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Illinois Suspends Agent for Alleged $20 Million ‘Ponzi-like’ Scheme
Copyright 2010 A.M. Best Company, Inc.All Rights Reserved BestWire
August 13, 2010 Friday 04:55 PM EST
387 words
Illinois Suspends Agent for Alleged $20 Million 'Ponzi-like' Scheme
Sean P Carr
CHICAGO
The Illinois Department of Insurance revoked the license of an insurance agent and supposed estate planner accused of defrauding 120 investors of at least $20 million in an alleged pyramid scheme. Robert C. Pribilski -- acting through his two Oakwood Terrace-based companies, USA Financial Management Services Inc. and USA Retirement Management Services -- organized investment seminars for retirees. He then persuaded the retirees to purchase promissory notes for purported investments in Turkey with interest rates of 8% to 11%, according to the insurance department.Pribilski and an associate raised at least $20 million, but actually used the funds to purchase homes, vacations and luxury automobiles -- not the promised Turkish Eurobonds, according to the U.S. Securities and Exchange Commission. Instead, returns were paid to earlier investors with funds received from new investors in a "Ponzi-like fashion," the SEC said. They also allegedly wired investors' money into bank accounts belonging to individuals residing in Turkey.The insurance license revocation followed an April 2010 Order of Prohibition issued by the Illinois Secretary of State against Pribilski and the USARMS company. The order permanently prohibited the offering or sale of any securities. Pribilski and USARMS are not registered with the U.S. Securities and Exchange Commission, according to the insurance department. The Secretary of State also imposed a civil penalty of $100,000, the maximum allowed under Illinois law, for "fraudulent, dishonest and coercive actions." Attempts to reach state officials about whether additional investigations are ongoing were unsuccessful.On March 9, the SEC obtained an emergency order against USARMS and managing partners Pribilski and Francois E. Durmaz, shutting down their operation, which was active in Illinois and California. The SEC's complaint charges all defendants with violations of the registration provisions of the Securities Act of 1933 and the anti-fraud provisions of the Securities Exchange Act of 1934. The complaint also charges defendants Durmaz and Pribilski with violations of the broker-dealer registration provisions of the Exchange Act.Attempts to reach the individuals and companies involved were unsuccessful.(By Sean P. Carr, Washington Correspondent: [email protected])
August 14, 2010
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