Oregon Ponzi Scheme Cases: Who Was Really Paying the Interest?

Oregon Ponzi scheme cases involving Capital Consultants, Foresee and Berjac show how money entrusted for investments can end up paying other clients or the people running the business. The accounts concern pension-plan investments, real estate notes and insurance premium financing. If you handled the loans, transfers or investor statements, you may recognize the difference between the business described to investors and the account that actually funded a payment.

This page follows those Oregon businesses and operators, with a Portland hedge-fund case as a comparison. Our broader explanation of how a Ponzi scheme works follows the payment mechanism across investments. Here, the business details matter: whose loan was supposed to earn interest, what the notes promised and where money intended for insurance financing went.

Capital Consultants and the Loan Other Clients Kept Paying

The SEC alleged that Capital Consultants used client money to pay interest to other clients invested in its $160 million loan to Wilshire Credit Corp. Capital Consultants was a registered investment adviser in Portland. The SEC’s account of its complaint described an undisclosed Ponzi-like scheme built around that loan.

Clients with money in the loan received payments funded by other clients’ money, according to the SEC. For someone working with the accounts, the useful comparison is between receipts from the borrower and transfers used to satisfy the interest obligation. The recipient’s statement shows the credit; the source account explains who supplied it.

The same SEC release reports that the adviser’s former principal admitted in his guilty plea to defrauding clients between 1994 and 2000. Those clients were mostly union pension and benefit plans.

The federal court in Oregon entered permanent injunctions against Capital Consultants and its principals on April 30, 2001. For an insider who knows the pension or benefit-plan accounts, the transaction trail remains the revealing part: a loan described as earning interest, client money moving between investments and the explanation given to the people whose savings supplied it. In the SEC’s account, we see a loan living off the clients it was supposed to pay.

Foresee and Commission PDX Promised Quick Real Estate Returns

The SEC alleged that Oregon operators behind Foresee and The Commission PDX sold more than $10 million in promissory notes while relying on new investors to pay earlier ones. The agency’s announcement of the complaint identifies The Policy PDX and Innings 150 as additional companies the operators used. The alleged conduct ran from at least January 2018 through September 2022.

The investment story was real estate. Retail investors, including retirees, were offered interest rates between nine and 15 percent, with interest and all principal to be returned within a few months. The complaint alleged that the operators could not make the promised payments within those periods and instead relied on new investor money.

That short payment promise gives someone inside the business a concrete comparison. The notes describe when investors should receive their money; the property transactions and bank records show what cash the business actually generated. In this alleged promissory note fraud, the source of the repayment matters as much as whether the repayment arrived.

The SEC also alleged that investor money went to unauthorized personal expenses, including casino trips, a whiskey club membership and cryotherapy. In the SEC’s account, the property pitch funded a whiskey club too.

On July 11, 2023, the federal court in Oregon entered final judgments that the operators and companies had agreed to. Each operator was ordered to pay a $200,000 civil penalty.

Berjac Diverted Money Intended for Insurance Premium Loans

Berjac’s criminal case concerned investment money solicited to finance small businesses’ insurance premiums and diverted into speculative real estate and personal spending. The Justice Department’s account of court documents in the criminal case places the insurance premium financing business in Eugene and Portland. It describes the managing partners soliciting the investments between 2008 and 2012.

The promised returns were five to seven percent. Investors were told their money would finance loans so small businesses could pay their insurance premiums. The court documents described by the Justice Department instead showed the managing partners using clients’ money for speculative real estate projects, their lifestyles and other personal financial obligations, while concealing the diversion and poor investment performance.

An investment sold to fund an insurance premium loan should connect to a borrower and the financing described to the investor. A transfer into a speculative property project has a different destination. The loan files, payment instructions and accounting entries can explain the difference between the promised use and the actual one.

The criminal case reached the people managing daily operations as well as the managing partners. Office managers ran the Eugene and Portland businesses, which collapsed in August 2012. The Justice Department said the scheme affected more than 400 investors and reported guilty pleas by the managing partners and office managers. The FBI and IRS Criminal Investigation investigated the case.

An employee who handled daily transactions may know both what investors were told and how the payments were entered in the books. In Berjac, that business knowledge concerns the gap between insurance financing and the other uses described in the criminal case.

Grifphon’s Bookkeepers Were Given an Offshore-Bond Explanation

The SEC’s case involving Grifphon Asset Management and Grifphon Holdings concerns a Portland hedge-fund business that allegedly raised over $37 million from more than 100 investors. In its announcement of the complaint, the SEC alleged that the investment adviser told bookkeepers that transfers represented purchases of offshore bonds. The agency described the purported investment as a sham.

For one fund, the SEC alleged that 70 percent of the money raised went to redemptions for investors in other funds, payments to finders or accounts controlled by the operator. The books could show an investment purchase while money went to those other destinations. Someone who processed those transfers may know the instruction, the destination and the explanation entered afterward.

The complaint also alleged false marketing materials, bogus account statements and claims that assets sat at reputable financial institutions. Investors were told independent buyers would purchase the funds’ assets at a premium. According to the SEC, those buyers were sham entities formed by Grifphon and its operator, without assets, income or the ability to pay.

The SEC’s later announcement records final judgments against the operator and the Grifphon companies on September 11, 2013. The comparison for someone who knows the funds is between the investment description, the assets actually held and the ownership of the supposed buyer. A bookkeeper who remembers the instruction behind an offshore-bond entry can explain something the investor statement leaves out.

The Records Behind the Oregon Investment Story

The securities fraud evidence connects the promise, the business receipts and the investor payment. Offering documents and notes describe what the money was supposed to fund. Bank records and accounting entries show where it went, while custody confirmations and investor statements let someone inside the business compare reported holdings with assets held elsewhere.

A broader occupational-fraud study found whistleblowing was the most common detection method in its sample. The Significance of Whistleblowing as an Anti-Fraud Measure, published in the Journal of Forensic & Investigative Accounting in 2018, reported that whistleblowers detected 35.9% of cases with complete data, compared with 21.4% for internal controls. The finding gives weight to the person who can explain a transaction, especially when the accounting description itself helped conceal the use of money.

What Can an Oregon Ponzi Scheme Whistleblower Earn?

Eligible SEC whistleblower awards range from 10% to 30% of qualifying sanctions collected in an action exceeding $1 million in monetary sanctions. If your information also concerns false claims for government money, we assess that conduct separately. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know What the Transfer Was For

If you handled an Oregon investment business’s loans, books or investor payments and recognize this gap, speak to our whistleblower experts about where the money really went. We work beside you throughout the process and bring in securities fraud whistleblower lawyers who understand the investment and its records. Together, we turn your knowledge of the payments and the decisions behind them into your strongest securities fraud whistleblower case.