May, 1994 Amagram

Nov. 1989 Amagram

The Associated Press

SALT LAKE CITY -- Mark Gallup heard about the opportunity from an coworker who was running an investment program and handed over $94,500 with his mother from their retirement accounts.

Gallup and his mother were supposed to recover their money, plus a 15-percent quarterly return, from U.S. brokers buying accounts receivables at a discount from Asian latex glove manufacturers.

Trouble was, none of this was true, say Utah authorities who filed 11 securities charges Tuesday against a Bluffdale couple accused of helping run a multi-million-dollar Ponzi scheme.
"I'm surprised my family members got into this," said Gallup"s son, Jeff, a securities lawyer trying to recover the money for his father and 78-year-old grandmother. "It doesn"t make any sense."

Jeff Gallup said he was trying to track down the assets of Gerald Trevor Jones and DeAnn T. Jones, both 41, who now face a felony case as well as a civil action. A court injunction forbids the couple from leaving Utah or disposing of any assets, which includes a "nice" but heavily mortgaged house in suburban Bluffdale, Gallup said.

Mark Gallup, now 60, and Trevor Jones were co-workers at Atlantic Research Corp. of Clearfield, where Jones solicited some of his investors. He got others from friends and fellow Amway distributors, investigators said.

The Joneses and their business, Insurpay, couldn"t be found in phone directories, and their lawyer didn"t return a call Tuesday from The Associated Press.

They took at least $2 million from more than 50 Utah investors, said Christine Keyser, spokeswoman for the Utah Division of Securities, which is looking for more victims. A 16-page affidavit filed Tuesday by a securities investigator said the Joneses fleeced one of their neighbors for $150,000.

Doing business as TD&K Associates and then as Insurpay, the Joneses acted as agents for J.T. Wallenbrock & Associates, a Pasadena, Calif., company shut down by the U.S. Securities and Exchange Commission.

KSL Utah

At least 21 people are victims of an alleged ponzi scheme that scammed investors out of two million dollars. A Bluffdale couple is accused of heading up the scheme that promised a big return on their investment, but never came through. News Specialist Karen Scullin joins us now to explain.

 A spokesperson with the department of Commerce says ponzi schemes lure victims in that all have something in common, often it's a group that belongs to the same church, but in this case, the victims all sold Amway products, although Amway is in no way connected to the alleged fraud.

Individually, the victims lost anywhere from $2000 to $150,000, but all together they lost two million dollars. The suspects are Bluffdale residents Gerald and Deann Jones. Law enforcement officers say the couple was running a Utah division of a bigger ponzi scheme out of California.

It worked like this: the couple told investors their money would be sent to a California Company that needed the cash to buy accounts from an Asian glove manufacturer. Promisory notes were issued promising a return of principal plus fifteen percent. Actually is was all a front for a ponzi scheme, where the scammers pay off old investors with new investor money. Officials want to get the word out that these scams are becoming more and more common.

Some of the charges the Jones' are facing include seven counts of second degree securities fraud and one count of a third degree securities fraud. Each count holds a possibility of significant prison time. Now officials do believe there are more victims, if you think you may have been hit, call the department of commerce at 530-6600. Police say evidence shows the couple were using at least part of the invested funds for personal expenses.

Date:Wednesday, August 20 @ 00:00:30 MDT

Topic:Business

The URL for this story is:
http://www.harktheherald.com//article.php?sid=92698

Grace Leong

The state Division of Securities and the Utah Attorney General's Office on Tuesday filed 11 felony charges against a Bluffdale couple, alleging they violated federal securities laws when they ran a Ponzi scheme that allegedly scammed more than 50 investors inUtah of more than $1.7 million.

Of the more than 50 investors located so far, 14 are in Utah County. Christine Keyser, spokeswoman for the state Department of Commerce, said the state couldn't specify the amount of damages sustained by the 14 Utah County investors.

"There could be more than 50 investors in Utah. So far we've found more than $2 million in investments were made. Some of the investors got about $300,000 back," she said. But the remaining $1.7 million is still unrecovered.

The defendants, Gerald Trevor Jones and his wife, DeAnn, were allegedly operating as unlicensed securities brokers under two bogus entities called TD&K Associates LLC and Insurpay LLC. The two entities have no assets, employees or operations in Utah County.

The Joneses are accused of promoting investments in J. T. Wallenbrock & Associates, a Pasadena company that had its assets frozen January following an investigation by the Securities and Exchange Commission that found

Wallenbrock was running a large Ponzi scheme that raised more than $230 million since 1999. The SEC investigation found that more than $100 million was allegedly used to pay other investors and at least $130 million was transferred to a sister company, Citadel Capital Management Group, to invest in high-risk, start-up businesses.

The Joneses were charged Tuesday in 3rd District Court in Utah with seven counts of second-degree securities fraud, one count of third-degree securities fraud, one count of third-degree sales by an unlicensed investment advisor, one count of third-degree sales of an unregistered security and one count of engaging in a pattern of unlawful activity.

In Tuesday's complaint, the state said the investments in Wallenbrock were allegedly being promoted as a "Glove Lending Program" by the defendants. Individuals solicited by the Joneses included the defendants' coworkers, neighbors, acquaintances and "what appeared to be fellow Amway distributors," the state alleged.

The defendants said the invested funds were being sent to a California company -- which they allegedly didn't identify to investors -- that bought the accounts receivables of Asian latex glove makers for a discount. The defendants said the accounts receivables were bought at 70 percent or 80 percent of the balance due. The company then collected the full purchase price of the gloves from the glove makers. That enabled the company to pay individuals who loaned them money a 15 percent return in three months.

At the end of the three-month period, investors had the option to roll all or part of the principal and interest intoa new promissory note.

Shortly after the SEC obtained an injunction against Wallenbrock and froze its assets, the defendants allegedly described the SEC action as an "audit" and that their funds would be released when the "audit" was completed.

The defendants also were accused of using investment funds from new investors for their personal expenses and to pay the promissory notes of previous investors.

Separately, four Riverton investors -- Mark, Paul and Sharon Gallup and their mother, Virginia Banks, who had participated in the defendants' alleged investment program -- filed a lawsuit in May against the defendants in federal court in Salt Lake City.

Similar securities fraud violations were made in this lawsuit.

Jeffrey Gallup, the plaintiffs' attorney, said his clients, who also were his relatives, obtained a court order on May 6 that prohibited the defendants from leaving the state and dissipating assets. The case is scheduled to go to trial in January.

"Wallenbrock was shut down in February by the SEC and is now operating as Village Capital Trust Ltd. In Belize," he said. "At a court hearing in May, a witness who invested in the program said Jones told him he was being compensated by Wallenbrock."

The defendants and their attorney could not be reached for comment on the allegations.