2 Vallejo men indicted in Ponzi scheme :Robert Cephas Brown Jr., 55, and Duane Allen Eddings, 49, had been swindling investors since about March 2001.
2 Vallejo men indicted in Ponzi scheme
By Lanz Christian Bañes/Times-Herald staff writer
Posted: 02/28/2009 01:02:10 AM PST
Two Vallejo men have been indicted by a grand jury in a $17-million Ponzi scheme that allegedly defrauded hundreds of investors, many from Vallejo and Fairfield.
Thursday's indictment alleges that Robert Cephas Brown Jr., 55, and Duane Allen Eddings, 49, had been swindling investors since about March 2001.
Brown has been taken into custody, while Eddings remains at large, though U.S. Department of Justice officials were confident of his capture.
In a Ponzi scheme, investors are paid "returns" by money from new investors, but are led to believe those funds are actual profit. In turn, the new investors are paid with money from still-newer investors, perpetuating a cycle.
"The defendants' scheme allowed defendants to attract additional clients, although no profits were actually being made for existing clients," the grand jury wrote in a 15-page indictment.
Investors allegedly were led to believe Brown was a stock market expert who could promise extraordinary returns, even doubling the initial investment.
More than 200 people were defrauded in the case, justice officials said.
Through word of mouth and so-called "investment" seminars, the duo wasable to lure investors into the scheme, the indictment alleged.
Brown and Eddings operated under the names Trebor Company, Trebor Investment Company, Trebor Seminars, Trebor group, Trebor Group Fund and Wise Investors Simply Excel LLC (WISE). "Trebor" is "Robert" spelled backward.
The two would send letters promising a date of return, and when that date passed, they would send another letter with a new date, the indictment alleged.
However, few received any payouts while Brown and Eddings reportedly used millions to fund a lavish lifestyle.
"For example, Brown frequently spent investor funds on limousine services for dates with girlfriends, outings to professional football games and concerts, expensive clothes, hotels, restaurants and a Ferrari. In addition, ... Brown made cash withdrawals of more than $3.5 million of investor money," noted the indictment.
The two deposited the money in Union Bank and Wells Fargo Bank accounts at branches in Vallejo.
The first complaint came to the Vallejo Police Department in 2006, with the United States Postal Inspector beginning an investigation shortly thereafter, said justice department officials.
The grand jury charged Brown Jr. with 18 felony counts that include mail fraud, wire fraud and money laundering. Eddings has been charged with 16 felony counts, including mail fraud, wife fraud and money laundering.
In addition to the Justice Department's criminal charges, the Securities and Exchange Commission filed a civil lawsuit on July 23, 2008, alleging securities fraud.
The SEC obtained an emergency court order prohibiting Brown from engaging in such fraud.
Brown was arrested last night at his sister's home in Vallejo and was arraigned Friday morning. He lived in Vallejo until July 2006, when he moved to Hillsborough.
Contact staff writer Lanz Christian Bañes at (707) 553-6833 or lbanes@thnewsnet.com.
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