The "4Nexchange" Ponzi Scheme
Update:10/12/2004 Joint statement from 4Exchange receiver and Leo Grant. After further investigation it was determined the Grant's investment was $88,000 instead of $8,000. The Grant's profit was then just $120,000.
Update: 4/24/2004 Paul Grant is sentenced to five years in prison and ordered to repay $18.7 million.
Don Storms puts his Hawker/Raytheon 125-1A-731 jet up for sale, just $1,495,000.
Crown - Don & Ruth Storms
Rumors claiming that savvy international businessman - A Quixtar Crown - Don Storms was suspended from Quixtar because he unwitting promoted a failed Ponzi scheme, drove me to search the Federal Court Data base. The PACER search resulted in a link between the Ponzi scam, "4Nexchange" and Donald Storms.
4Nexchange was run by Paul Grant, 35 of Alpine Utah. Paul Grant is the son of Amway/Quixtar Double Diamond, Leo and Amy Grant. All four of Grant's sons were Amway distributors. It is unknown whether Paul was an IBO during the scam. The scheme propagated through the Grant's contacts in the Amway/Quixtar network.
The 4Nexchange business address was Paul's $840,00 home, which was seized by the Receiver-Attorney, Mr. Wing. It is not yet know how many Quixtar distributors lost money in the scam. If you have additional information or a prospectus from 4Nexchange please write.
In the suit, Wing v. Donald Storms, Mr. Wing the receiver-attorney for "4Nexchange LLC", is seeking to recover $1,157,000 in pay-outs to Mr. Storms on his $262,000 investment in 4Nexchange, LLC. The receiver claims Mr. Storms introduced at least 50% of the 140 victims, and 66% of the $17 million brought into the scam. From the Civil Complaint1: 02-CV-127:
"Storms introduced prospective investors to 4Nexchange and one of it's principals, Paul Grant. In doing so, he informed the prospective investors that he had know Mr. Grant and his family for years and that Mr. Grant was trustworthy."
"Storms also encouraged individuals in his Quixtar downline to improve their status in the Quixtar pyramid by offering these individuals the incentive of being eligible to invest in 4Nexchange if the individuals reached "Emerald" level in Quixtar"
Additionally Mr. Storms directed payments from 4Nexchange totaling $1,702,000 to Valley Forge Christian College. The monthly payments to the college varied in proportion to the amounts held by 4Nexchange investors referred by Mr. Storms. The funds were spent on capital improvements. At great hardship, the college has returned the monies to the 4Nexchange receiver. Motion for Vally Forge College
Don Storms was featured in the July 2001 Quixtar IAchieve. Highlighted in the story was his support for a new computer lab, and construction of a library at Valley Forge Christian College and the recently dedicated Storms Research and Communication center. No doubt his support involved paying the college his commissions on the money lost by victims of the scam.
Robert & Susan Covino, Diamond distributors invested $2.357 million in 4Nexchange. They are seeking return of $1,987,000, which was sent in after regulators had frozen the accounts of 4Nexchange. The money was borrowed against their home to invest in 4Nexchange. Return of Covino's funds The Covinos have put their New Jersey mansion on the market.
4Exchange forecasted investment returns from currency futures trading of up to 120% per year.
"Interesting to see Don Storms name at the top of the list. My upline emerald always bragged to us how he was making 10% a month on this investment deal with Storms, apparently involving George Soros." Site Visitor
In theCivil Complaint 02-CV-1069 Wing v. Leo and Amy Grant, Mr. Wing is seeking to recover $214,000 from Leo and Amy Grant. The receiver initially claimed the Grant's invested $8,000. The figure was later determined to be $88,000. The receiver claimed a return on investment of over 27 times, which later turned out to be just 1. times their investment.
This is not the first time investment scheme where downline Amway distributors have lost millions.
Diamond Alan Keranen took 200+ Amway distributors for
$12 million, in 1990.
It is interesting to note that Valley Forge Christian college has returned the unjustly earned funds, whereby Mr. Storms and Leo and Amy Grant are still fighting the return their unjust enrichment from the scam.
4NExchange Principals Accused of Ponzi
Scheme (From the SEC complaint)
Beginning in 1999 the defendants have offered and sold securities in the form of investment contracts to investors. Returns on these investments were to be generated through a currency trading program. Since September 2001, a period analyzed by the Commission, the defendants have sold approximately $17 million in securities to at least 140 investors.
Investors have been promised that they will receive regular monthly returns of between 5 and 10 percent. Investors supposedly have the option of receiving regular payment of returns, reinvestment of the returns into the 4NExchange program, or receive payment of the returns together with a return of a portion of the principal. Investors were told that the identity of the traders was confidential.
Investors receive statements from 4Nexchange. The statements reflect the amount invested, the amount "earned" and the amount paid to the investor. Investors have been receiving the promised returns through the filing of this action. Those payments have been made from funds invested by later investors.
The Defendants are not investing the funds in any legitimate investment security or in any foreign exchange trading program. Instead, Grant and Barrett are diverting the investor funds for other uses, using the invested funds for their personal benefit and using investor funds from later investors to pay earlier investors. Other than a transfer of $200,000 to an account with a registered commodities dealer, there is no evidence of any funds being used for the trading of foreign currencies.
The Defendants have used a substantial portion of the investor funds to repay earlier investors. For the period from September 13, 2001 through April 16, 2002, approximately $8,181,264 was returned to investors in the form of profits from the putative foreign currency trading.
Most of the money went to return
investments plus purported profits to customers who invested early, to cover business
expenses and to pay more than $500,000 to Grant and Bassett, the CFTC said.
I have contacted Quixtar Public Relations twice and both times they would not comment and did not deny the presence of an issue. Quixtar has run a new article on Ponzi Schemes on its website. If you have access to Quixtar use this hyperlink. If not here is the article.
Anyone who was approached about the investment who still has documentation or information regarding 4Nexchange, is asked to write me and give me the details. A good site on financial scams in general is http://www.quatloos.com/. Anyone with recordings about the issue with Quixtar distributor relations or additional details is encouraged to contact me. Supposedly IBOs in the Storm's line can contact Samantha Howell at Quixtar Distributor Relations to get confirmation.
Site visitor feedback about the Ponzi Scheme. Do have other details? Write me
I wish to remain anonymous, but I just can't stay quiet as I read the posts here.
In early 1999, my husband and I were downline from Paul Grant in the Amway business. We were told from our downline that Paul had approached them to invest. They asked us about it and we warned them that Paul was not licensed to sell or solicit investments, especially if they were not personally sponsored by him. We called Samantha Howell and informed her of the situation. We called Leo and Amy Grant and told them of our concerns. No one listened to us because "our pin wasn't big enough". We didn't know what else to do. Amy assured us that her attorneys had checked this out, and that what Paul was doing was legal. We told her that it wasn't right for Paul to go to our downline, that it might cause a problem with credibility for us. She didn't care. We lost the majority of our downline and our business has had to start over again. We believe in the business model that Quixtar has to offer. We changed our line of sponsorship and are trying to move forward. I am saddened by the cultural traditions that allow for fraud. We know it can happen in any climate. Church, family, and business. Any time you trust some one you become vulnerable. I suggest that people not be greedy, not be so blind as to just trust what you want to hear, but be personally responsible and really check things out. I know that Paul and his parents deserve a fair trial, but I also know what we have gone through. Not only did we lose our business but, along the way, in order to gain credibility with his investors, Paul discredited us, the upline of many of his investors. He hurt a lot of people that will never be compensated for his poor choices. I am angry at the way we were just ignored when we tried to raise the voice of warning. Samantha Howell knew of our concerns as soon as March 1999. I am left with the challenge of forgiving and forgetting. That is, of course my problem, but I truly hope that people will just be honest enough and caring enough to not blindly follow people just because they have more money than some one else. Truth is truth. Buyer beware...
I got a spoke with my upline Platinum and he did in fact confirm the Don Storms was essentially out. He explained the Don was involved in bringing people in to a Ponzzi type scheme and among the many ethical issues one was involving non-personal down line in business ventures. My Platinum knows Don well as well as investors who were burned. It appears extremely unlikely Don will resurface. Most down line below silver have no clue as to the scope of this situation.
He did say it was some kind of investment fund in which Don brought people into. He believes Don's point was not to cheat the people, or even that he was pa t of the fund, just to help make good returns for them. The corporation might have warned him about the activity and he for whatever reason continued.
Essentially when the scam fell apart burned investors sued every body involved and he got caught up in the whole mess. The figure that my upline threw out was a scam in significant excess of 17.5 million."
It should also be interesting to see what happens to the company CPI, which ran Don's functions. The company was believed to be run by Lee Storms, Don's son, a onetime pearl distributor. With Don being out downline diamond will no longer informally obligated to use his company which tended to be rather expensive since function, rooms and meals where all made into a package with no exceptions. Essentially, you had to get a hotel room for the Friday and Saturday night to attend the function even if you lived in that city. For example a price above $225+ per person for 4 in a room was common.
My name is John Grant, the youngest of the four Grant boys. I was very upset to read the lies that have been put forth on this site.(a lot of your information is one sided), so I thought that I would tell some of the other side. Where should I begin.........
First, my brother Paul is and always will be my HERO....also my parents are HERO'S to me and to millions through out the world. Most of everyone that my brother Paul brought into 4Nexchange where family and friends who would all stand up for each other, DIE for each other, but never would any of us take turns STABBING EACH OTHER WITH A KNIFE....just to gain wealth...Why would my brother take advantage of his family and friends to gain wealth? The answer is HE WOULDN'T. Money is very low on my family's list of priorities....thanks to my parents making the right choice 30 odd years ago to build the Amway business, we no longer put money above the things that do matter the most...GOD, FAMILY, FRIENDS, TRUST,ETC.
Second, my brother Paul has paid for this mistake more than I could ever go into and tell you because it is a private family matter, lets just say that a Trillion dollars could not get back the things that he has lost. One of many things that he had lost was his honor among the public, which was very hard for him because we (the Grants) have always worked hard and even harder to keep HONOR at home and with the public.
Third, lets put things right about all that has happened, after everything came out to the public and the blaming started, a lot of the investors who had lost all of their life savings, are still close to Paul because they understand his intent was pure and he was trying to help everyone who was willing to invest with him, in fact most of them are waiting until that time in the future when Paul "gets back up on his horse after being bucked off" and are going to invest with and for him, you see Paul is a great man and a great leader, you could only be so lucky to spend time with him.
Fourth, to make attacks against my parents and Don Storms is just ridicules, they have done nothing but sacrifice for everyone who needed them, my parents have been taken for millions and yet they still give and invest with people, not for their own gain but for they are investing in people. this crap that I read about "THE GRANTS WOULDN'T LISTEN TO US BECAUSE OUR PIN WASN'T BIG ENOUGH", I'm sorry but this would be a good place for me to add all of my swearing.......You see my parents/family were in Amway before I was even born, and they care just as much for they "guy" who just got in that night verses their "Diamonds", yes they have a great bond with their "Diamonds" because they have spent a lot of sweat and blood with them, I have seen my mom travel all around the world just to be with the "new guy" because hey needed her help.
It seems John offers us no new insight to what actually transpired with 4Nexchange. From the tone of his letter he actually believes his brother is an innocent pawn in the whole thing. The whole purpose of his letter seems to "edify" his brother rather than present any new facts from the case. I wrote John back to tell us the real story and what the "lies" I had on the page so I could correct them. Let's see if he writes back.