 31, 2010 was $37,717.67. As of this date the defendants have failed to make
any payments on the loan.
143. Each of the following payments represents an investment in securities by
Bee or Bagley which was induced by the conspirators in furtherance of the conspiracy,
and which was caused through the use of misrepresentations and omissions of material
fact:
Date InitialInvestment
Repayment InterestPaid
Paid To
08.21.08 $10,000.00 -0- -0- Cashier=s check to M.Williams
08.21.08 $10,000.00 -0- -0- Cashier=s Check to C.Hales
08.21.08 $10,000.00 -0- -0- Cash to Williams01.16.09 $30,000.00 -0- -0- Cashier=s check to
Hales
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01.16.09 $20,000.00 -0- -0- Cash to Williams
$20,000.00 -0- -0- RV Credit
TOTAL: $100,000.00 -0- -0-
Date InitialInvestment
Repayment ofPrincipal
InterestPaid
Paid To
04.22.09 $15,000.00 -0- Cashier=s Check to M.Williams
04.27.09 $15,000.00 -0-
05.13.09 $15,000.00 Cashier=s check to C.Hales
05.22.09 $15,000.00 $2,500.0005.22.09 $10,000.00 Cashier=s check to C.
Hales05.22.09 $15,000.00 Cashier’s check to C.
Hales05.27.09 $40,000.00 Cashier=s check to C.
Hales05.29.09 $25,000.00 $5,000.0005.29.09 $1,000.00 Cash to C. Hales06.02.09 $8,000.00 Cashier=s check to C.
Hales06.02.09 $7,000.00 Cashier=s check to C.
Hales06.10.09 $11,000.00 Cashier=s check to
Todd Smith06.18.09 $8,000.00 Cashier=s check to C.
Hales
TOTAL $130,000.00 $55,000.00 $7,500.00
GRAND TOTAL $67,500.00
The repayments, in turn, were in furtherance of the conspiracy's lulling scheme, and
again were made to create the appearance of legitimacy of misrepresentations of
material fact and/or to cover up such misrepresentations and omissions.
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144. Since June 2009, Bagley and Bee have requested information from
Williams about PMI. Bagley and Bee were told not to “bother” PMI or to talk with Wright
“because Mike is a hot-head and loses his temper. He doesn't even know what he says
when he gets mad.” Bee related that comment to Wright about the $100,000.00
investment with PMI. Wright attempted to deny involvement, stating: “Hell, I don't know
what Chris did with your money. He may have paid a house payment with it.” At this
juncture, in June 2009, Bee suspected for the first time that something might be awry.
145. In July 2009 Bee met with Richardson at Mimi's Café to find out
information as to why there were so many delays on monthly payouts from PMI and
what the expectations for payouts would be. Richardson stated that it looked possible
for Bee and Bagley to make 5% to 10% per month once PMI got off the ground and that
they were just needing to get all the documentation to cover certain SEC requirements.
Richardson said he did not have the documentation with him but that he would bring it
with him the next time they met. Bagley met with Richardson the following week in the
Oyster Bar parking lot in Cottonwood Heights, Utah, where Richardson said he would
deliver documentation for Bee and Bagley to fill out to show that they were accredited
investors.
146. Bee spoke with Hunter in December 2009 at which time Hunter explained
that the real time live trading had not occurred until November 4, 2009, ran for two
weeks, then there had been a Thanksgiving break, and it had just been up for two days
when prior to the conversation. Hunter stated that December was slow and that not a
lot of activity would be going on until after January 1, 2010.
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147. Richardson called Bagley to set up a meeting after several requests from
Bagley to get documentation on PMI and the Bee and Bagley investments with PMI.
The meeting date was December 28, 2009. Bee and Bagley arrived early and could not
get in the door, so they texted Richardson, who in turn called Hunter, who unlocked the
door. Bee and Bagley went upstairs with Hunter and advised Wright that his headlights
were on in the parking lot. Bee and Bagley sat at the meeting table and waited for
Richardson. Hunter gave a brief overview of how PMI was supposedly functioning. Then
Wright discussed Oneiros as the parent company with PMI a branch off of it. Wright
asked what contacts plaintiffs had with Hales, and amounts of money that plaintiffs had
invested in PMI through Hales. Wright confirmed that Hales had “invested money” with
PMI but asserted that it was “not anywhere near the amount you are talking about.” Bee
asked whether her call to Wright in July had been the first “red-flag” and if he had
others. Wright said that there was another couple who had spoken to him about
investments they had made in PMI through Hales. Wright attempted to divert attention
from he and PMI, stating that he, Wright, was “concerned” that Hales and Williams were
operating a fraudulent investment scheme. Wright then asked Bee and Bagley to
indemnify Wright, Hunter, PMI and Oneiros in exchange for helping Bee and Bagley go
after Hales and Williams. Wright said that he would then have his attorneys present Bee
and Bagley's situation to “the Utah Court system” as well as the similar situation of other
people. Wright said that he felt that there may be several more people who have
“invested money” through Hales and Williams and that there might be a “Ponzi
scheme.” Wright asked that Bee and Bagley turn over to him all of their documentation
of their dealings with Hales and Williams. Wright said that he was concerned that his
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company could be misconstrued as having been a part of a fraudulent investment
scheme.
148. At or around the same December 2009 meeting at PMI about 5 or 6
minutes before Richardson had to leave, Bee mentioned money that Bee and Bagley
had given Hales and Williams for investing in Otis Oil. Richardson said he did not think
Hales invested money there unless it was through yet another company, called Vision
Capital.
COUNT I(NON-DISCHARGEABILITY OF BEE’S AND BAGLEY’S CLAIMS AGAINST DEBTOR
UNDER 11 U.S.C. § 523 (a)(2)(A), (A)(4) - AGAINST DEBTORS BARRY DON AND KIMBERLY
CHAMPLIN HUNTER)
149. Bagley and Bee incorporate all previous allegations.
150. 11 U.S.C. § 523(a)(2)(iii) provides, in pertinent part:
(a) A discharge under section 727 of this title does not discharge anindividual debtor from any debt- -
(2) for money, property, services, or an extension, renewal, orrefinancing of credit, to the extent obtained by- -
(A) False pretenses, false representation or actual fraudother than a statement respecting the Debtor’s or aninsider’s financial condition.
151. The representations Hunter made referenced herein concerned presently
existing material facts that were false and that Hunter either knew to be false or made
recklessly knowing that he had insufficient knowledge upon which to base such
representations.
152. Hunter as an investment advisor for Bagley and Bee, was a fiduciary at
the time of making representations.
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153. Hunter made the representations to Bee and Bagley to induce them to rely
on those misrepresentations. But for those misrepresentations, Bee and Bagley would
not have acted as they did in reliance thereon.
154. As a result of the false pretenses, artifices, false representations and
actual fraud described above, Bee and Bagley, acting reasonably and in ignorance of
the facts gave money and other things of value to Hunter as described above, acting
reasonably and in ignorance of the facts.
155. Bee and Bagley thereby were damaged in amounts to be proven at trial
for which they are entitled to recovery.
156. Bee and Bagley’s losses and damages were proximately caused by
Hunter’s false pretenses, artifices, false representations and actual fraud.
157. Accordingly, Bee and Bagley’s claims against Hunter as set forth herein,
as well as those alleged in the State Court Action, are not dischargeable pursuant to 11
U.S.C. § 523(a)(2)(A).
158. All of the co-conspirators are liable for all of the damages caused to Bee
and Bagley in furtherance of the Conspiracy an award of full restitution, damages
against the defendants, jointly and severally, resulting from their fraud and/or material
misrepresentations, in the sum of $1,000,000.00, together with all reasonably
foreseeable consequential damages, prejudgment interest thereon, plus all of the costs,
including attorneys’ fees. Bee and Bagley are also entitled to an appropriate award of
punitive damages against each of those defendants as the proof may show.
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COUNT II(DENIAL OF DISCHARGE OF DEBTORS UNDER 11 U.S.C. § 727 (a)(2)(A), 727(a)(3),
727(a)(4) - AGAINST DEBTORS BARRY DON AND KIMBERLY CHAMPLIN HUNTER)
159. Bagley and Bee incorporate all previous allegations.
160. 11 U.S.C. § 727(a) provides, in pertinent part:
(a) The court shall grant the debtor a discharge, unless-. . .(2) the debtor, with intent to hinder, delay, or defraud a creditor oran officer of the estate charged with custody of property under
this title, has transferred, removed, destroyed, mutilated, orconcealed, or has permitted to be transferred, removed,destroyed, mutilated, or concealed-(A) property of the debtor, within one year before the date ofthe filing of the petition; or(B) property of the estate, after the date of the filing of the
petition;(3) the debtor has concealed, destroyed, mutilated, falsified, orfailed to keep or preserve any recorded information, includingbooks, documents, records, and papers, from which the debtor'sfinancial condition or business transactions might be ascertained,unless such act or failure to act was justified under all of thecircumstances of the case;(4) the debtor knowingly and fraudulently, in or in connection withthe case-
(A) made a false oath or account;(B) presented or used a false claim;(C) gave, offered, received, or attempted to obtain money,property, or advantage, or a promise of money, property, oradvantage, for acting or forbearing to act; or(D) withheld from an officer of the estate entitled topossession under this title, any recorded information,including books, documents, records, and papers, relating tothe debtor's property or financial affairs;
(5) the debtor has failed to explain satisfactorily, beforedetermination of denial of discharge under this paragraph, any lossof assets or deficiency of assets to meet the debtor's liabilities;
161. Under Utah law, all property of a limited liability company which has been
dissolved, after winding up, belongs to the members.
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162. On their Statements and Schedules filed with the Court on May 25, 2012,
Hunter and Kimberly, in paragraph 18 of the Statement of Financial Affairs (Bankruptcy
Case No. 12-26860, Docket No. 2, at page 27 of 36), under penalty of perjury, falsely
and fraudulently described Hunter’s business, PMI, as having the nature of business
being “Business Consulting” and so operating between January 2006 and October
2011. The false and fraudulent description of the nature of PMI’s business, the millions
of dollars of assets that flowed into or were controlled by it during its operations and the
absolute failure to explain what happened to the hundreds of thousands of dollars of
PMI’s hard assets, in the form of computer servers and equipment, at least some and
perhaps all of which is Hunter’s sole property upon PMI’s winding up and therefore part
of the debtors’ estate, the willful concealment of the existence of these assets by failing
to list as creditors or even give notice of the bankruptcy to Bee and Bagley until after the
Trustee filed his no asset report, which was done deliberately with the intent to conceal
the true facts from the Trustee, the failure to turn over documents evidencing the assets
of the dissolved PMI that belong to Hunter, the failure to disclose that Wright and
Oneiros have taken their proprietary trading program which was exclusively licensed to
PMI and now seek to “license” it in conjunction with the continuing FOREX trading,
ongoing component of the Ponzi scheme all fit within the statutory bases to deny a
discharge to the debtors.
163. There has been no account given for the assets of PMI remaining upon its
dissolution and winding up, which assets are part of the debtors’ estate.
164. Accordingly, the Court should deny a discharge to the debtors under 11
U.S.C. § 727(a).
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COUNT III(FRAUDULENT TRANSFER - AGAINST ALL DEFENDANTS)
165. Bagley and Bee incorporate all previous allegations.
166. Some or all of the assets of PMI were transferred to one or more
defendants who are “insiders” as that word is defined in UTAH CODE ANN. § 25-6-2(7).
167. As to those insider transfers made by PMI, they are fraudulent as to Bee
and Bagley to the extent they were made after Bee and Bagley’s claims against PMI
arose and they were made to such insiders for an antecedent debt.
168. PMI was insolvent at all times because it was operated as a Ponzi scheme
and all the insiders knew it.
169. PMI’s transfers were made, or obligations incurred by it, without receiving
a reasonably equivalent value in exchange for the transfers or obligations.
170. In addition, all transfers of PMI and obligations incurred by it were made
with actual intent to hinder, delay, or defraud the creditors of PMI; or without receiving a
reasonably equivalent value in exchange for the transfer or obligation and PMI: (I) was
engaged or was about to engage in a business or a transaction for which the remaining
assets of PMI were unreasonably small in relation to the business or transaction; or (ii)
intended to incur, or believed or reasonably should have believed that it would incur,
debts beyond its ability to pay as they became due.
171. Bee and Bagley are entitled to all such relief under the Utah Fraudulent
Transfer Act and or in equity or otherwise for all transfers made by PMI and obligations
incurred by PMI to others, directly or indirectly, with respect to Wright, Oneiros, Hunter,
Kimberly, the Church, the Utah Church, the Utah Mission, Madsen, Lucidity, Volition,
Cynthia, Burton, D’Arezzo, Farr, Hites, Kingdon, Petersen, Stowe and Szaniszlo,
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whether for alleged services, employment, repayment of debt, distribution of capital or
otherwise.
COUNT IV(CIVIL LIABILITY FOR VIOLATIONS OF RACKETEER INFLUENCED AND
CORRUPT ORGANIZATIONS ACT, 18 U.S.C. § 1964(c) - AGAINST ALL DEFENDANTS EXCEPT
KIMBERLY CHAMPLIN HUNTER AND CHURCH OF SCIENTOLOGY INTERNATIONAL)
172. Bagley and Bee incorporate all previous allegations.
THE PERSONS
173. Each of the named defendants are "persons" within the meaning of 18
U.S.C. § 1961(3). Defendants Barry D. Hunter; Kimberly Champlin Hunter; Portfolio
Manager International L.L.C.; Oneiros Technologies L.C.; Michael J. Wright; Gregory B.
Madsen; Lucidity Management, LLC; Volition Trading Company, LLC; Church of
Scientology of Utah; Cynthia L. Wright; Church of Scientology Mission of Salt Lake City;
Church of Scientology International; Tom Burton; James D'Arezzo; Alan S. Farr; George
Hites; Greg Kingdon; David Petersen; Robby J. Stowe; Sandor Szaniszlo shall be
referred to collectively, from time to time, in this Count, as the “co-conspirator
defendants.”
174. Each of the co-conspirator defendants entered into an agreement to
violate the provisions of 18 U.S.C. § 1962(a), (b) and (c), and to commit two or more
predicate acts in furtherance thereof. The predicate acts are described in the section on
predicate acts below, which is incorporated herein in its entirety.
THE ENTERPRISE
175. The "Enterprise" as that term is defined in 18 U.S.C. § 1961(4) consists of
an association-in-fact of entities as depicted in the Handwritten Fraud Organization
Chart drawn by defendant Wright and attached hereto as Exhibit B. In the alternative,
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the association-in-fact consists of Oneiros, PMI, Wright, Hunter, Hales, Williams,
Richardson, Volition, Lucidity, the Church, the Utah Mission, the Utah Church and other
persons who performed specific functions in the organization that formed a criminal
organization with a defined structure, that was ultimately led by the Church, is the
Enterprise or, as the final alternative, PMI itself is not a “person” but instead is the
Enterprise.
PLAINTIFFS' STANDING TO SUE
176. Plaintiffs have standing to pursue claims against the co-conspirator
defendants for violations of 18 U.S.C. § 1962, because they have been injured in their
property by reason of those violations, as follows:
INVESTMENT INJURY INCURRED BY REASON OFVIOLATION OF 18 U.S.C. § 1962(a)
177. Each of the co-conspirator defendants operated as a funding source for
the Enterprise and has, in furtherance of the conspiracy, received income, directly or
indirectly, from a pattern of racketeering activity consisting of, inter alia, mail fraud, wire
fraud, Theft by Deception under UTAH CODE ANN. § 76-6-405, chargeable as a felony
under UTAH CODE ANN. § 76-6-405, in that each occurrence of theft involved the
obtaining of a thing of value exceeding $1,000.00, Communications Fraud chargeable
as a felony under UTAH CODE ANN. § 76-10-1801 in that each occurrence of the
obtaining of a thing of value was for a value exceeding $1,000.00, Money Laundering
under UTAH CODE ANN. § 76-10-1903, chargeable as a felony under UTAH CODE ANN. §
76-10-1904, Unlawful Dealing of Property by a Fiduciary, under UTAH CODE ANN. §
76-6-513, chargeable as a felony under that section in that each occurrence of the
obtaining of a thing of value was for a value exceeding $1,000.00, Securities Fraud
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under UTAH CODE ANN. § 61-1-1, -2, -3, -7, -16, each chargeable as a felony under UTAH
CODE ANN. § 61-1-21(2). The defendants reinvested the funds obtained from plaintiffs
and other victims, directly or indirectly, in the Enterprise, for use in funding further
fraudulent activities and procuring funds from additional victims and thus to operate the
Enterprise, the activities of which affect interstate commerce, in violation of 18 U.S.C. §
1962(a). The predicate acts involved numerous wire transfers, text messages and
e-mails, transmitted across state lines and over the interstate wires, each such
transmission being an essential step in the plot and/or related to subsequent lulling
schemes.
178. By reason of the defendants’ use and investment of the racketeering
proceeds in the Enterprise, the Enterprise was capable of surviving, maintaining its
operations and entering into multiple fraudulent transactions with plaintiffs which directly
injured plaintiffs in form of (1) the loss of plaintiffs' monies invested; (2) the incurring of
debt by Bagley for which he is responsible to Zions First National Bank, NA; (3) the
incurring of mental anguish and emotional distress over the loss of their funds, as with
other victims. But for the pattern of racketeering activity through which those illicit
proceeds of racketeering were generated, the Enterprise would have failed and plaintiffs
would not have been injured in such a fashion.
PREDICATE ACT INJURY INCURRED BY REASON OF THECONDUCT OF THE AFFAIRS OF AN ENTERPRISE,
IN VIOLATION OF 18 U.S.C. § 1962(c)
179. Plaintiffs also have been injured by reason of the co-conspirator
defendants' employment by or association with the Enterprise, because their
participation, directly or indirectly, in the conduct of the Enterprise's affairs, through a
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pattern of racketeering activity has directly resulted in the plaintiffs'(1) accumulation of
debt without receiving any benefit; and (2) losing the funds they invested through the
persons who committed the crimes alleged.
PREDICATE ACTS OF RACKETEERING ACTIVITY
180. All of the actions of each co-conspirator defendant were taken for and on
behalf of the Enterprise thereby making each person chargeable for the predicate acts
of each other person.
181. Each time the defendants procured monies from either of the plaintiffs or
other victims and invested such funds in the Enterprise the defendants, together and as
co-conspirators, committed each of the predicate acts described above.
182. Each defendant has engaged in the commission of at least two predicate
acts in furtherance of the object of the conspiracy and operation of the enterprise that
form part of the pattern of racketeering activity as defined in 18 U.S.C. § 1961,
evidenced by at least the following known specific acts and communications in violation
(Transportation of stolen goods, securities, moneys, fraudulent State tax stamps, or
articles used in counterfeiting); or a violation of UTAH CODE ANN. §§ 61-1-1(2), -3(1), -7,
-17(2), and/or a rule or order under UTAH CODE ANN. § 61-1-15, and/or a condition
imposed under UTAH CODE ANN. §§ 61-1-10(4) or 11(7), which violations are chargeable
under UTAH CODE ANN. § 61-1-21 as a third degree felony:
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BARRY D. HUNTER/PMI/SALT LAKE MISSION
Date Summary of Documentary Evidence Predicate Act under §1961
Early 2005 Hunter (UT) had a phone conversation with TomBurton (CA) about Hunter being appointed as the CEOof PMI.
Wire Fraud 18 U.S.C. §1343
11.01.06 -11.02.06
Email communications between T. Burton (CA) and B.Hunter (Mike and Greg)(UT) re. referencing DavidPetersen's investment of $150K and budget projectionsto draw $276,500.00.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
11.06.06 Email from B. Hunter (UT) to D. Petersen (UT) with anattached operating agreement for Burton in his role asthe “Establishment Officer” and states that “I know Alan[Farr] is especially impressed with Tom [Burton] andwants his involvement. This might be a good [sic] toshow Alan to put him more at ease.”
Wire Fraud 18 U.S.C. §1343
01.26.07 Email from B. Hunter (UT) to A. Farr (UT) re.investment funding.
Wire Fraud 18 U.S.C. §1343
11.22.06 Email communications between Barry Hunter (UT) andTom Burton (CA) in which Co-Conspirator Burtonexplains his efforts to recruit Montecito Hedge FundManagers and claiming that “[t]he story and positioningis so easy now.” Co-Conspirator Burton also mentionedhis efforts to contact Co-Conspirators Szaniszlo andHites to update them on “the new plan,” and requesteda withdrawal of $75,000 from the “TradeStationcorporate account.” Co-Conspirator Hunter stated thathe would “continue to push the comm lines out on thisend so we can get the funds we need” and requeststhe routing number and account number in addition tothe name on the account “that I will be wiring the fundsto.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
11.30.06 Email comm. between B. Hunter (UT) and T. Burton(CA) with attached master plan explaining theorganization of PMI and Oneiros, including the“Oneiros Offshore Expansion Plan,” the co-conspirators’ long-range plan for PMI and Oneiros toexpand trading capital to “$100-150 million.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
08.28.06
Email from B. Hunter (UT) to A. Farr (UT) re. offeringposition as a managing member of PMI
Wire Fraud 18 U.S.C. §1343
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01.23.07 B. Hunter (UT) sent an email to James D’Arezzo (CA)and identified $346,000.00 in loans to PMI from GregKingdon, Michael Wright and Barry Hunter and alsoreferences loans to PMI from David Peterson, AlanFarr, Tom Burton and Sandor Szaniszlo
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
01.23.07 Barry Hunter (UT) sent an email to James D'Arezzo(CA) regarding inclusion into PMI as a way for keymembers to trade their own accounts and help indirecting PMI business activities and indicating that Mr.D'Arezzo can be part of the LLC or take a moreinformal role.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
11.13.07 Email between B. Hunter (UT) and D. Petersen (UT) re.$15,000.00 invoice and slot to invest.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
12.17.07 Email from Barry Hunter (UT) to David J. Petersen (UT)showing $200,000.00 added to PMI in December 10,2007 and requesting permission to use Petersen’s“trading data, symbol names and results in preparing apromo piece.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
04.29.07
(Hunter,PMI andSalt LakeMissionCont.)
Email from B. Hunter (UT) to A. Farr (UT) which included an attached letter purported to beanswers from Wright, Hunter, Madsen, and SteveWyatt, PMI’s CPA, to questions asked about the PMIbusiness plan and its software application. The letterstates that “[i]nvestment capital at this point would begoing into PMI operations and infrastructure.Additionally, the PMI 500K brokerage account will beused to validate the trading algorithms released byOneiros in automated live funded trading before it isapproved for any client accounts.” The lettermemorializes the co-conspirators’ intent that “themajority of the profits will be earmarked to profit sharingplans with the bulk of the capital being used to fund aphilanthropic foundation,” and that “[t]he system willultimately be used to fund the foundation.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
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10.16.08 Email from B. Hunter (UT) to C. Hales (UT) in which heprovided account and routing numbers for PMI’s bankaccount with Wells Fargo. Hunter also forwarded amessage from Wright to Hales in the email, in whichWright states “We are assuming, based on the last fewdays of absent communication, that you are trying asbest you can to get things resolved on your end. I wantto make sure that you know we are also working aswell to resolve things too. The main thing I want tostress is that we must stay in complete communicationof any vital data each of us may need. Vital data can begood news or bad news...[t]he hallmark of our group’sagreement is that each one of us can and will confrontand handle any barrier that is presented.”
Email communications between Barry Hunter (UT) toTom Burton (CA) re. "Fat Cats" that Chris Halesbrought in, references funds that PMI has agreementswith including PMI board of Advisors, David Petersen,Rusty Tweed, Chris Hales, George Hites, MikeSchwartz, Steve Garhardt, Peter Lowden. InvolvesMike Ricks and states that Barry Hunter and MichaelWright are aware that Ricks plead guilty to insidertrading.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
11.19.08
(Hunter,PMI andSalt LakeMissionCont.)
Hunter (UT) responded to Burton’s (CA) late email thenight before and informed him that “[h]ere’s the fundsthat we have agreements with. PMI Board of AdvisersDavid Petersen’s own fund. Rusty Tweed (Rusty’sgoing to be in Utah next week for Thanksgiving) ChrisHales (He’s the you [sic] young guy(28) who brought usthe fat cat and is partnering in the deal). On a sidenote: Chris is starting his Purif next Wednesday. Weintroduced him to Scientology. George Hites. Possible,Mike Schwartz (Oregon $10 Million Fat Cat) Dr. SteveGarhardt (Las Vegas high net worth investor) PeterLowden, Hedge fund from Reno.” That same day,Burton responded to Hunter’s email: “Barry - Are youaware of Ricks past? Looks like he pleaded guilty toinsider trading. See link below. What do you think of hisethics level. -Tomhttp://www.usps.com/postalinspectors/nrdoj0406.htm.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
01.08.09 Email between B. Hunter (UT), Jean Hammer (SageFinancial)(NV) and Mel Myer re. looking forward tobeing of service to you, Dr. Rodney Howard Browne.
Wire Fraud 18 U.S.C. §1343
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01.09.09 Email communications from Barry Hunter (UT) to JimD'Arezzo (CA) discussing an email which PMI sent out“to shut the door on any future guys who might comeback and say you promised me that I could set up myown server. We have two fat cat clients who couldeasily bring in over $500 Million each so we’re notreally wanting more small clients. The 50K fee isactually a partially refundable Earnest MoneyAgreement. They have been fairly easy to come by withclients who have large amounts of liquid cash.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
01.08.09-01.09.09
Between January 6, 2009 and January 8, 2009 BarryHunter and David Petersen communicated via emailHunter's anticipation that PMI would receive$90,000.00 from Mike Ricks in the next four days.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
01.22.09 Hunter sent an email to Hales with an attachedstatement of residual compensation for sales with PMIand a copy of the solicitor agreement with PMI. Hunterstates that “[i]n order to receive revenue on a residualbasis from a client, you must pass the Series 65 Exam.This allows us to designate you personally as an IARInvestment Adviser Representative of PMI and allowsyou to receive residual compensation for clients thatyou introduce to PMI... [i]n doing the math, even withthe introductions you’ve made thus far, this should be a$Million+ yearly game in and of itself. Of course thebiggest compensation should come through strategicalliance and building up your own fund.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
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01.23.09 Hunter emailed a copy of a “Management AgreementTemplate,” stating “Chris here’s a copy of theManagement Agreement Template that potential clientscan look [sic]”. The Management Agreement Templateincluded wire information for PMI’s account with WellsFargo and outlines a “Master Fund Feeder FundBusiness Model” and claims “PMI can in some casesact as the Portfolio Manager for other fund managers,its [sic] PMI’s responsibility to be actively involved withthe all [sic] the other entities that compose the variouspossible business models that PMI may becomeaffiliated with or be a part. Without this understandingof the Master Fund Feeder Fund structure and PMI’srole in it, it could be easily construed that all the partiesare ‘in business’ with each other, when the truth is thateach entity is autonomous and has its ownresponsibilities, functions and compensations.”
Wire Fraud 18 U.S.C. §1343
02.15.09 Email from B. Hunter (UT) to C. Hales (UT) withattached list contained the following names ofindividuals purportedly introduced by Hales or byanother individual introduced to PMI by Hales.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
02.19.09 Email from B. Hunter (UT) to M. Williams (UT) re. Livepaper trading test to pass on to appropriate parties.
Wire Fraud 18 U.S.C. §1343
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02.19.09 Hunter (UT) sent an email to Williams (UT) with anattached “schematic Mike [Wright] put together on theStrategic Alliance Idea.” The schematic outlined theprocess by which the co-conspirators obtained a loanfor their LLC entity from an investor. The schematicexplains the following process: “Lender and theBorrower both set up a two signature bank wirerestricted bank account. This account becomes theoriginating account that funds a brokerage account.The brokerage cannot cross wire and must wire backthrough the originating account so any funds that comefrom the brokerage account will be locked up in the twosignature bank wire only bank account which protectsthe lender. The brokerage account is funded with the$10 million via the bank account. A $1 million cashreserve account is set up inside the brokerage account.The brokerage account is then leveraged to 18 millionwhich is 180%. PMI with its software and electronicinfrastructure build the portfolios and manage the 18million and set a total liquidation account trigger at 5%or $900,000 on the 18 million being managed. Theborrower or another 3rd party agrees to fund a onemillion dollar reserve account inside the brokerageaccount-via the two signature bank wire only account.Since PMI has total liquidation trigger of 5% on $900Kon the 18 million, in the brokerage account this milliondollars would be used to offset such a loss and sorestore the lender back to 10 million.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
02.20.09 Email from B. Hunter (UT) to M. Williams (UT) re.attached Portfolio Design Build Services & EarnestMoney Agreement
Wire Fraud 18 U.S.C. §1343
02.27.09 Email from B. Hunter (UT) to M. Williams (UT) re. Listof people who have been in the office and raisingoperating capital.
Wire Fraud 18 U.S.C. §1343
03.10.09 Email between G. Kingdon (UT) and B. Hunter (UT) re.email from M. Baybak to M. Wright and B. Hunter andPMI operations.
Wire Fraud 18 U.S.C. §1343
02.23.09 Email from B. Hunter (UT) to C. Hales (cc. EricRichardson)(UT) re. Trade Station Securities contactJake Hinkle in Florida.
Wire Fraud 18 U.S.C. §1343
03.21.08 Email from B. Hunter (UT) to J. Hinkle (FL) re. Newclient, Chris Hales needs brokerage account. Alsoconsiderable expansion.
Wire Fraud 18 U.S.C. §1343
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11.18.08 Email from Hunter (UT) to Burton (CA) to provide anupdate on PMI, and stating that “I’ve been on thephones the last two days generating interest for ourinitial PMI fund. I’m at about $2.7 Million incommitments thus far.” Later that day, Burtonresponded to Hunter’s email and inquired as toHunter’s availability for December 5 and 6, 2008, tovisit with Burton and David P[etersen]. Hunterresponded that evening and informed Burton that “Mikeand I are fully engaged in finishing up the legal for ouragreement with the Fat Cat who has agreed verbally tofund the build out. He’s agreed to about $700K ininfrastructure costs and his intent is to trade up to $500Million over the next few years.” Burton responded lateon November 18, stating that “[i]t is really important thatwe confront and handle the operating agreementBEFORE you actually start trading the funds. This iscritical for all of our protection now that substantialmoney is being traded. Also I know that I am the co-signor on a number of documents related toTradestation and I believe on some docs related to theinvestor registration. If you want to send what you havedone so far on the operating agreement I can startlooking at what will need to be modified.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
03.08.09 Email from B. Hunter (UT) to C Hales (UT) re. Eric[Richardson] good addition to team.
Wire Fraud 18 U.S.C. §1343
03.09.09 Michael Baybak43, a prominent Scientologist andpotential investor for PMI, sent an email to Hunter andWright thanking them “for forwarding your write-up onthe strategic vision you folks have for your group’sgrand goals as well as the interdependent structure ofthe four entities you have in mind to carry forthsuccessful accomplishment of your (emerging favoriteword here) audacious and, dare I say, exteriorizingmission. I can certainly buy into the grand vision andthe enlightened purposes of your intended activity, andI do rather like your conception of the structuralelements, including the “hub and spoke” concept of thevarious funds that would [sic] structured to operateunder, if I get this rightly, PMI operations. Seems to methat you are really maximizing the structure to milk theglobal market’s cow maximally - and for the greatergood.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
43 See http://www.cs.cmu.edu/~dst/Fishman/time-behar.html
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05.08.09 Hunter (UT) sent an email to Hales (UT) to memorializeinvestments received by PMI from Hales or investorswhom Hales introduced to PMI. Hunter states “Hereare the records of Investment received by PMI thatwere not for Design-Build Service Agreements. 11-8-2008 $10,000 You dropped this off at the office. 1-26-2009 $5,000 I picked it up at your home. 2-18-0009$5,000 Ben and Dan dropped this off. Let me knowwho the promissory note(s) need to written [sic] to andI’ll draft the document(s). FYI, Ben had mentionedwhen he dropped off the $5,000 that he wasresponsible for some of the money that Bentley hadwritten to PMI earlier. I don’t know if he was talkingabout the $30K Design/Build or not, it was just acomment he made.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
05.21.09 Email from Barry Hunter (UT) to Craig Garhardt (NV),Jean Hammer (NV), Steve Garhardt (NV) withattachment titled "Strategic Alliance Performance FeeCalculation" Hunter states that “Our understandingfrom our previous discussions is that in an StrategicAlliance, interest charges that are incurred by Sagemonthly on raising capital would be deducted from theincrease in the trading account before performancefees were paid. PMI would also receive a fee to gotowards its monthly operating costs. When we are upand running, we anticipate our monthly costs will be$60,000 and our idea was to have our StrategicAlliance with Sage pay for 1/3rd of that or $20,000.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
06.05.09-06.09.09
Email communications between B. Hunter (UT), M.Baybak (CA), (cc. Rob Rainer, George Duggan, M.Wright) forwarded to G. Kingdon re. Trading Baybak’s$2 Million pension on PMI system. Eric Richardsonreferred to as Compliance Officer.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
06.29.09and07.07.09
Email communication between B. Hunter (UT), C.Hales (UT) and E. Richardson (UT) a copy of the“Portfolio Management Subscription AgreementTemplate” and stated that “This should be much morethorough and it is what we will need to use in theagreements with Lucidity and Volition.”
Wire Fraud 18 U.S.C. §1343
07.07.09 Hunter (UT) sent an email to Hales (UT) with anattached “Management Agreement Template that I sentto Eric last week.”
Wire Fraud 18 U.S.C. §1343
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07.13.09 Email from Greg Kingdon (UT) to Barry Hunter (UT)referencing a $2 Million investment in PMI from MichaelBaybak
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
08.04.09-08.05.09
Email communication between Barry Hunter (UT) andGreg Kingdon discussed via email Eric Richardsongetting $4 Million dollars from Christopher Hales andallocating $2 Million to PMI and also PMI havingobtained $50,000.00 from Chris Hales in the previousyear.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
08.10.09 Email from Barry Hunter (UT) to Greg Kingdon (UT)with an attachment outlining the PMI Fee Structure
Wire Fraud 18 U.S.C. §1343
10.14.09 Email communication from Greg Madsen (UT) to GregKingdon (UT) and Barry Hunter (UT) confirming anorder for servers and attached an invoice and receiptfor payment in the amount of $7,291,47.
Wire Fraud 18 U.S.C. §1343
10.23.09 Hunter sent an email to Steve Gerhardt, Jean Hammerand Craig Gerhardt, stating that “This letter is toreconfirm the terms and conditions on which weaccepted your funds for a slot in the data center. As wecommunicated, we have a data center capacity for onlyone Strategic Alliance and have several interestedparties whom are working on funding this opportunity.In that there is only one of these Strategic Allianceslots, the offer is open on a first come first serve basisonly. In the event another party performs by securing asizeable account, the slot and Strategic Alliance wehave with you will become null and void. While theopportunity to have a dedicated slot for your S.A. willhave been terminated, you will still have the opportunityto come into our master fund, feeder fund set up. Themoney you tendered for servers plus the interest onthat money will be refunded to you our can be used tooffset any fee splits that may become due to PMI...Allarrangements for management going forward will bedone on a case by case basis and at our solediscretion.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
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10.26.09and10.28.09
Email communications between Barry Hunter (UT) toCraig Garhardt (NV), Jean Hammer (NV), SteveGarhardt (NV) of Sage Financial Holdings LLC effortsof Sage towards securing funds for the StrategicAlliance and Craig Garhardt stating "we are ready onour end and able to handle the $45 million."
Wire Fraud 18 U.S.C. §1343
12.31.09 Email from G. Kingdon (UT) to B. Hunter (UT) re.withdrawing portion of funds, will add funds in the newyear.
Wire Fraud 18 U.S.C. §1343
12.31.09 Email from Rusty Tweed (CA) to B. Hunter (UT) in theform of a letter of intent for Tweed Financial Services,Inc. to place $1,000,000.00 with PMI and another$5,000,000.00 by end of first quarter of 2010.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
01.01.10 Email from Barry Hunter (UT) to Jim D'Arezzo (CA)stating Sandor has been paid back.
Wire Fraud 18 U.S.C. §1343
01.05.10 Email from Barry Hunter (UT) to David Petersen (UT),Greg, Kingdon (UT) with attached December 31, 2009letter from Eric Richardson, President RPMInvestments Company LLC to Barry Hunter, PMIstating, "Based on our agreements with PMI and theachievement of performance metrics, we have obtainedinvestment commitments for Volition Fund currently inexcess of $17,000,000."
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
01.11.10 Email from Barry Hunter (UT) to Craig Garhardt (NV) ofSage Strategic Alliance, LLC in reference to Hunter’sand Wright’s changes to a Letter of Intent documentattached to the email for Sage Financial Holding’sintent to execute a PMI Strategic Alliance ManagementAgreement. The letter states that Sage “will beincreasing the funding of the account after this initialfunding state to approximately $5-8 million by the endof the second quarter and $25 million by year end.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
01.15.10 Email communications between Tom Burton (CA) andBarry Hunter (UT) indicating that Rusty Tweed willhave $1.5 Million dollars ready to trade before Februaryand another client Sage called and would have $2Million dollars before February 1st as well as debtconsolidation on some notes that have come due in anamount between $250,000.00 to $300,000.00.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
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02.02.10 Email from B. Hunter (UT) to Rusty Tweed (CA) re.restructuring Master Fund and excited to start tradingyour brokerage account. And $265K is deposited inPMI Quant Pool Account.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
02.03.10 Email communication between Barry Hunter (UT), GregKingdon (UT) and Rusty Tweed (CA) including theattached “Conceptual Process and Procedure for aMaster-Fund” to Kingdon and stated that “Eric[Richardson] put this together some time ago to showhow a Master Fund needs to be set up. I’d like to workwith you and Eric on a new structure for theQuantitative Analytics Master Fund.” The attachmentincludes a chart explaining how funds are to betransferred via wire transfer to the separate feederfunds from the PMI Prime Fund master fund.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
06.30.10and07.06.10
Email communications between B. Hunter (UT) and J.D’Arezzo (CA) re. Chris needs to distribute funds. “Mike [Wright] and I [Hunter] have gone after othersources of funding.”
Wire Fraud 18 U.S.C. §1343
09.14.10and09.15.10
Email communication between Barry Hunter (UT) andGreg Kingdon (UT) which referenced a letter fromJames D'Arezzo identifying his role in "orchestrating adanger handling on Oneiros/PMI" and identifying effortsto bypass Greg Madsen, Jean Hammer, EricRichardson and Michael Wright in decision making forPMI
Wire Fraud 18 U.S.C. §1343
01.06.09and01.08.09
Email communication between B. Hunter (UT) and D.Petersen (UT) re. postulating will receive $90K fromMike Ricks. Conf. Call with large financial planner outof Tampa.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
01.23.07 Email communication between B. Hunter (UT) and J.D’Arezzo (CA) re. Petersen, Farr Burton and Szaniszlotogether have loaned PMI $346,000.00. Also potentialusers with high net worth.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
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02.21.08 Email from Hunter to Alan Farr with attached draft ofpromissory note to Farr $50,000.00 (unsigned).
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
03.03.09 Email from Barry Hunter (UT) to David Petersen (CA)stating he believes he found the $30,000.00 spent ontrading slot. A spreadsheet attached to the emailshows payment from David Petersen to PMI in theamount of $330,500.00.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
03.05.08 Promissory Note from Carol Farr $50,000.00(unsigned)
Violation of 18 U.S.C. § 2314
03.08.10 -03.10.10
Email communications between Barry Hunter (UT) andGreg Kingdon (UT) communicated via email regardingan investment by Chris McCormack of $500,000.00 inPMI and $1.5 million in Oneiros, and that he hascommitted $50 Million in the Sage account. The emailcommunications also highlight a transfer $600,000.00into a new "Master Fund."
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
03.18.09 Email communications between B. Hunter (UT) andDavid Petersen (UT) regarding ownership interest inPMI and identifying Barry Hunter initially as 100%owner of PMI and making reference to Barry Hunter'sCPA's advice to include another managing memberwith at least 10% ownership.
Wire Fraud 18 U.S.C. §1343
08.08.08 Email from Hunter to Steve Wyatt with attachedPromissory Note to Wyatt ($200,000.00). Hunterstates: “We’d like to get this signed as soon as isconvenient for you so that we can close out 2008 forPMI.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
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09.01.10 Email from B. Hunter (UT) to Hilton Bell with attached08.31.10 Promissory Note between PMI and Hilton andLee Ann Bell ($200,000.00).
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
10.03.06 Email from Barry Hunter (UT) to Sandor Szaniszlo (CA)regarding payment to Szaniszlo and Capital UnicornIntegrity, an entity apparently owned in whole or in partby Mr. Szaniszlo, in the amount of $5,000.00.
Wire Fraud 18 U.S.C. §1343
10.12.07 Design Build Services and Earnest Money Agreement,unsigned, between David Petersen and PMI in theamount of $15,000.00 to be tendered at time of signingand another $15,000.00 due on November 15, 2007and in consideration of the up front costs to purchaseequipment and labor costs Mr. Petersen agreed that$25,00.00 of the $30,00.00 is considered anon-refundable fee.
Violation of 18 U.S.C. § 2314
12.21.09 Email communication between Barry Hunter (UT) andChristy Fenton ([email protected]), EricRichardson (UT), Boyd Cook, Mickey Fenton([email protected]) and others stating $94,000will be transferred back to the Volition account
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
01.29.08-01.30.08
Email communications between B. Hunter (UT) and J.D’Arezzo (CA) re. PMI results and D’Arezzo requestsummary to give to his contacts. Hunter askingD’Arezzo for “resources and comm lines that could helpus. . . ” Asking for $100k and some additional capitaland want to create a "strategic alliance" with D'Arezzo.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
MICHAEL WRIGHT/ONEIROS/ PMI/UTAH CHURCH / SALT LAKE MISSION
Date Summary of Documentary Evidence Predicate Act under §1961
10.23.06 Letter possibly sent via email attachment from Mike[Wright] (UT) to T. Burton (CA) re. organizations,funding and loan proceeds.
Mail Fraud 18 U.S.C. §1341;Wire Fraud 18 U.S.C. §1343
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1.22.07 Email from M. Wright (UT) to Jim D’Arezzo (CA) viaBarry Hunter (UT) outlining terms of D’Arezzo’sinvestment including without limitation an access rightslicense with PMI that allows him to use the PMImanagement market timing software and a personaltrading account “in the amount of 10 times yourinvestment capital or $1,000,000" with a preferential feestructure.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
Letter possibly sent via email attachment from Mike[Wright] (UT) to T. Burton (CA) re. putting together agroup that would “help us financially.”
Mail Fraud 18 U.S.C. §1341;Wire Fraud 18 U.S.C. §1343
04.30.08 Letter possibly sent via email attachment to C. Hales(UT) from M. Wright (UT) re. setting [Hales and theBentley Entities] up properly. Wright states: “For ease ofmanaging your LLC, you can designate onemember/manager of the LLC to initiate bank wirerequests to pay PMI fees from the brokerage to the LLCaccount. Once the funds hit the LLC account you canbank wire them to the PMI account.”
Mail Fraud 18 U.S.C. §1341;Wire Fraud 18 U.S.C. §1343
03.09.09 Michael Baybak44, a prominent Scientologist andpotential investor for PMI, sent an email to Hunter andWright thanking them “for forwarding your write-up onthe strategic vision you folks have for your group’s grandgoals as well as the interdependent structure of the fourentities you have in mind to carry forth successfulaccomplishment of your (emerging favorite word here)audacious and, dare I say, exteriorizing mission. I cancertainly buy into the grand vision and the enlightenedpurposes of your intended activity, and I do rather likeyour conception of the structural elements, including the“hub and spoke” concept of the various funds that would[sic] structured to operate under, if I get this rightly, PMIoperations. Seems to me that you are really maximizingthe structure to milk the global market’s cow maximally -and for the greater good.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
03.10.09 Email between G. Kingdon (UT) and B. Hunter (UT) re.email from M. Baybak (CA) to M. Wright (UT) and B.Hunter (UT) and PMI operations.
Wire Fraud 18 U.S.C. §1343
07.20.09 Email from Michael Baybak to Wright regarding time andcosts lining up legal set-ups and availability ofinvestment capital. Baybak acknowledges: “I don’t thinkit’s workable to contort the fund’s operations and payoutschemes to a monthly basis so as to primarily serveyour overhead necessities.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
44 See http://www.cs.cmu.edu/~dst/Fishman/time-behar.html
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10.30.09 Email from Craig Gerhardt (Sage)(NV) to Wright andHunter re conference call scheduled for 11.04.09 withAndress Enterprises, potential investors, and includescall number and conference code.
Wire Fraud 18 U.S.C. §1343; Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
CYNTHIA L. WRIGHT/UTAH CHURCH/SALT LAKE MISSION
Date Summary of Documentary Evidence Predicate Act under §1961
03.28.2009 Email from M. Wright to M. Baybak using CynthiaWright’s hotmail account discussing Baybak’s visit tothe PMI/Oneiros facility.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
03.30.2009 Email from M. Baybak to M. Wright using CynthiaWright’s hotmail account regarding Baybak’s visit toSalt Lake “in the April 10-15 time frame.” Baybakstates “Don’t worry about any meddling by me in yoursoftware release or the operability of your systemtimed for my trip.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
GREG KINGDON/PMI
Date Summary of Documentary Evidence Predicate Act under §1961
03.07.09 Email chain between B. Hunter and G. Kingdonregarding a presentation to the “Las Vegas Group” andinvestment from Michael Baybak of $40k per month for afew months and $30k to “run[] [Kingdon’s] gold fund”and that “the gold miners have $5 mill together fortrading and another $20 mill lined up.” Kingdon states “Iam poised and ready to appear on stage and deliver mylines.”
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03.10.09 Email between G. Kingdon (UT and Thailand) and B.Hunter (UT) re. email from M. Baybak to M. Wright andB. Hunter and PMI operations. Hunter states “We metagain with the Gold Fever Boys yesterday. They alsobrought us a $40,000 check to pay for the rest of theirserver slot. I think I told you that we raised the price of aslot to 60K. They will be ready very soon. Mike Wright ison the second review of his letter to MichaelBaybak...Sorry for the quick note but we’ve had theBoys from Vegas here most of the day.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
06.05.09-06.09.09
Email communications between B. Hunter (UT), M.Baybak (CA), (cc. Rob Rainer, George Duggan, M.Wright) forwarded to G. Kingdon re. Trading Baybak’s$2 Million pension on PMI system. Eric Richardsonreferred to as Compliance Officer.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
07.13.09 Email from Greg Kingdon (UT) to Barry Hunter (UT) andMichael Wright (UT) referencing a $2 Million investmentin PMI from Michael Baybak and Cortez
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
08.04.09-08.05.09
Email communication between Barry Hunter (UT) andGreg Kingdon discussed via email Eric Richardsongetting $4 Million dollars from Christopher Hales andallocating $2 Million to PMI and also PMI havingobtained $50,000.00 from Chris Hales in the previousyear.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
08.10.09 Email from Barry Hunter (UT) to Greg Kingdon (UT) withan attachment outlining the PMI Fee Structure.
Wire Fraud 18 U.S.C. §1343
10.14.09 Email communication from Greg Madsen (UT) to GregKingdon (UT) and Barry Hunter (UT) confirming an orderfor servers and attached an invoice and receipt forpayment in the amount of $7,291,47.
Wire Fraud18 U.S.C. §1343
12.31.09 Email from G. Kingdon (UT) to B. Hunter (UT) re.withdrawing portion of funds, will add funds in the newyear.
Wire Fraud 18 U.S.C. §1343
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02.03.10 Email communication between Barry Hunter (UT), GregKingdon (UT) and Rusty Tweed (CA) including theattached “Conceptual Process and Procedure for aMaster-Fund” to Kingdon and stated that “Eric[Richardson] put this together some time ago to showhow a Master Fund needs to be set up. I’d like to workwith you and Eric on a new structure for the QuantitativeAnalytics Master Fund.” The attachment includes a chartexplaining how funds are to be transferred via wiretransfer to the separate feeder funds from the PMI PrimeFund master fund.
Wire Fraud 18 U.S.C. §1343
09.14.10and09.15.10
Email communication between Barry Hunter (UT) andGreg Kingdon (UT) which reference a letter from JamesD'Arezzo identifying his role in "orchestrating a dangerhandling on Oneiros/PMI." and identifying efforts tobypass Greg Madsen, Jean Hammer, Eric Richardsonand Michael Wright in decision making for PMI.
Wire Fraud 18 U.S.C. §1343
02.17.09 Email from Greg Kingdon (UT) to Barry Hunter (UT)stating he an come up with an additional $23,611.95 thisweek for second Kingdon slot.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
03.08.10 -03.10.10
Email communications between Barry Hunter (UT) andGreg Kingdon (UT) communicated via email regardingan investment by Chris McCormack of $500,000.00 inPMI and $1.5 million in Oneiros, and that he hascommitted $50 Million in the Sage account. The emailcommunications also highlight a transfer $600,000.00into a new "Master Fund."
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
TOM BURTON/PMI
Date Summary of Documentary Evidence Predicate Act under §1961
10.3.06-10.6.06
Hunter sent an email to Burton and Petersen to addresslegal requirements of registering as investment advisorsto meet both federal and state regulations. On October6, 2006, Petersen responded “I am in Dallas, and will beback on Sat. So I will review this and then get back withyou next week.”
Wire Fraud 18 U.S.C. §1343
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10.23.06 Letter sent either as attachment to email or through first-class mail from Mike [Wright](UT) to T. Burton re.organizations, funding and loan proceeds. “I personallywant you to know that it’s not just about your helpingprovide the financing which is of course a great help.But I feel the greater value comes in having a group ofthetans with some horsepower on board pushingtogether with us as a single determined entity. Moneycan’t make a postulate.” “I know, you all know ourchurch needs our help and I do not know about you but Ipersonally see no other group of individuals other thanourselves that have an actual workable plan underway.”
Mail Fraud 18 U.S.C. §1341;Wire Fraud 18 U.S.C. §1343
11.01.06 -11.02.06
Hunter sends an email communication purportedly fromHunter, Wright and Kingdon to Burton outlining Burton'scontribution to "building the professional trading systemand management team," and stating a proposal for"preferential trading terms" for Burton, Petersen andHites for their involvement with PMI and Oneiros and theproposal that outstanding debt owed to Szaniszlo berepaid and referencing David Petersen's investment of$150K and budget projections to draw $276,500.00.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
Letter from Mike [Wright](UT) to T. Burton re. puttingtogether a group that would help us financially.
Mail Fraud 18 U.S.C. §1341; Wire Fraud 18 U.S.C. §1343
11.6.06 Hunter sent an email to Petersen with an attachedoperating agreement for Burton in his role as the"Establishment Officer" and states that "I know Alan[Farr] is especially impressed with Tom [Burton] andwants his involvement. This might be a good [sic] toshow Alan to put him more at ease."
Wire Fraud 18 U.S.C. §1343
11.22.06 Email communications between Barry Hunter (UT) andTom Burton (CA) in which Co-Conspirator Burtonexplains his efforts to recruit Montecito Hedge FundManagers and claiming that “[t]he story and positioningis so easy now.” Co-Conspirator Burton also mentionedhis efforts to contact Co-Conspirators Szaniszlo andHites to update them on “the new plan,” and requested awithdrawal of $75,000 from the “TradeStation corporateaccount.” Co-Conspirator Hunter stated that he would“continue to push the comm lines out on this end so wecan get the funds we need” and requests the routingnumber and account number in addition to the name onthe account “that I will be wiring the funds to.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
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11.30.06 Email comm. between B. Hunter (UT) and T. Burton(CA) with attached master plan explaining theorganization of PMI and Oneiros, including the “OneirosOffshore Expansion Plan,” the co-conspirators’ long-range plan for PMI and Oneiros to expand tradingcapital to “$100-150 million.”
Wire Fraud 18 U.S.C. §1343
11.13.08 -11.19.08
Email communications between Barry Hunter(UT) toTom Burton (CA) re. "Fat Cats" that Chris Hales broughtin, references funds that PMI has agreements withincluding PMI board of Advisors, David Petersen, RustyTweed, Chris Hales, George Hites, Mike Schwartz,Steve Garhardt, Peter Lowden. Involves Mike Ricksand states that Barry Hunter and Michael Wright areaware that Ricks plead guilty to insider trading.
Wire Fraud 18 U.S.C. §1343
11.18.08 Email from Hunter (UT) to Burton (CA) to provide anupdate on PMI, and stating that “I’ve been on thephones the last two days generating interest for ourinitial PMI fund. I’m at about $2.7 Million in commitmentsthus far.” Later that day, Burton responded to Hunter’semail and inquired as to Hunter’s availability forDecember 5 and 6, 2008, to visit with Burton and DavidP[etersen]. Hunter responded that evening and informedBurton that “Mike and I are fully engaged in finishing upthe legal for our agreement with the Fat Cat who hasagreed verbally to fund the build out. He’s agreed toabout $700K in infrastructure costs and his intent is totrade up to $500 Million over the next few years.” Burton responded late on November 18, stating that “[i]tis really important that we confront and handle theoperating agreement BEFORE you actually start tradingthe funds. This is critical for all of our protection now thatsubstantial money is being traded. Also I know that I amthe co-signor on a number of documents related toTradestation and I believe on some docs related to theinvestor registration. If you want to send what you havedone so far on the operating agreement I can startlooking at what will need to be modified.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
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11.19.08 Hunter (UT) responded to Burton’s (CA) late email thenight before and informed him that “[h]ere’s the fundsthat we have agreements with. PMI Board of AdvisersDavid Petersen’s own fund. Rusty Tweed (Rusty’s goingto be in Utah next week for Thanksgiving) Chris Hales(He’s the you [sic] young guy(28) who brought us the fatcat and is partnering in the deal). On a side note: Chrisis starting his Purif next Wednesday. We introduced himto Scientology. George Hites. Possible, Mike Schwartz(Oregon $10 Million Fat Cat) Dr. Steve Garhardt (LasVegas high net worth investor) Peter Lowden, Hedgefund from Reno.” That same day, Burton responded toHunter’s email: “Barry - Are you aware of Ricks past?Looks like he pleaded guilty to insider trading. See linkbelow. What do you think of his ethics level. -Tomhttp://www.usps.com/postalinspectors/nrdoj0406.htm.”Hunter responded on November 19, stating that “I toodid a Google search some time ago on Mike Ricks. MikeWright and I are aware of it. In fact we were speakingwith the director of compliance and licensing with theState of Utah Dept of Securities this morning about it.He has looked into it and found that we are notprecluded from working with him. I would put his tonelevel at strong interest. I would suspect he has a veryhigh IQ...[w]e’ll be talking with him one on one about thisbefore signing any agreements.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
01.15.10 Email communications between Tom Burton and BarryHunter (UT) indicating that Rusty Tweed will have $1.5Million dollars ready to trade before February andanother client Sage called and would have $2 Milliondollars before February 1st as well as debt consolidationon some notes that have come due in an amountbetween $250,000.00 to $300,000.00.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
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JAMES D’AREZZO/PMI
Date Summary of Documentary Evidence Predicate Act under §1961
Prior toJanuary23, 2007
Sometime before January 23, 2007, whether by email orU.S. mail, Wright caused to be sent to D'Arezzo a letteroffering D'Arezzo a non-managing member interest inPMI. In the letter, Wright states that "[t]he first and mainreason [PMI was organized] was to be a legal insulatoror buffer to Oneiros Technologies...The second reasonwas to provide a way for individuals who were helpingus in terms of finance and advice to have a way to useour technology without requiring PMI to get involved inthe licensing requirements of the SEC...[s]ince PMI hasbeen organized as an LLC, its member's [sic] liability islimited and because it would have a limited number ofassets, it would be a much less juicy target for somepossible SP's actions."
Mail Fraud 18 U.S.C. §1341;Wire Fraud 18 U.S.C. §1343
01.23.07 B. Hunter (UT) sent an email to James D’Arezzo (CA)and identified $346,000.00 in loans to PMI from GregKingdon, Michael Wright and Barry Hunter and alsoreferences loans to PMI from David Peterson, Alan Farr,Tom Burton and Sandor Szaniszlo
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
01.23.07 Barry Hunter (UT) sent an email to James D'Arezzo(CA) regarding inclusion into PMI as a way for keymembers to trade their own accounts and help indirecting PMI business activities and indicating that Mr.D'Arezzo can be part of PMI or take a more informalrole.
Wire Fraud 18 U.S.C. §1343
01.09.09 Email communications from Barry Hunter (UT) to JimD'Arezzo (CA) discussing an email which PMI sent out“to shut the door on any future guys who might comeback and say you promised me that I could set up myown server. We have two fat cat clients who could easilybring in over $500 Million each so we’re not reallywanting more small clients. The 50K fee is actually apartially refundable Earnest Money Agreement. Theyhave been fairly easy to come by with clients who havelarge amounts of liquid cash.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
01.01.10 Email from Barry Hunter (UT) to Jim D'Arezzo (CA)stating Szaniszlo has been paid back.
Wire Fraud 18 U.S.C. §1343
06.30.10and07.06.10
Email communications between B. Hunter (UT) and J.D’Arezzo (CA) re. Chris needs to distribute funds. Mikeand I [Hunter] have gone after other sources of funding.
Wire Fraud 18 U.S.C. §1343
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01.29.08-01.30.08
Email communications between B. Hunter (UT) and J.D’Arezzo (CA) re. PMI results and D’Arezzo requestsummary to give to his contacts and Hunter askingD’Arezzo for “resources and comm lines that could helpus. . . ” asking for $100k and some additional capital andwant to create a "strategic alliance" with D'Arezzo.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
DAVID PETERSEN/PMI/SALT LAKE MISSION
Date Summary of Documentary Evidence Predicate Act under §1961
11.06.06 Email from B. Hunter (UT) to D. Petersen (UT) with anattached operating agreement for Burton in his role asthe “Establishment Officer” and states that “I know Alan[Farr] is especially impressed with Tom [Burton] andwants his involvement. This might be a good [sic] toshow Alan to put him more at ease.”
Wire Fraud 18 U.S.C. §1343
08.25.06 Email from B. Hunter to D. Petersen referencing atransfer of $50,000 from the Tradestation account to thePMI account to be transferred online to Petersen.Hunter states “Since we will be transferring funds ingreat quantity, I’d like to set up an online transfer to youraccounts.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
08.28.06 Email from B. Hunter (UT) to D. Petersen(UT)re. offeringposition as a managing member of PMI
Wire Fraud 18 U.S.C. §1343
09.12.06 Email from Hunter to Petersen. Hunter states: I spokewith Mike [Wright] about changing the letter to beaddressed to you personally. He agreed. I believe thatpositions you better as the insider (trusted adviser) thatyou are. I believe it’s time to push out all ourcommunication lines until we find the right investor tohelp take us over the top. My good friend KevinCalderwood is coming to see the system next Tuesday.He has a personal net worth of over $100 Million ans ispresently the CEO of a Geothermal Energy companybased in Salt Lake City. He is also a Stake President inWashington D.C., a very theta guy and could be anexcellent ally for ridding the LDS church of Psychiatryand Psychology.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
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02.27.07 Response email from Petersen to Hunter: “I’m still atflag and would go along with the rest of the group. Theyare keeping me real busy which is great but I haven’tbeen able to keep up on any other stuff. It was great toget the good update from you the other day. On anothernote I understand Janet [Petersen] is trying to get Robinand her boy friend in to see you at the Mission. They aregreat people, I sure [sic] they will make it and sign up fora course or some auditing.”
Wire Fraud18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
07.17.07 Email from J. D’Arezzo (CA) to B. Hunter (UT), S.Szaniszlo (CA), Alan Farr (UT), D. Petersen (UT), T.Burton (CA) regarding M. Wright’s “State of the Union”memo and insight into performance of PMI system.
Wire Fraud 18 U.S.C. §1343
10.12.07 Design Build Services and Earnest Money Agreement,unsigned, between David Petersen and PMI in theamount of $15,000.00 to be tendered at time of signingand another $15,000.00 due on November 15, 2007 andin consideration of the up front costs to purchaseequipment and labor costs Mr. Petersen agreed that$25,00.00 of the $30,00.00 is considered anon-refundable fee.
Violation of 18 U.S.C. § 2314
11.13.07 Email between B. Hunter (UT) and D. Petersen (UT)re.$15,000.00 invoice and slot to invest.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
12.17.07 Email from Barry Hunter (UT) to David J. Petersen (UT)showing $200,000.00 added to PMI in December 10,2007 and requesting permission to use Petersen’s“trading data, symbol names and results in preparing apromo piece.”
05.21.08 Email from Hunter to Petersen regarding “large clientcycles going on. A hedge fund manager out of LasVegas, $100 Million plus under management met withus on Monday. His partner followed up with Mikeyesterday. Interest is high in forming a strategicalliance.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
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10.20.08 Email chain between Petersen and Hunter. Hunterstated: “I got this text from Chris [Hales] today ‘Gotfunds in my one hundred percent possession. I reallyapologize for the lack of communication but will be backtomorrow....talk to you soon.’ Chris followed up with acall to David Wright and said that he has 5.1 million forPMI. $1 Million will go to the move and build out and theremaining amount is for a trading account. So themoney is in the bank as we postulated.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
01.06.09and01.08.09
Email communication between B. Hunter (UT) and D.Petersen (UT) re. postulating will receive $90K fromMike Ricks. Conf. Call with large financial planner out ofTampa.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
01.09.09 Invoice for $6,000.00 from PMI for consulting services toCottontree Management, David Petersen
Violation of 18 U.S.C. § 2314
01.12.09-01.13.09
Email chain between Hunter, Kingdon and Petersen.Hunter states: “Greg, In the list you brought in of the Top50 US Hedge Fund Groups in 2006 a familiar namejumped out at number 31 31. RenaissanceTechnologies Corp. East Setauket NY 24.00 Billion and175.86%. Renaissance was developed by JimSimmons. He’s the best of the best until we unseat him.He’s the guy we are after with our tech. If I’m figuringright, 175% on $24 Billion is $42 Billion in profits. Thatseems to be more like the orders of magnitude that weshould be operating on. Well, let’s get on with it then.”Petersen writes: “I agree let’s get going”. Hunter writes:“David, Have a great trip to the Ship. It’s very pro-survival for our group that you [sic] businesses areprospering...We’ll be creating a large flow here whileyou are gone.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
03.03.09 Email from Barry Hunter (UT) to David Petersen (UT)stating he believes he found the $30,000.00 spent ontrading slot. A spreadsheet attached to the email showspayment from David Petersen to PMI in the amount of$330,500.00.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
03.18.09 Email communications between B. Hunter (UT) andDavid Petersen (UT) regarding ownership interest inPMI and identifying Barry Hunter initially as 100% ownerof PMI and making reference to Barry Hunter's CPA'sadvice to include another managing member with atleast 10% ownership.
Wire Fraud 18 U.S.C. §1343
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03.24.09 Email chain forwarded from Michael Baybak to Wright,Hunter, and Kingdon to Petersen. Hunter states: “David,This is an E-Mail we received from Michael Baybaktoday. This is very confidential but I wanted to share theinformation with you and get your perspective. GregKingdon gets back today so I’m sure he will be heavilyinvolved in this. Just keeping you in the loop!!!” Baybakwrites: “One concomitant aspect of my professionalwork is that I do tend to work on a personal basis withhundreds if not thousands of high-net worth investorsand institutional money managers, and perhaps thispotential resource could be of interest in connection withyour own plans.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
SANDOR SZANISZLO/PMI
Date Summary of Documentary Evidence Predicate Act under §1961
09.13.06 Email from Barry Hunter to S. Szaniszlo re repayment of$10,000.00 and request for a phone call from Szaniszlo.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
10.03.06 Email from Barry Hunter (UT) to Sandor Szaniszlo (CA)regarding payment to Szaniszlo and Capital UnicornIntegrity, an entity apparently owned in whole or in partby Mr. Szaniszlo, in the amount of $5,000.00.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
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02.27.07 Email from Barry Hunter (UT) to Sandor Szaniszlo (CA),David Petersen (UT), and Tom Burton (CA) expressingappreciation for advice, loans and referrals to PMI. “InJanuary of 2006 $400,000 was deposited into theTradeStation PMI Corporate account, $100,000 eachfrom Alan, David, Tom and Sandor...[a] various timesduring the year David, Alan and Tom all transferredfunds from the Corporate Accounts to PMI which wereused for operations. Since that time we discontinuedtrading in August, each member of the group requestedthat their remaining trading funds be returned to them.David was sent $50,000 in August, Sandor was sent$100,000 in October, Tom was sent his remaining$75,000 in November and David transferred hisremaining $25,000 directly to PMI in October. At varioustimes during the year, Alan transferred $75,000 of hisfunds directly to PMI to be used for operations.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
07.17.07 Email from J. D’Arezzo (CA) to B. Hunter (UT), S.Szaniszlo (CA), Alan Farr (UT), D. Petersen (UT), T.Burton (CA) regarding M. Wright’s “State of the Union”memo and insight into performance of PMI system.
Wire Fraud 18 U.S.C. §1343
07.24.07 Email from Barry Hunter (UT) to Sandor Szaniszlo (CA)outlining PMI plans moving forward and update fromMike [Wright]
Wire Fraud 18 U.S.C. §1343
10.02.07 Email from Barry Hunter (UT) to Sandor Szaniszlo (CA)with attached sales commission agreement betweenPMI and Szaniszlo, which states “On any amount ofInvestment in or Loans that Sandor secures for PMIoperations, Sandor receives a onetime commission of6%.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
ALAN FARR/PMI
Date Summary of Documentary Evidence Predicate Act under §1961
01.26.07 Email from B. Hunter (UT) to A. Farr (UT) re. investmentfunding.
Wire Fraud 18 U.S.C. §1343
08.28.06 Email from B. Hunter (UT) to A. Farr (UT) re. offeringposition as a managing member of PMI, with attachedunsigned letter offering a position as a managingmember of PMI to Farr.
Wire Fraud 18 U.S.C. §1343
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04.29.08 Email from B. Hunter (UT) to A. Farr (UT) whichincluded an attached letter purported to be answers fromWright, Hunter, Madsen, and Steve Wyatt, PMI’s CPA,to questions asked about the PMI business plan and itssoftware application. The letter states that set up feesfor a new client “are based on several costs.Commission base compensation to the sales personwho may solicit the client and the amount of money thefund wants to allocate and, the money being allocatedeffects [sic] the number of computer data servers thatwill be needed as well as dictating how much customprogramming and personnel will be required to createcustom or replicated investment portfolios within thesystem. This is all done on a case by case basis. Insome cases a portion of the setup fees are recoverable.”The letter further states that “[i]nvestment capital at thispoint would be going into PMI operations andinfrastructure. Additionally, the PMI 500K brokerageaccount will be used to validate the trading algorithmsreleased by Oneiros in automated live funded tradingbefore it is approved for any client accounts.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
02.21.08 Email from Hunter to Alan Farr with attached draft ofpromissory note to Farr $50,000.00 (unsigned).
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
03.05.08 Promissory Note from Carol Farr $50,000.00 (unsigned) Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
CHRISTOPHER HALES/LUCIDITY/VOLITION/PMI
Date Summary of Documentary Evidence Predicate Act under §1961
04.30.08 Ltr. To C. Hales (UT) from M. Wright (UT) re. setting[Hales] up properly
Mail Fraud18 U.S.C. §1341;Wire Fraud 18 U.S.C. § 1343
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10.16.08 Email from B. Hunter (UT) to C. Hales (UT) in which heprovided account and routing numbers for PMI’s bankaccount with Wells Fargo. Hunter also forwarded amessage from Wright to Hales in the email, in whichWright states “We are assuming, based on the last fewdays of absent communication, that you are trying asbest you can to get things resolved on your end. I wantto make sure that you know we are also working as wellto resolve things too. The main thing I want to stress isthat we must stay in complete communication of anyvital data each of us may need. Vital data can be goodnews or bad news...[t]he hallmark of our group’sagreement is that each one of us can and will confrontand handle any barrier that is presented.”
Wire Fraud 18 U.S.C. §1343
01.23.09 Hunter emailed a copy of a “Management AgreementTemplate,” stating “Chris here’s a copy of theManagement Agreement Template that potential clientscan look [sic]”. The Management Agreement Templateincluded wire information for PMI’s account with WellsFargo and outlines a “Master Fund Feeder FundBusiness Model” and claims “PMI can in some cases actas the Portfolio Manager for other fund managers, its[sic] PMI’s responsibility to be actively involved with theall [sic] the other entities that compose the variouspossible business models that PMI may becomeaffiliated with or be a part. Without this understanding ofthe Master Fund Feeder Fund structure and PMI’s rolein it, it could be easily construed that all the parties are‘in business’ with each other, when the truth is that eachentity is autonomous and has its own responsibilities,functions and compensations.”
Wire Fraud 18 U.S.C. §1343
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02.15.09 Email from B. Hunter (UT) to C. Hales (UT) stating,“[h]ere is the list of people that have come in our office. Ineed phone numbers and E-Mail addresses on each ofthem.” The attached list contained the following namesof individuals purportedly introduced by Hales or byanother individual introduced to PMI by Hales: JoeFreed, Dustin Wilcox, Cameron Cox, Aaron Browning,Scott Alldredge, Carol Bee, Brian Bagley, Dan Burbank,Brett Candiotti, Andrew Chudd, Ben Davis, Phillip Davis,Ryan Davis, Todd De Bic, Gavin Dickson, BrentGarrison, Eric Garrison, Ashton Gifford, Lloyd Gleave,John Grealish, Derrett Harding, Lynn Hirschi, JoelJeffrey, Robbie Kauo, Garret Kelsch, randy Kurek, BradLabarm, Gary McDonald, Troy Morgan, Kit Morrison,Andrew Mullen, Roy Nelson, Nixon Pierre, David Fank,Kenny Andam, Kevin Price, Ren Richards, Mike Ricks,Colton Rogers, Michael Showhaus, Michael Stewart,Todd Smith, Tyler Tarpenning, Greg Tarpenning, JoelM. Vanderhoof, Josh Watson, Jeff White, MarcusWilliams, David Youmans, Jean Hammer, PeterLowden, Steve McCarty, Melvin Myer, (Hedge FundManager getting data), Rodney Howard Brown, MikePappas, Palm Springs Group, Brian King ODLSecurities, Andrew Harris - Jones and Jones, SteveGarhardt, Craig Garhardt, Michael Peros EX (CIA),Carmine Avino, and Margaret Petersen.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
02.23.09 Email from B. Hunter (UT) to C. Hales (cc. EricRichardson) (UT) re. Trade Station Securities contactJake Hinkle in Florida.
Wire Fraud 18 U.S.C. §1343
03.08.09 Email from B. Hunter (UT) to C Hales (UT) re. Eric[Richardson] good addition to team.
Wire Fraud 18 U.S.C. §1343
06.29.09and07.07.09
Email communication between B. Hunter (UT), C. Hales(UT) and E. Richardson (UT) a copy of the “PortfolioManagement Subscription Agreement Template” andstated that “This should be much more thorough and it iswhat we will need to use in the agreements with Lucidityand Volition.”
Wire Fraud 18 U.S.C. §1343
07.07.09 Hunter (UT) sent an email to Hales (UT) with anattached “Management Agreement Template that I sentto Eric last week.”
Wire Fraud 18 U.S.C. §1343
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01.22.09 Hunter sent an email to Hales with an attachedstatement of residual compensation for sales with PMIand a copy of the solicitor agreement with PMI. Hunterstates that “[i]n order to receive revenue on a residualbasis from a client, you must pass the Series 65 Exam.This allows us to designate you personally as an IARInvestment Adviser Representative of PMI and allowsyou to receive residual compensation for clients that youintroduce to PMI... [i]n doing the math, even with theintroductions you’ve made thus far, this should be a$Million+ yearly game in and of itself. Of course thebiggest compensation should come through strategicalliance and building up your own fund.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
05.08.09 Hunter (UT) sent an email to Hales (UT) to memorializeinvestments received by PMI from Hales or investorswhom Hales introduced to PMI. Hunter states “Here arethe records of Investment received by PMI that were notfor Design-Build Service Agreements. 11-8-2008$10,000 You dropped this off at the office. 1-26-2009$5,000 I picked it up at your home. 2-18-0009 $5,000Ben and Dan dropped this off. Let me know who thepromissory note(s) need to written [sic] to and I’ll draftthe document(s). FYI, Ben had mentioned when hedropped off the $5,000 that he was responsible for someof the money that Bentley had written to PMI earlier. Idon’t know if he was talking about the $30KDesign/Build or not, it was just a comment he made.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
12.21.09 Email communication between Barry Hunter (UT) andChristy Fenton ([email protected]), EricRichardson (UT), Boyd Cook, Mickey Fenton([email protected]) and others stating $94,000 willbe transferred back to the Volition account
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
12.31.09 Eric Richardson authored a letter on behalf of RPMInvestments Company LLC, regarding commitments forVolition Fund "currently in excess of $17,000,000.00."
Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
07.17.08 Upon request by Hales for initial $30,000 investment,Bagley wrote an equity line check to himself in theamount of $30,000.00 from Wachovia Bank. Hedeposited that check into his Wells Fargo account. WellsFargo put a hold on the check because is was such alarge sum and verification of funds had to be completedbefore it could be withdrawn.
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
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08.21.08 Bagley obtained two separate cashier's checks, onepayable to Hales for $10,000.00 and the other payableto Williams for $10,000.00. he also withdrew $10,000.00cash and gave it to Williams.
Wire Fraud 18 U.S.C.§1343;Violation of 18 U.S.C. § 2314
01.16.09 Bagley Cashier’s Check to Hales for $30,000; $20,000cash to Williams
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
04.22.09 Bee Cashier’s check for $15,000 to M. Williams Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
05.13.09 Bee Cashier’s check for $15,000 to Hales Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
05.22.09 Check from Hales to Bee for $17,500. Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
05.22.09 Bee Cashier’s check for $10,000 to Hales; $15,000 cashto Hales
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
05.27.09 Bee Cashier’s check for $40,000 to Hales Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
05.29.09 Check from Hales to Bee for $29,000. Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
05.29.09 Bee $1,000 cash to Hales. Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
06.02.09 Bee Cashier’s check for $8,000 to Hales Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
06.02.09 Bee Cashier’s check for $7,000 to Hales Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
06.10.09 Bee Cashier’s check for $11,000 to Hales Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
06.18.09 Bee Cashier’s check for $8,000 to Hales Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314
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GREG MADSEN/PMI
Date Summary of Documentary Evidence Predicate Act under §1961
08.12.09 Email from B. Hunter (UT) to G. Kingdon and copied toGreg Madsen (UT), Michael Wright (UT), and AndrewKingdon about Madsen’s choice for naming a PMIfeeder fund. “PMI could use its exclusive licenserelationship of the Oneiros AlphaGen System as amarketing advantage. It’s probably easier for PMI topromote the AlphaGen System than if Oneiros promotedit. We could have the groups putting feeder fundstogether, promoting the technology also. We couldhighlight the extreme out of the box thinking of Oneirosas a definite advantage and create some mystery.”
Wire Fraud 18 U.S.C. §1343
10.14.09 Email communication from Greg Madsen (UT) to GregKingdon (UT) and Barry Hunter (UT) regarding the orderinformation for servers and hard drives.
Wire Fraud 18 U.S.C. §1343
01.14.10 Email from G. Kingdon to Barry Hunter (UT) and copiedto Greg Madsen (UT), Michael Wright (UT) including L.Ron Hubbard quote: “Your success depends upon theproduction of an effect, your finance depends uponattracting interest. If you find finance faltering, you willdiscover immediately why if you realize that the financialsystem is a communications system and thatcommunications systems are the background of whatyou are doing.”
Wire Fraud 18 U.S.C. §1343
01.25.10 Email from G. Kingdon to Barry Hunter (UT) and copiedto Greg Madsen (UT), Michael Wright (UT) referring to acommunication received by Kingdon from arepresentative of the International Association ofScientologists stating “I’m glad you’re doing everythingyou’re doing with amporn and the different campaigns.Definitely needed.” Kingdon writes: “This from the IASrep on the ship chasing me for my next status. I sure amproud to be a Scientologist, and they sure do need ourhelp.”
Wire Fraud 18 U.S.C. §1343
GEORGE HITES/PMI
Date Summary of Documentary Evidence Predicate Act under §1961
01.01.08 PMI and Infinity Catamaran Ltd., located in Road TownTortola British Virgin Islands and owned by GeorgeHites, entered a Subscription Agreement in the amountof $250,000.00, which was forwarded via email to Hitesby Hunter.
Violation of 18 U.S.C. § 2314
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03.21.07 Email from Hunter to Hites with attached PromissoryNote to Hites for $85,000.00 (unsigned) with instructionsto sign and fax and including PMI wire transferinformation
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
ROBBY J. STOWE/PMI
Date Summary of Documentary Evidence Predicate Act under §1961
Unknown Letter to Robby Stowe from Hunter requesting afinancial commitment for a “four server slot in thenew data center.” Hunter states “A client’s serverset up like this could manage upwards of $30+million; however this is something that must benegotiated at the time of activation. In other words,we are not saying how much money we will run,only that you have our commitment to give youaccess to our tech and some portion of theavailable capacity of our data center at the timeyour operation is activated. Based on this, the$50,000 is a technology access fee, nothing else.”
Mail Fraud 18 U.S.C. §1341;Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
12.05.06 Email from Hunter to R. Stowe re. Steve Nemeth, afriend of Wright and Hunter who is planning to workfor PMI. Attached to the email is a narrativeauthored by Nemeth outlining his Scientology“auditing.”
Wire Fraud 18 U.S.C. §1343
05.13.08 Email from B. Hunter to R. Stowe providing updateon “finalizing the first part of our funding packagetoday which is an Earnest Money Agreement anddeposit.” Hunter also states: “ We have a long timecontact, fund manager in Oregon who is goingahead with a trading account. He is managing $125million so the potential here is significant.”
Wire Fraud 18 U.S.C. §1343;Violation of 18 U.S.C. § 2314;Violation of UTAH CODE ANN.§§ 61-1-1(2), -3(1), -7, -17(2),and/or a rule or order underUTAH CODE ANN. § 61-1-15,and/or a condition imposedunder UTAH CODE ANN. §§61-1-10(4) or 11(7).
183. Plaintiffs are informed and believe, as see on the face of many of them,
that the e-mail communications were transmitted over the internet and through multiple
states using various national email servers and internet service providers.
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184. Each of the preceding predicate acts was an essential step in the plot
towards the execution, operation and fulfillment of the object of the conspiracy, either by
way of being an essential component of the fraud scheme or as an essential component
of lulling schemes designed to prevent and/or delay detection of the fraud.
185. Further, the foregoing is expressly not intended to encompass all of the
predicate acts committed by the defendants, for it is anticipated that additional acts will
be uncovered in discovery and that additional analysis of the structure, organization and
operation of the enterprise and of the conspiracy will yield other bases to allege
predicate acts, such as, by way of example only and not by way of limitation, the
additional of felony charges under state law.
EXTERNAL PATTERN/MULTIPLE VICTIMS
186. Plaintiffs know that the predicate acts forming a pattern with respect to
their victimization are only part of an external pattern of commission of predicate acts by
which others have been victimized for the following reasons:
a. Plaintiffs met other target victims at the PMI function described
above;
b. Plaintiffs were told by Williams and Hales that those other victims
had likewise placed investments in PMI on behalf of other victims;
c. Email communications between the co-conspirators revealed the
following names of individuals purportedly introduced to the co-conspirators by
Hales or by another individual introduced to PMI by Hales: Joe Freed, Dustin
Wilcox, Cameron Cox, Aaron Browning, Scott Alldredge, Carol Bee, Brian
Bagley, Dan Burbank, Brett Candiotti, Andrew Chudd, Ben Davis, Phillip Davis,
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Ryan Davis, Todd De Bic, Gavin Dickson, Brent Garrison, Eric Garrison, Ashton
Gifford, Lloyd Gleave, John Grealish, Derrett Harding, Lynn Hirschi, Joel Jeffrey,
Robbie Kauo, Garret Kelsch, Randy Kurek, Brad Labarm, Gary McDonald, Troy
Morgan, Kit Morrison, Andrew Mullen, Roy Nelson, Nixon Pierre, David Fank,
Kenny Andam, Kevin Price, Ren Richards, Mike Ricks, Colton Rogers, Michael
Showhaus, Michael Stewart, Todd Smith, Tyler Tarpenning, Greg Tarpenning,
Joel M. Vanderhoof, Josh Watson, Jeff White, Marcus Williams, David Youmans,
Jean Hammer, Peter Lowden, Steve McCarty, Melvin Myer, Rodney Howard
Brown, Mike Pappas, Palm Springs Group, Brian King, ODL Securities, Andrew
Harris from Jones and Jones, Steve Garhardt, Craig Garhardt, Michael Peros,
Carmine Avino, and Margaret Petersen.
d. Wright admitted to plaintiffs that Williams and Hales had brought
other victims to invest in PMI.
CONTINUITY AND RELATEDNESS
187. The predicate acts described above are each related to the conduct of the
Enterprise and the objects of the conspiracy.
188. The predicate acts described above exhibit both open-ended and
closed-ended continuity.
189. The predicate acts exhibit closed-ended continuity in that they occur
regularly, they are high in number, they occur with frequency over an extended period of
time and they involve multiple victims, of which the plaintiffs were only one pair.
190. The predicate acts also exhibit open-ended continuity, in that the fraud
scheme could be perpetrated indefinitely and has shown no sign of abating, with Hales
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soliciting further investment from Bee just within one month of the filing of the State
Court Action.
191. Because the time frame of the schemes is indefinite and has the potential
to continue for months and years, the pattern of racketeering activity has open-ended
continuity.
192. Further, the recent amendment of the Oneiros filings with the state of Utah
evidence the intent to continue the scheme into the future at least with respect to
FOREX trading.
INJURY BY REASON OF CONSPIRACY TO VIOLATE 18 U.S.C. § 1962(a), (b) AND(c), IN VIOLATION OF 18 U.S.C. § 1962(d)
193. Each and every co-conspirator defendant herein agreed to commit, in
furtherance of the conspiracy, two or more predicate acts.
194. The commission of predicate acts in furtherance of the conspiracy caused
damage to the plaintiffs by reason of the respective violations of 18 U.S.C. § 1962(a),
(b) and (c), as described above.
195. Each co-conspirator defendant is, therefore, jointly and severally liable to
the plaintiffs for all damages incurred by them and all relief available to the plaintiffs for
the violations of each of those sections as set forth in more detail above.
196. Defendants violations have been the cause-in-fact and legal cause of
damages to plaintiffs in the sum of not less than $300,000.00, or such other and greater
sum as may be proven at trial.
197. In addition, a reasonably foreseeable consequential damage to each of
the plaintiffs as the result of their financial devastation caused by the defendants is
extreme emotional distress and mental anguish, for which plaintiffs are each entitled to
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judgment in the sum of not less than $1,000,000.00, or such other and greater sum as
may be proven at trial.
198. The plaintiffs are entitled to recover from the conspirator defendants,
jointly and severally, three times the amount of their damages plus pre-judgment
interest, together with all attorneys' fees, costs and expenses, under 18 U.S.C. §
1964(c).
COUNT V(BREACH OF FIDUCIARY DUTY - AGAINST PMI, ONEIROS, WRIGHT, HUNTER, HALES)
199. Bagley and Bee incorporate all previous allegations.
200. The co-conspirator defendants, together with their co-conspirators the
Bentley Entities, Hales, Richardson, Williams, Hunter, PMI, Lucidity and Volition,
purported to act as investment advisers for plaintiffs and therefore owed plaintiffs a
fiduciary duty.
201. The foregoing facts demonstrate that the co-conspirator defendants each
breached such fiduciary duty.
202. One or more unlawful, overt acts were committed by each co-conspirator
defendant in furtherance of the object of the Conspiracy.
203. Such breaches are the cause-in fact and legal cause of damages to
plaintiffs in the sum of not less than $300,000.00, or such other and greater sum as may
be proven at trial.
204. In addition, a reasonably foreseeable consequential damage to each of
the plaintiffs as the result of their financial devastation caused by the defendants is
extreme emotional distress and mental anguish, for which plaintiffs are each entitled to
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judgment in the sum of not less than $1,000,000.00, or such other and greater sum as
may be proven at trial.
205. Plaintiffs are also entitled to an appropriate award of punitive damages
against each of the conspirator defendants as the proof may show.
COUNT VI(CIVIL CONSPIRACY - AGAINST ALL DEFENDANTS)
206. Bagley and Bee incorporate all previous allegations.
207. Each co-conspirator defendant entered into a combination of two or more
persons to accomplish the object of the Conspiracy as set forth above.
208. Each co-conspirator defendant reached a meeting of the minds on the
object of the Conspiracy and on one or more courses of action as described above.
209. One or more unlawful, overt acts were committed by each co-conspirator
defendant in furtherance of the object of the Conspiracy.
210. The unlawful, overt acts of the co-conspirators, in furtherance of the object
of the conspiracy, have been the cause-in-fact and legal cause of damages to plaintiffs
in the sum of not less than $300,000.00, or such other and greater sum as may be
proven at trial.
211. In addition, a reasonably foreseeable consequential damage to each of
the plaintiffs as the result of their financial devastation caused by the co-conspirator
defendants is extreme emotional distress and mental anguish, for which plaintiffs are
each entitled to judgment in the sum of not less than $1,000,000.00, or such other and
greater sum as may be proven at trial.
212. Plaintiffs are also entitled to an appropriate award of punitive damages
against each of the co-conspirator defendants as the proof may show.
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COUNT VII(CIVIL LIABILITY FOR VIOLATIONS OF THE UTAH UNIFORM SECURITIES ACT–
UTAH CODE ANN. § 61-1-22 - AGAINST ALL DEFENDANTS EXCEPT CHURCH OF
SCIENTOLOGY OF UTAH, CHURCH OF SCIENTOLOGY INTERNATIONAL, CYNTHIA AND
KIMBERLY)
213. Bagley and Bee incorporate all previous allegations.
214. The named co-conspirator defendants, and each of them, offered or sold
securities to Bagley and Bee in violation of UTAH CODE ANN. §§ 61-1-1(2), -3(1), -7,
-17(2), and/or a rule or order under UTAH CODE ANN. § 61-1-15, which requires the
affirmative approval of sales literature before it is used, and/or a condition imposed
under UTAH CODE ANN. §§ 61-1-10(4) or 11(7).
215. The named co-conspirator defendants, and each of them, are liable to
Bagley and Bee.
216. Bagley and Bee elect to recover the consideration paid for the securities,
together with interest at 12% per year from the date of payment, costs, and reasonable
attorney fees.
217. Bagley and Bee hereby tender the return of such securities to the co-
conspirator defendants, and each of them.
218. In addition, because each of the violations of UTAH CODE ANN. § 61-1-1(2)
by each of the named co-conspirator defendants were reckless and intentional, Bagley
and Bee are each entitled to three times the consideration paid for the securities,
together with interest, costs, and attorney fees.
219. Each of the representations of material fact detailed above was false when
it was made, in that there was no viable software which virtually eliminated the risk of
securities investment and which guaranteed profits of no less that 5% per month and
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could make up to a 72% return on investment over three months. Moreover, all the
misrepresentations made to cloak the conspirators with legitimacy were false in that
none of the conspirators were legitimate business persons nor did any of the
businesses operate legitimately, having all been funded with the proceeds of fraud. The
conspirators had not complied with the securities laws and had no intention of
complying. The conspirators had no intention of supporting charities. Although
representing themselves as investment advisers, none of the individual defendants in
fact were registered with the state of Utah as investment advisers. The representations
about the nearness of PMI commencing its wonderful program were all false. The
representations about compliance with the securities laws were false in that no
registration statements were filed, no adequate disclosures made and, of course,
misrepresentations and omissions of material fact were being made.
220. Numerous material omissions were also made in conjunction with the offer
and sale of securities to Bee and Bagley, including the failure to advise Bee and Bagley
that the conspirators were defrauding them, that the High Yield Investment Program
was a fraud scheme, that none of the conspirators had complied with the securities
laws, that the idea of a trading program that could eliminate risk from market trading
was a fantasy and not legitimate, that the investments were actually the highest risk
investments which could be made, that they were unsuitable for plaintiffs' investment
objectives, that the delays in implementation were the result of the true fact that no
implementation would ever be made as represented, that no proprietary software in fact
existed, that no legitimate licenses in fact existed, that Hales and Williams were
operating numerous businesses and supporting their lifestyles through a pattern of fraud
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schemes, that Wright was a real estate developer and not a computer programmer or
securities expert, that the only "humanitarian" work that was going to occur was in the
interest of the conspirators, that the Note Trading was part of a lulling scheme as were
the assurances that the investments were secure and numerous others.
221. Plaintiffs are thus entitled to judgment against the named co-conspirator
defendants for defendants' making of any untrue statements of material fact and
defendants' omission to state material facts necessary in order to make the statements
made, in the light of the circumstances under which they are made, not misleading with
respect to is purchase of plaintiff's securities, pursuant to UTAH CODE ANN. § 61-1-22, for
all damages caused thereby, including consequential damages, in the sum of not less
than $300,000.00, or such other and greater sum as may be proven at trial, together
with interest thereon from July 2, 2007 forward at the statutory rate of 12% per annum,
together with all of plaintiff's reasonable attorney fees, costs and expenses incurred
herein.
222. Because the named co-conspirators’ conduct as pleaded was reckless or
intentional, plaintiff is entitled to have the judgment against plaintiff tripled in amount,
pursuant to UTAH CODE ANN. § 61-1-22(2), resulting in a judgment against defendant
and in favor of plaintiff in a total sum of not less than $900,000.00, or such other and
greater sum as may be proven at trial, together with interest thereon from July 2, 2007
forward at the statutory rate of 12 % per annum, together with all of plaintiff's
reasonable attorney fees, costs and expenses incurred herein.
223. In addition, a reasonably foreseeable consequential damage to each of
the plaintiffs as the result of their financial devastation caused by the co-conspirator
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defendants is extreme emotional distress and mental anguish, for which plaintiffs are
each entitled to judgment in the sum of not less than $1,000,000.00, or such other and
greater sum as may be proven at trial.
COUNT VIII(ALTER EGO– AGAINST WRIGHT, MADSEN, ONEIROS, CYNTHIA, CHURCH OF SCIENTOLOGY
OF UTAH, CHURCH OF SCIENTOLOGY MISSION OF SALT LAKE CITY, CHURCH OF
SCIENTOLOGY INTERNATIONAL)
224. Bagley and Bee incorporate all previous allegations.
225. PMI was formed to operate and did operate a high yield investment
program as part of a series of Ponzi schemes.
226. From its formation through its cessation of business, PMI was
undercapitalized.
227. Although PMI purported to be, at times, owned by Hunter, Burton,
D'Arezzo, Farr, Hites, Kingdon, Petersen, Stowe and/or Szaniszlo, and controlled by
Hunter, in fact PMI was formed and existed in order for Wright to oversee and control
the generation of funds to be paid to one or more of the Church of Scientology of Utah,
the Church of Scientology Mission of Salt Lake City and the Church of Scientology
International.
228. PMI failed to recognize the formalities of operating as a limited liability
company, with irregular shifting of memberships, additions and withdrawals of
members, unclear management, operating entirely within the offices of Oneiros, sharing
personnel, and a variety of other sham factors.
229. Plaintiffs believe that no legitimate distributions were made to members
and that any funds received by members were illegal repayments of capital.
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230. Plaintiffs believe that all material funds of PMI were largely siphoned off to
Wright and Oneiros, who were in actual control of PMI, and in turn siphoned in part to
Cynthia, Madsen, Church of Scientology of Utah, Church of Scientology Mission of Salt
Lake City, Church of Scientology.
231. Despite purporting to have multiple members, non-members Wright and
Oneiros provided the only true functional management of PMI.
232. PMI has an absence of adequate records to explain where the large pools
of capital that purported to be infused into it and the funds generated from its high yield
investment program actually went. In fact, it is believed that a part of PMI’s operations
were conduction through other entities which collected funds from victims and paid
some or all of those funds to PMI directly or indirectly in such a fashion as to scrub,
launder or conceal the sources and uses of funds.
233. PMI never operated as a legitimate business and plaintiffs believe that
PMI always operated as a facade for Wright, Madsen, Oneiros, Cynthia, Church of
Scientology of Utah, Church of Scientology Mission of Salt Lake City and Church of
Scientology International.
234. The misuse of PMI’s purported limited liability existence to further the
wishes of the persons who controlled it operated and operates to promote injustice and
fraud.
235. Plaintiffs are entitled to a declaration that PMI was and is an alter ego of,
at a minimum, and possibly more, Wright, Madsen, Oneiros, Cynthia, the Church of
Scientology of Utah, the Church of Scientology Mission of Salt Lake City and the
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Church of Scientology International and that each of those persons is fully liable for all
of the debt of PMI, including all sums owing to plaintiffs.
WHEREFORE, plaintiffs demand judgment in their favor, and against defendants,
jointly and severally as applicable, as follows:
A. For a determination of the debt owed to Bee and Bagley by Hunter and
Kimberly and a determination that such debt is non-dischargeable;
B. For a determination that the Debtors, Hunter and Kimberly, should be
denied a discharge;
C. For such relief against each defendant as the particular proof may show
entitlement, legally, equitably, by statute or otherwise, including without limitations all
forms and nature of damages;
D. For trebling as may be allowed;
E. For punitive damages as may be allowed;
F. For orders of relief of rescission, alter ego, replevin, restitution,
receivership, injunction or otherwise and for the avoidance and set aside of transfers
and orders of turnover to the debtors’ estate of the assets transferred and of each such
alter ego as needed to satisfy the estate’s creditors;
G. For all of plaintiffs' reasonable attorneys fees, costs and expenses, as may
be allowed at law, in equity, by contract, statute, rule, inherent power of the Court or
otherwise, both before and after judgment; and
H. For all such other and further relief to which the proof at trial may show
entitlement or which the Court otherwise deems just, equitable and proper in the
premises.
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DATED this 26th day of April, 2013.
PETERS š SCOFIELD
A Professional Corporation
/s/ David W. Scofield DAVID W. SCOFIELD
Attorneys for Plaintiffs
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CERTIFICATE OF SERVICE
I hereby certify that on the 26th day of April, 2013, the foregoing FIRST AMENDED
COMPLAINT TO DENY DISCHARGE UNDER 11 U.S.C. § 727, TO DETERMINE NON-DISCHARGEABILITY PURSUANT TO 11 U.S.C. § 523 AND FURTHER RELIEF waselectronically filed with the Court to be served via the Court's ECF/CM system upon thefollowing:
and by United States mail, first class postage prepaid, to:
Sandor Szaniszlo10290 Tujunga Canyon Boulevard, #305Tujunga, CA 91042
Lucidty Management, LLCc/o Reg. Agent Benjamin J. Davis9060 N. Lakeshore DriveLakepoint, UT 84070
George Hites5945 Bruce DrivePleasanton, CA 94588
Tom Burton5350 Paseo RioSanta Barbara, CA 93111
Alan S. Farr682 East 4129 SouthSalt Lake City, Utah 84107
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James D' Arezzo7645 Rocky Mountain View Rd.Tujunga, CA91042
Cynthia L. Wright1335 Colonial CircleSalt Lake City, Utah 84108
Gregory B. Madsen2382 Pauline WayWest Jordan, UT 84088
Church of Scientology Mission of Salt Lake Cityc/o Its Registered Agent Cynthia Wright1335 South Colonial CircleSalt Lake City, Utah 84108
Volition Trading Company, LLCc/o Its Registered Agent, Christopher D. Hales #17419-081FCI SaffordFederal Correctional InstitutionP.O. Box 9000, Safford, AZ 85548
Oneiros Technologies L.C.c/o its Member Michael J. Wright1335 South Colonial CircleSalt Lake City Utah 84108
Church of Scientology of Utahc/o Its Registered Agent Wendy L. Lauritzen1931 South 1100 EastSalt Lake City, Utah 84106
/s/ David W. Scofield DAVID W. SCOFIELD
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