‘Mini-Madoff’ Who Took Investments From Santa Fe Girls Sentenced to Pay $ 10.4 Million | Native Information

Unregistered Santa Fe funding advisor dubbed a ‘mini-Madoff’ ordered to pay almost $ 10.4 million in restitution and penalties after partaking in a 20-year Ponzi scheme involving 45 buyers Throughout the nation.

A federal decide issued a consent order on April 7 for a everlasting injunction towards Douglas Lien, 79, after the Securities Division of the New Mexico Division of Regulation and Licensing issued a stop and desist order -desist versus Lien.

Among the many victims had been three ladies in Santa Fe, together with Randa Phillips, 71, who contacted the securities division in Could 2019 together with her criticism towards Lien.

The securities division referred the case to the Commodity Futures Buying and selling Fee, which sued Lien in america district courtroom.

Below the consent order, Lien is prohibited from buying and selling in commodities futures, offering funding recommendation in New Mexico, or soliciting or accepting funds to take a position on behalf of anybody. else.

Chief Justice William P. Johnson’s order states that Lien pay “instantly” $ 5,195,679 in restitution and $ 5,195,679 in fines.

Phillips, together with Norma Bell, 81, and a girl named Patricia, who did not wish to use her final title, stated they doubted they may get their a refund. Lien owes Phillips $ 62,633, Patricia $ 7,500, and Bell stated she owed him $ 50,400.

In a press launch asserting the consent order, the Commodity Futures Buying and selling Fee stated that “orders requiring the compensation of funds to victims might not outcome within the restoration of misplaced cash as a result of wrongdoers might not have funds obtainable. or enough property. “

The Buying and selling Fee and the Securities Division are solely allowed to provoke civil proceedings, however legal proceedings in different jurisdictions are attainable if Lien doesn’t pay.

“It is a simple enterprise for any district legal professional. All the things is traced. He admitted his guilt, ”stated Jean-Nikole Wells, legal professional for Bell, who had one other consumer 10 years in the past who invested with Lien. She then found that Lien was not registered as an Funding Advisor, however that her consumer had recovered his cash, so she didn’t pursue the case.

“I’ve seen him work together with these folks and make them really feel like he is their good friend,” Wells stated.

In an interview final week, Lien stated he accepted every little thing that was spelled out within the consent order, however hoped to barter the “instant” fee order.

“Clearly I can not pay it tomorrow,” Lien stated. “It should take time. I can not inform you what we’ll give you. I’d say two to 5 years. You possibly can think about arising with that quantity. [$10.4 million] that shortly.

The decide appointed the Nationwide Futures Affiliation in Chicago because the monitor to obtain Lien’s funds. The affiliation is a self-regulatory group for the US derivatives business.

Lien informed the courtroom that he primarily offers with commodity futures, principally US Treasury bond futures. However Lien had a buying and selling account steadiness of nearly $ 25,000 from 2013-19, in response to the consent order.

His victims in Santa Fe stated they believed he had hidden cash. Since a minimum of 2000, Lien has collected $ 14.2 million from 45 buyers, in response to courtroom information.

“He did not spend $ 14.2 million,” Phillips stated. “It is round.”

“It is fairly slippery,” stated Patricia, 67. “From what we noticed of him, he hid it in plenty of locations. I do not know if we’ll ever see the cash.

Courtroom information present that 12 of 45 individuals who invested by means of Lien’s agency, Westend Investments, owe greater than $ 100,000 every and one sufferer owes $ 1.5 million. Fifteen different buyers – together with the three ladies from Santa Fe – owe lower than $ 100,000.

However 18 buyers made cash “investing” with Lien, 4 of which made a revenue of over $ 100,000 and the primary investor made $ 863,000.

This can be a traditional Ponzi scheme: with comparatively little or no cash really invested, the Ponzi operator usually makes use of new investor cash to pay early buyers, who normally profit on the expense of subsequent buyers. The system works so long as there are sufficient new buyers.

Lien labored with the courtroom to element the way it operated with out being registered as a futures fee dealer with the Commodity Futures Buying and selling Fee, an unbiased federal company. As an alternative of a trial, it was a settlement settlement.

“I felt all through the funding that I used to be making would work,” Lien stated. The New Mexican. “It acquired overwhelming with the paperwork. What appeared attainable at one level was greater than I may deal with. After all, I’ve regret that it did not work. I plan to repay in full in two to 5 years. I’m beneath stress to repay as shortly as attainable. “

In courtroom paperwork and interviews, the ladies stated they’d invested hundreds of {dollars} in Lien.

Phillips invested $ 239,000 with Lien in 2004-05, the sum of his mom’s inheritance. Bell invested $ 95,000 in 2014, utilizing its 401 (ok) funds. She withdrew it in September 2015 on the recommendation of her accountant, however reinvested $ 90,000 with Lien in January 2016 after suspending an rate of interest of 9% monthly. Patricia invested $ 18,000 with Lien from a Social Safety lump sum fee.

“We name him the mini-Madoff,” Phillips stated in reference to Bernie Madoff, the well-known financier who died in jail on April 14 after being jailed for a dozen years for defrauding buyers of an estimated $ 17. , $ 5 billion in an elaborate Ponzi scheme.

The consent order learn: “Lien has socialized along with his shoppers over time, even inviting a few of his shoppers to trip with him and his spouse on a non-public, family-friendly island close to Martha’s Winery, and Hyperlink’s many purchasers. thought of him a good friend.

Lien was charging shoppers 15% monthly on enterprise income, with the courtroom discovering that he stored greater than $ 3.5 million for “administration charges.”

“The account statements and tax kinds that Lien despatched to its shoppers didn’t replicate the precise outcomes of Lien’s futures buying and selling, however relatively confirmed false buying and selling income and administration charges that Lien was charging on these false income,” says the consent order.

Prospects paid taxes on these false statements.

Finish of line

Lien’s Ponzi scheme started to crumble in early 2019.

“All through 2019, a number of Lien shoppers have requested the return of all or a part of their funds,” the courtroom ruling states. “Though Lien returned a few of the requested funds, he didn’t open up to shoppers that on a number of events he paid shoppers utilizing funds he obtained from different shoppers, very similar to he did. a Ponzi scheme, or utilizing funds he has obtained from fairness traces of credit score, and never utilizing funds from shoppers’ personal account balances or buying and selling income. He has additionally attracted shoppers with false excuses or just ignored them. “

The Santa Fe trio had been amongst those that requested to money their investments in early 2019.

“He stated, ‘They had been all long-term bonded,’ and ‘You want an excessive amount of curiosity in dwelling,'” recollects Phillips. “Throughout all these years I’ve paid excessive taxes due to bogus 1099s.”

Bell recalled Lien saying, “Do not take your cash out. Go away me and let it pile up. “

“I wished to take all of it out and take it some other place,” Bell stated. “That is when he began making excuses.

Patricia suffers from a dysfunction that has brought about her to interrupt many bones.

“I requested to withdraw my cash as a result of I attempted to go see my physician,” Patricia stated. “He must lose every little thing to pay again his buyers who’re compelled to reside tougher due to his Ponzi scheme.”

Buddies referring associates are a part of how Ponzi schemes construct their enterprise. Phillips in 2004 adopted a good friend who had managed to money out an funding with Lien, and within the 2010s Bell and Patricia had been added to Phillips’ account as a result of their investments had been too small for Lien to just accept individually.

“I believed it could have

saved me from absolute poverty, ”stated Phillips, who stated she had suffered from a critical autoimmune illness since 1989.“ I provided individuals who wanted cash that I did not have. not performed. I spent greater than I’d have. The home I purchased in 2005 can be in the marketplace quickly. “

Bell thought of Lien a good friend.

“Figuring out now that he knew from the beginning that he was committing fraud, what actually damage me was that he was attempting to be a part of all my property planning and it was all incorrect,” Bell stated. . “I would like the folks of the town to know who he’s and what he has performed.”

Lien defined his plan to repay the $ 10.4 million.

“As quickly as I’m [able] to make a last compensation settlement, I plan to speak privately with every [victim],” he stated.

Lien additionally stated he began a separate enterprise to commerce choices and keep away from futures and commodities, which the federal consent order prohibits.

In line with the Stop and Desist Order of the State Securities Division, Lien is prohibited from accepting cash from any individual and investing at an individual’s request.

“I’ll attempt to increase a small quantity of capital within the type of presents,” Lien stated. “I am not attempting to behave in any capability as an agent. If anybody needs to provide me cash as a present, I’d take it as a present. “

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