2 arrested in alleged $15 mil fraud scheme
Two suburban men who billed themselves as foreign currency traders have been charged by federal prosecutors with swindling customers out of $15 million to pay for a lifestyle that included strip clubs, jewelry and private jets.
Charles G. Martin, 43, of suburban Glencoe and Malibu, Calif., was arrested Tuesday night in the Los Angeles area and John E. Walsh, 60, of Lake Forest was picked up Wednesday morning on a criminal complaint charging them with wire fraud.
A court order closed their One World Capital Group LLC in December 2007 and froze its last $636,815 of assets. The two men operated a "Ponzi-like" scheme diverting money out of customer accounts and into their pockets, prosecutors said.
The criminal complaint was filed in U.S. District Court on Tuesday and unsealed Wednesday following the arrests.
One World was formed in 2005 and based in the upscale North Shore suburb of Winnetka with an office in New York as well, prosecutors said. They said the two men made false statements to customers and federal regulators to conceal the fact that they siphoned off money customers thought was being used for currency trades.
Credit card and bank records show Martin spent more than $1 million at a strip club and restaurants, nearly $1 million at hotels and $1 million renting private jets, prosecutors said. He also purchased a fleet of luxury vehicles, donated hundreds of thousands to celebrity charity events and hired bodyguards, they said.
Walsh allegedly used his One World credit card to charge personal expenses including $140,000 worth of jewelry.
Federal agents arrived at Martin's home armed with warrants authorizing them to seize 57 items including watches and jewelry, antique furniture, oriental rugs, a piano and assorted high-end appliances and electronics. Agents also were authorized to seize two safety deposit boxes from Martin and one from Walsh, and a BMW that Walsh gave his son.
Bank records also show the two men dipped into company funds to finance an unreleased movie, "Order of Redemption," for which Martin was listed as a contributing producer, according to an affidavit attached to the criminal complaint. It said they sank $569,000 into the movie.
Walsh appeared briefly for an initial appearance in U.S. District Court on Wednesday and was ordered held in custody pending a bond hearing on Friday.
Martin made an initial appearance in Los Angeles federal court Wednesday afternoon and was scheduled for a second hearing on Monday to determine if he will be released on bond. U.S. attorney's spokesman Thom Mrozek said that if Martin is released on bond, a date would be set for him to appear in Chicago. Otherwise, marshals will take him to Chicago.
Walsh's attorney, Leigh Roadman, did not immediately return a message left on his office voicemail from The Associated Press.
Wire fraud carries a maximum sentence of 20 years in prison and a $250,000 fine.