There are three component parts to a well run Ponzi scheme and in every case the victims fall prey and into the PIT. PROMISE, ILLUSION and TRUST!
Over the past several months I’ve been reporting on BizRadio out of Houston and the scheme or scam (as I and many others see it) run, in part, by Daniel Frishberg and Al Kaleta. Then just yesterday I clicked on a lengthy new report about another massive Ponzi scheme (makes BizRadio look like chump change) effected by Trevor Cook (who entered into a plea agreement) and Pat Kiley (Radio Host) who is reportedly the target of a criminal investigation.
So how did this mess come to be? Three things: PROMISE, ILLUSION and TRUST!
Step One: Cook made the promise that this was a risk free investment. As is often said, he (Cook) had a fool proof system. Folks there is NO FOOL PROOF SYSTEM.
Step Two: Cook created what looked (0perative word “LOOKED”) to be a high tech system that supported his claims. He created the ILLUSION. And, as part of that, he had (what appears to be) in his back pocket – Pat Kiley (Religious Radio Guru) whose mouth supported the Illusion that this was all real. After all, it wasn’t just Cook who made his claim – he had a (my term here) co-conspirator to help with the Illusion. Now whether Kiley was “in on the deal” or just too dumb to do due diligence on what he was promoting on the radio is for the legal system to decide, but either way – Kiley was instrumental in creating the Illusion.
Step Three: Kiley’s brand – via his nationally syndicated radio show – created a large part of the TRUST needed to spread the message and seal the Ponzi scheme deal. Not that this all fell on Kiley’s shoulders, Cook, too, played a large part in the Trust component by creating false statements giving investors an inaccurate view of their investment returns.
PROMISE, ILLUSION and TRUST. These three are the foundations of how fraud becomes and creates victims.
See the SEC News Release on Trevor Cook – http://www.sec.gov/news/press/2010/2010-12.htm
See also SEC News on Pat Kiley – http://www.sec.gov/litigation/litreleases/2009/lr21313.htm
So…how does this relate to the story I’ve been following with BizRadio? Seems that there are interesting correlations. First, Al Kaleta was the one who seemingly was the point man for the money. Perhaps it was best to say that Al Kaleta was the “promise keeper.” Daniel Frishberg was the “radio personality” who had the name recognition to support the Illusion and create Trust. Together, Frishberg and Kaleta, seemingly convinced many investors to (like in the case of Trevor Cook and Pat Kiley) put millions into venture(s) that turned out to be no more than a massive illusion designed to promote the personal gains of Daniel Frishberg and Al Kaleta.
Where from here? Well, in the case of Cook – he’s entered into a plea deal for no more than 25 years in prison in exchange for his help in finding the money. Good luck with that, as it appears that much of it has disappeared – gone as quickly as his illusion dissipated. Kiley – well, that’s a function of where the criminal investigation goes. Did he know and conspire or was he just that stupid?
In the other case of Al Kaleta and Daniel Frishberg – that is yet to be decided – other than an SEC Receiver has been appointed to take possession of what funds can be found so that investors can be made whole as much as possible. More to come!
Meanwhile…YOUR COMMENTS ARE WELCOME!