Three Charged with Operating Fraudulent Ponzi Scheme Targeting Cambodians, Reports U.S. Attorney

17 November 2005

Arrests were executed yesterday on a Criminal complaint charging three individuals with mail fraud in connection with a Ponzi scheme that at this time is estimated to have bilked hundreds of investors, mostly from the Cambodian community, of a total of at least $5 million. United States Attorney Michael J. Sullivan; Kenneth W. Kaiser, Special Agent in Charge of the Federal Bureau of Investigation in New England; and Rebecca A. Sparkman, Special Agent in Charge of the U.S. Internal Revenue Service, Criminal Investigation, announced that JAMES BUNCHAN, age 50, formerly of Attleboro, now living in North Miami, Florida and CHRISTIAN ROCHON, age 54, of 50 Maynard Street, Attleboro, Massachusetts, were arrested yesterday on a criminal Complaint charging them with mail fraud. A third defendant named in the criminal Complaint, SENG TAN, remains at large. According to an affidavit filed in support of the Complaint, TAN, ROCHON, and BUNCHAN are principals of WMDS, Inc., a/k/a World Marketing Direct Selling Inc., and an affiliated company, OneUniverseOnline Inc., also known as 1UOL with offices based in Canton, Attleboro, and Boston. It is alleged that TAN, ROCHON and BUNCHAN have been operating an illegal "pyramid scheme" through these companies in which investors are lured into making investments with a promise of a return on their investment. It is alleged that in reality their "returns" have simply been payments of their own principal and the principal of later investors brought into the program. Victims of the fraudulent scheme appear to be largely from the Cambodian community. Based on the investigation thus far, it is believed that the fraud scheme involves hundreds of victim investors who were defrauded of a total in excess of $5 million. According to the Complaint, WMDS and 1UOL purport to be in the business of selling healthcare and dietary products through a multi-level marketing program. It is alleged that the real business of WMDS and 1UOL, however, has been and continues to be the creation of a pyramid scheme that markets investments by offering unrealistic rates of return, has taken in millions of dollars from investors, and has misappropriated investor funds. According to the Complaint, the defendants, primarily through TAN and BUNCHAN, solicited investments in WMDS and 1UOL in unit amounts of approximately $26,000. In return for such an investment, WMDS promised investors that it would make an initial lump sum payment to them of, for example, approximately $2,400, and thereafter would pay the investor $300 per month for life, a monthly payment that would then purportedly pass on to the investors' children. While the WMDS and 1UOL websites refer to multi-level direct marketing operations, the investments solicited by WMDS did not require participation in the marketing operation by prospective investors. Rather, it is alleged that the monies solicited were characterized as, and at least for some periods, acted as "investments" or investment contracts. According to the Complaint, for a limited time WMDS and 1UOL made the promised payments, both to lull investors into thinking that the investment contracts they had entered into were legitimate and to entice them unwittingly to recruit additional investors into the fraudulent scheme. Investors who marketed on behalf of WMDS and 1UOL and brought in new investors were promised additional investment income by virtue of profits realized by the investors they recruited. Ultimately, it is alleged that WMDS and 1UOL ceased making the promised payments to investors. According to the Complaint, WMDS and 1UOL first claimed that technical difficulties prevented them from making the promised payments, then they based the cessation of payments on claims that the investors were not complying with the terms of the investment contracts, thereby completing the misappropriation of the investors' monies. ROCHON, who was arrested yesterday in Attleboro appeared before U.S. Magistrate Judge Robert B. Collings and remains in custody pending a detention hearing today. BUNCHAN, was arrested yesterday in Miami. He also remains in federal custody pending a detention hearing in Florida. If convicted, the defendants each face up to 20 years' imprisonment, to be followed by 3 years of supervised release, and a $250,000 fine or twice the gross gain to the defendants or gross loss to the victims. The investigation is ongoing. The case is being investigated by the Federal Bureau of Investigation in Massachusetts and Rhode Island, as well as the U.S. Internal Revenue Service, Criminal Investigation in Rhode Island. The U.S. Attorney would like to thank the Securities Exchange Commission Boston District Office for its assistance in this investigation. It is being prosecuted by Assistant U.S. Attorney Jack W. Pirozzolo in Sullivan's Economic Crimes Unit.

Source: PR Newswire

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