U.S. Department of Justice

United States Attorney
Northern District of California

Tuesday, February 28, 2012

Two Indicted in San Francisco in $129 Million Ponzi Scheme Case

San Francisco – A federal grand jury in San Francisco returned a 23-count indictment charging William Wise, formerly of Raleigh, N.C., and Jacquline Hoegel, of American Canyon, Calif., with conspiracy, mail fraud and wire fraud on Feb. 21, 2012, U.S. Attorney Melinda Haag announced.   In addition to those charges, Wise was also charged with money laundering, and Hoegel was charged with four counts of making and subscribing a false tax return, one count of obstruction and one count of false statements.   These charges stem from Wise’s and Hoegel’s operation of a massive Ponzi scheme by which they marketed and sold fraudulent certificates of deposit (CDs) to more than 1,200 individuals who invested over $129.5 million to purchase the CDs.   As of March 2009, when the Securities and Exchange Commission (SEC) shut down the scheme, CD purchasers had lost more than $75 million in the scheme.  

 

According to the indictment, Wise, 62, and Hoegel, 55, are alleged to have operated a long-running scheme to sell CDs issued by three entities – Millennium Bank, United Trust of Switzerland and Sterling Bank and Trust.   Millennium Bank was a bank licensed in St. Vincent and the Grenadines, and was represented to be a wholly-owned subsidiary of United Trust of Switzerland, which was purportedly a private financial services company in Switzerland.   CD purchasers were told that Sterling Bank and Trust was an international private bank managed and administered in Switzerland.   Millennium Bank, United Trust of Switzerland and Sterling Bank and Trust were all controlled by Wise, with Hoegel as his second-in-command.   Hoegel ran the Napa, Calif., office where most CD purchasers sent their funds and from which the CDs were administered.     

 

The CDs issued by Millennium Bank, United Trust of Switzerland and Sterling Bank and Trust all promised CD purchasers guaranteed rates of return – sometimes over 16 percent – that were allegedly based on overseas investments.   In fact, CD purchasers’ funds were not used for overseas investments that generated the promised returns; the funds were instead used to enrich Wise and Hoegel and to make interest payments to earlier CD purchasers.  

 

The indictment was unsealed today, after the arrest and initial appearance of Hoegel before Magistrate Judge Carolyn Delaney in Sacramento, Calif.   She was released on bond.   Hoegel’s next appearance will be on March 6, 2012, before the Honorable Elizabeth D. Laporte.   Wise, a Canadian citizen, is believed to be in Canada, and a warrant for his arrest has been issued.  

 

These criminal charges follow a civil suit filed by the SEC in U.S. District Court in Texas.  

 

The maximum penalty for each count of conspiracy, mail fraud and wire fraud is 30 years in prison, a fine of $1 million and restitution.   The maximum penalty for money laundering is 10 years in prison, a fine of $250,000 and restitution.   The maximum penalty for each count of obstruction and making a false statement is five years and a fine of $250,000.   The maximum penalty for each count of making and subscribing a false tax return is three years in prison, a fine of $100,000 and restitution.   However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence.

 

The prosecution is the result of a lengthy investigation by the Internal Revenue Service-Criminal Investigations and FBI and is the result of a joint investigation by the U.S. Attorney’s Office for the Northern District of California and the U.S. Attorney’s Office for the Eastern District of North Carolina.   In San Francisco, Tracie L. Brown and Adam A. Reeves are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Rayneisha Booth and Beth Margen.   In Raleigh, Evan Rikhye is the Assistant U.S. Attorney who is prosecuting the case.

 

This prosecution is also part of President Barack Obama's Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.   The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov .

 

Please note, an indictment contains only allegations against an individual and, as with all defendants,  Wise and Hoegel must be presumed innocent unless and until proven guilty.

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Financial Fraud encompasses a wide range of illegal behavior - from mortgage scams to Ponzi schemes, credit card theft to tax fraud. Everyone is affected by financial fraud.