CNC Ponzi Scheme
Food For Thought
CNC was a ponzi scheme where salespeople sold investment "contracts" for approximately $25,000 each and then supposedly used the money to make monthly food products purchases for subsequent sale to food wholesalers and supermarket chains.
CNC paid its sales staff a monthly commission for each contract they sold for as long as the investor kept the principal invested in CNC. This commission generally amounted to $150 per month for each contract.
They helped some of their investors evade federal income tax on the CNC "dividend" income because CNC did not report it to the IRS. They also accepted cash investments from some of its investors, who received their monthly dividends in cash, rather than by check as other investors did.
The head of CNC fled to the Cayman Islands but returned and pleaded guilty to mail fraud and money laundering for which he was sentenced to 10 years in prison for a scheme which created over $67 million in losses.
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