First Nationle and Percipience Investment Operation Ponzi Scheme: New Company Names, the Same Investor Money

First Nationle and Percipience belonged to an investment operation that obtained at least $115.5 million through a Ponzi scheme, according to the Justice Department’s account of an operator’s criminal guilty plea. The case connected several investment issuers, purchased adviser businesses and hundreds of bank accounts under common control, with incoming money paying earlier investors. If you handled the checks, investor statements or sales conversations, those connections may be more revealing than any single company’s balance sheet.

This case follows the First Nationle and Percipience offerings from the sales pitch to the accounts that funded payments. Our broader pages explain how Ponzi schemes use new investor money and compare investment adviser and fund operations across other cases.

Several Issuers, One Source of Money

First Nationle Solutions and Percipience Global Corporation were among the issuers offering principally unsecured promissory notes and preferred stock, according to the Justice Department’s account of an operator’s August 2021 guilty plea. The same operators controlled the issuers, which lacked substantial genuine business operations. Any minor legitimate activities failed to produce enough income to pay investors their promised returns. We see a portfolio whose issuers all needed the next investor’s money. The variety was in the company names.

The Justice Department’s October 2019 account of the other operator’s guilty plea reported at least $46 million raised through the First Nationle offering since February 2012 and $22 million through Percipience since July 2012. Investors were told their money would fund each issuer’s purported business. The department described the purpose of the apparent variety:

Buying Adviser Businesses Bought Access to Investors

The Justice Department’s October 2019 guilty-plea account describes the operators purchasing established investment adviser and broker businesses from professionals who wanted to leave the business. They used prior investors’ money to buy at least 15 such businesses between approximately 2008 and September 2017.

The expansion followed losses the operators concealed. According to that account, the partners had formed Lucian Development in Rochester and solicited investments for City Capital Corporation. After learning in July 2007 that their investors’ money was gone, they acquired City Capital’s assets and debts, with debts far exceeding asset values. They continued soliciting new money without telling investors what had happened to the old money.

The Justice Department’s account of the Pennsylvania guilty plea makes the sales transition concrete. The operator and his associates solicited customers from acquired books of business to withdraw money from traditional investments, including annuities, and reinvest in their controlled issuers. Sometimes they did so without disclosing that common control. Offering documents, company websites and personal pitches supplied the false story that the money would fund legitimate businesses.

Customers were being asked to move savings out of annuities into issuers whose businesses could not fund their promised returns. The customer relationship became the route into securities sold by the operators themselves. For someone who worked through an acquisition, the old holdings, new recommendation and issuer ownership connect the familiar adviser relationship to what investors were actually sold.

The New York plea account places the headquarters and most administrative and banking work in Rochester, with satellite offices and traveling salespeople around the country. The Pennsylvania account describes an investment business in Scotrun, Monroe County, using names including Advice and Life Group and Poconos Investments.

Investor Payments Kept the Sales Story Alive

Incoming investor money paid promised interest and other payments to earlier investors, according to the Justice Department’s October 2019 guilty-plea account. Most of the remaining money funded the operators’ lifestyles, more adviser-business purchases and the expenses of keeping the operation running. Those expenses included sales and administrative salaries, office rent, employee housing and loan interest.

That account says very little went into productive investments, and those investments generated meager income, lost money or failed. Meanwhile, the Pennsylvania plea account describes statements falsely showing invested funds, investment returns and, in some cases, bonuses. Some investors received actual payments or redemptions, but those payments came from new investor money. The statement and the check could reinforce the same false story.

The banking arrangement helped hide that source. The New York plea account describes hundreds of business accounts under different names, with incoming money routinely passing through several accounts before it was spent. The operators directed deposits, withdrawals, checks and transfers. Movement between company accounts obscured both the payments to earlier investors and the money going to the operators.

An offering raises money for an issuer, and the promised use of that money can be compared with its bank destination. The same comparison works at the other end: the source of a distribution can be compared with what investors were told it represented. In this operation, transaction records and investor communications meet at those two points. A person handling transfers may know which account supplied the money that a salesperson described as a return.

When Payments Stopped, New Notes Replaced Old Promises

The Justice Department’s April 2021 account of an employee’s criminal guilty plea describes how false reassurances prolonged the scheme. The employee initially handled transaction paperwork, checks and wire transfers, then took on investor meetings and some sales after gaining experience and a securities license. By January 2017, he recognized the Ponzi scheme after promised payments stopped for clients he serviced.

According to that plea account, he nevertheless continued telling investors their money was safe and encouraged them to sign new promissory notes. In May 2018, he told a First Nationle investor that the money was safe in an account, knowing that was untrue, and tried to persuade the investor to roll principal and accrued interest into another note. He also reassured a couple holding United RL and Percipience notes that they would be fully repaid, despite knowing the notes were fraudulent.

That account connects the payment failure, the employee’s knowledge and the next sales conversation. For someone who heard the assurances or handled the replacement notes, the relevant evidence includes what the employee knew when the promise was renewed. The paperwork kept offering another beginning.

Money Returned While Principal Remained Unpaid

The Justice Department’s August 2021 plea account puts the fundraising period between January 2012 and June 19, 2018, involving approximately 1,000 investors. It says the operation had returned approximately $44.8 million to investors as part of the scheme by its collapse, while approximately $70.7 million in principal remained owed.

For an insider, the investor ledger and the bank account answer different parts of this story. The ledger records the investment and the payment attributed to it, while the bank trail identifies where the payment came from. A return shown on a statement could be another investor’s contribution moving through the accounts.

Common Control Behind Apparently Separate Investments

The same ownership question appears in the SEC’s Woodbridge allegations. Investors were told that returns came from loans to independent borrowers, but the SEC alleged that most borrowers were controlled by the operation’s owner and lacked the income to make the payments. New investor money funded earlier investors instead. A later civil judgment required Woodbridge to surrender proceeds.

In the First Nationle and Percipience plea accounts, the supposed variety lay in the issuers offered to investors. In the Woodbridge allegations, it lay in the purportedly independent borrowers. Both accounts make ownership records and actual business receipts relevant to the investment story a salesperson tells.

The View From Inside the Payment Chain

A study in the Journal of Forensic & Investigative Accounting, The Significance of Whistleblowing as an Anti-Fraud Measure, found that frauds involving more perpetrators were more likely to be detected through whistleblowing. The 2018 study analyzed occupational-fraud survey data from the Association of Certified Fraud Examiners.

The First Nationle and Percipience accounts show why the view from different jobs matters. A sales employee could hear the promised use of funds, an administrator could prepare a replacement note, and someone handling accounts could see the incoming money behind an outgoing payment. We connect those views with the underlying transactions so the investment story can be tested against the money.

How Much Do SEC Whistleblowers Get Paid?

An SEC whistleblower award can pay eligible whistleblowers 10% to 30% of qualifying collected sanctions when the SEC action exceeds $1 million in monetary sanctions. The SEC’s whistleblower rules reward information that contributes to successful enforcement. We build on what you know and bring in securities fraud whistleblower lawyers with the specific expertise your case needs.

Where evidence concerns false claims for government money, a whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Which program fits your information is a question we work through with you.

You Know What the Investor Was Told

If you saw replacement notes, false reassurances or payments funded by the next customer’s deposit, speak to one of our Whistleblower Experts about what you saw. We use your knowledge to build your strongest securities fraud whistleblower case, bring in securities fraud whistleblower lawyers who understand investment offerings and money flows, and stay beside you throughout the case.