Lakewood's Weare used Net to launch $9 million scheme
By John Accola, Rocky Mountain News
August 4, 2005
A former Lakewood minister who used the Internet to
launch a $9 million Ponzi scheme was sentenced to three years in
federal prison Wednesday.
U.S. District Court Judge Edward Nottingham's sentence amounted to
less than half the jail time that government prosecutors had sought for
Kenneth Roy Weare, 58.
But Nottingham said Weare, who pleaded guilty to mail fraud and theft in April 2004, was in such ill health that he qualified for a "downward departure" in federal sentencing guidelines.
Nottingham said he was "appalled" by the medical care Weare has received from the Bureau of Prisons during his 2 1/2 years at the Federal Correctional Institution in Jefferson County.
"One wonders when (the Bureau of Prisons) is going to get it right. . . . They are going (to) kill him," the judge said.
The chief of cardiology at Denver Health Medical Center testified last week that Weare had been misdiagnosed with the wrong type of congestive heart disease and was receiving medication that could be fatal.
Weare's public defender, Virginia Grady, said her client remains under the same medication, despite the independent diagnosis. She argued for no jail time, saying that sending Weare, also a diabetic, back to a federal prison for any length of time could be his "death sentence."
But Denver's Acting U.S. Attorney Thomas O'Rourke argued Weare was far from bedridden. He portrayed Weare as someone trying to milk the system, a noncompliant patient who had recently been spotted eating candy bars, drinking Pepsi and smoking.
Although it's now the Bureau of Prison's call, Grady said Weare likely will be given credit for nine months' jail time he has already served since another federal judge lifted a contempt-of-court order in November 2004.
When indicted in 2003, Weare was already in the custody of the U.S. Marshals Service for contempt charges stemming from nonpayment of a $6.8 million judgment in a civil lawsuit brought by the Securities and Exchange Commission.
Prosecutors said Weare bilked thousands of investors by offering them $375 memberships in a bogus "offshore rent/mortgage free" program that promised total return of their initial investment within six months. From November 1999 to December 2000, Weare collected more than $8 million in membership fees, routing wire transfers, checks and money orders to bank accounts in the U.S., Canada and Europe.
Although victims received $2.5 million as "interest payments" and $3 million remains in a frozen account in Luxembourg, Nottingham ruled the net loss for sentencing purposes was $6.6 million. The government has received loss claims of more than $1 million from 645 investors, a fraction of Weare's alleged victims.
Weare apologized to the court.
"It never ever crossed my mind that what has happened in my life would occur," he said. "Had I known, I would have never done what I did."
JEFFCO MAN INDICTED IN $8M
INVESTMENT
SCAM
Date: Wednesday, March 26, 2003
Source: By John Accola
ROCKY
MOUNTAIN NEWS
A Jefferson County man
accused
of bilking 23,000 investors with an $8
million investment scheme was
indicted by a Denver grand jury Tuesday.
At the time of his indictment,
Kenneth Roy Weare, 56, was already in the
custody of the U.S. Marshals
Service for contempt of court charges stemming
from a civil lawsuit brought
by the Securities and Exchange Commission.
According to Tuesday's
indictment,
Weare snared victims across the country
by offering them memberships
in an ``offshore rent/mortgage-free program''
through a Lakewood company
called
J&K Global Marketing Co.
For an annual membership fee
of $375, Weare promised investors a total
return of their initial
investment
within six months. Investors who then
enlisted three other investors
to buy into the program were promised monthly
returns as high as 1,200
percent,
according to the indictment.
From November 1999 to
December
2000, Weare collected $8 million in
membership fees by means of
wire transfers, checks and money orders to bank
accounts in the U.S., Canada,
Luxembourg and the West Indies, authorities said.
Some of the money was used
to
pay back investors. But U.S. Attorney John
Suthers said Weare pocketed
the remainder for himself or funneled it to
unnamed associates.
If convicted, Weare faces
up
to five years in prison and a $250,000 fine for
each of nine counts of wire
fraud and two counts of mail fraud. In addition,
the indictment charges him
with
multiple counts of property fraud that carry
a maximum 10-year prison
sentence
if convicted.
Last October, U.S. District
Judge
John Kane issued a contempt order against
Weare after he failed to
appear
for a court hearing involving payment of a
$6.8 million default judgment
in January 2002. The SEC said it tracked $3.8
million of investor funds to
offshore bank accounts set up by Weare and
companies he headed.
But without Weare's
cooperation,
SEC trial attorney Leslie Hughes said there
was no guarantee the frozen
assets would be returned to investors.
``Anytime you are trying to
enforce a judgment from the U.S. in another
country, there are issues of
whether or not the court in the foreign
jurisdiction will recognize
the judgment,'' Hughes said.
In the civil case, the
court
found Weare, J&K and another company he
operated - AAA-Auction.com -
had engaged in securities fraud by making false
representations to investors.
Weare, a one-time minister
convicted
of charity fraud in 1994, had been a
consistent no-show in court
hearings stemming from the SEC case, which began
with an April 2001 restraining
order against J&K.
*************************************
Bilking suspect might be jailed
But Jeffco man may have fled country with
investors' cash
By John Accola, Rocky
Mountain News
October 30, 2002
A federal judge has given a Jefferson County man accused of bilking thousands of investors across the country until Friday to return more than $6.2 million or be jailed on contempt charges.
U.S. District Judge John Kane issued a contempt order Tuesday against Kenneth Roy Weare, 55, after Weare failed to appear for a scheduled court hearing.
The Securities and Exchange Commission, which won a $6.8 million default judgment against Weare in January, has tracked $3.8 million of suspected investor funds to offshore bank accounts set up by Weare and several companies he headed.
But without Weare's cooperation, SEC trial attorney Leslie Hughes said there's no guarantee the now-frozen assets will be returned to investors anytime soon.
"Anytime you are trying to enforce a judgment from the U.S. in another country, there are issues of whether or not the court in the foreign jurisdiction will recognize the judgment," Hughes said.
Weare's whereabouts remained a mystery Tuesday, and the SEC is not ruling out the possibility that he has fled the country.
According to court documents, Weare's last known address was at a modest rented home on South Gray Street in Edgewater.
But Weare, who was convicted of charity fraud in 1994, has been a consistent no-show in court hearings stemming from the SEC litigation, which began with an April 2001 emergency restraining order against his J&K Global Marketing Corp.
That's when the SEC first alleged that Weare, sometimes using the alias Roy Weaver, had raised at least $6.4 million over a two-year period from more than 10,000 investors nationwide over J&K Global's Web site.
The SEC lawsuit said Weare's "high-yield ventures" program, which touted annual return rates of 600 percent starting with an initial investment of $375, was a Ponzi scheme that used money from new investor funds to make payments to prior investors.
At the same time, Weare was skimming much of the money for himself to pay for personal expenses and to set up overseas accounts, the SEC said.
Hughes said Weare stashed $1.8 million in a bank in Grenada and another $2 million in various accounts in Luxembourg.
In its motion seeking a civil contempt order, the SEC noted Weare has failed to pay the $6.8 million judgment or provide an accounting of his finances as ordered by the court.
Hughes said the SEC was able to prove Weare knew about the judgment from letters he posted to former clients over the Internet.
In what Hughes calls a "flaunting disrespect" to Kane's award ruling in January, Weare has hired an overseas attorney and filed suit in Grenada to regain control of the $1.8 million account.
Should Weare not be able to make good on the judgment by Friday - or provide a reasonable explanation for nonpayment - Kane threatened Tuesday to jail him indeefinitely.
"On a civil contempt order, the defendant really holds the keys to the jail door," Hughes said. "He stays behind bars until he complies with the court orders."
Hughes said the SEC doesn't routinely seek the jailing of defendants in civil lawsuits. Weare, however, is a notable exception, she said.
"People borrowed from their credit cards to
invest in this," Hughes said. "Why shouldn't he be held responsible for
that?"
*****
www.dailycamera.com
Colorado scene
October 31, 2002
DENVER
Man gets ultimatum in Ponzi-scheme case
A Jefferson County man accused of bilking investors of at least $6.2 million has until Friday to return the money or be jailed on contempt-of-court charges, a federal judge has ordered.
U.S. District Judge John Kane issued the contempt order Tuesday against Kenneth Roy Weare, 55. The order stems from a $6.8 million default judgment the Securities and Exchange Commission won against Weare in January and a previous court hearing he didn't attend.
The SEC, which sued Weare in 2001, doesn't know his whereabouts. His last known address was in Edgewater, according to court records.
Weare, who also uses the name Roy Weaver, raised at least $6.2 million over two years from more than 10,000 investors nationwide through J&K Global Marketing Corp. The SEC's lawsuit claimed Weare's business, which boasted annual return rates of 600 percent from a $375 membership fee, was a Ponzi scheme using new investments to pay earlier investors
The agency has tracked $3.8 million believed to be investors' funds to offshore bank accounts, officials said. But without Weare's cooperation, SEC lawyer Leslie Hughes said there's no guarantee the frozen assets will be returned to investors soon because of questions about jurisdiction.
*****