CHICAGO (CBS) — A Geneva salesman has been charged with defrauding investors in four Las Vegas companies out of more than $5 million in a Ponzi scheme.
Roderick Rieman, 66, of Geneva, was owner and operator of the Innovative Financial Services investment firm in St. Charles. He also represented himself as a director of three companies that claimed to deal in interactive kiosks, prepaid debit cards, and restaurant reservation software, according to the U.S. Attorney’s office.
Michael Crook, 52, of Los Angeles, was president of the three Las Vegas companies – Z Touch Systems Inc., Global Payment Solutions Inc., and Bluko Information Inc., according to the U.S. Attorney’s office.
Between 2004 and 2007, prosecutors say, Crook and Rieman persuaded investors to give them more than $5 million by vastly overstating the returns that were possible, and misrepresenting other information about the companies. They were, in fact, running what prosecutors call a “Ponzi-type” scheme.
Prosecutors say among Crook and Rieman’s schemes was to sell investments on interactive kiosks called on-demand interactive environments, or “ODIEs,” which they said were made and sold by Z Touch. They promised investors an annual return of 18 percent in monthly payments, repayment of the principal in 36 months, and a security interest in a particular ODIE for each investor, prosecutors said.
But in reality, only a few ODIEs were ever built, none were ever placed in businesses or public places, and the company made no money. As a result, more than 100 investors lost their entire investments, except for Ponzi payments they received as a result of the scheme, prosecutors said.
Crook and Rieman are both charged with 10 counts of mail fraud, and each count could result in 20 years in prison and a $250,000 fine upon conviction.