A pyramid scheme that netted an estimated $300 million ended with FBI agents showing up at the scammer’s door and shooting him dead in the middle of a bizarre four-hour standoff, according to a report.
The FBI earlier this year raided the home of Las Vegas attorney Matthew Beasley – one of two men allegedly running the Ponzi scheme – after receiving a lead from short seller Hindenburg Research, The Wall Street Journal reported Thursday (Paywall).
Beasley opened the door to the side, but – in a move straight out of a Hollywood crime thriller – then looked ahead and revealed he was pointing a gun at his own head. He then brandished the gun in front of the officers and swung it at them, according to the newspaper.
FBI investigators shot him twice and Beasley retreated to his home – bleeding from gunshot wounds to his chest and shoulder. The FBI brought in a hostage negotiator, and Beasley “said he wished the agents had killed him — he said he’d rather die than go to jail,” the Journal reported, citing federal prosecutors.
After a tense four-hour standoff, Beasley admitted the so-called “investment” opportunity he ran with Jeffrey Judd, J&J Purchasing and J&J Consulting Services, was a scam. He came out of his home alive and was taken into custody.
It appears to be the end of a lavish lifestyle for Beasley and Judd. Since the two men began soliciting investments in 2017, they’ve bought a private jet, millions of dollars worth of real estate and opulent cars including Bentleys, a Rolls Royce, a Porsche and an Aston Martin.
The dramatic climax is also the end of a multi-million dollar Ponzi scheme, a financial scam that lures investors with the promise of a risk-free investment with high returns – the operator pays off old investors with new investor money.
J&J told thousands of people – mostly investors in the western US who were spending $80,000 to $100,000 – that they were providing individuals with the money to file personal injury lawsuits. The bet paid a 12.5% return in just 90 days.
Hindenburg founder Nate Anderson told The Wall Street Journal the operation was “the most blatant Ponzi scheme we’ve seen.”
Hindenburg was warned by an accountant who had invested several clients and suspected something fishy. A Hindenburg partner happened to know one of Judd’s high school classmates, Mark Holt, and enlisted his help to learn more about the surgery.
Holt, who runs a private jet charter company, flew to Las Vegas to meet with the marketers at Judd and J&J. Hindenburg wired Holt’s jet with microphones and cameras to gather information about the operation. A marketer conceded to Holt that the deal was so good that some investors thought it was actually a Ponzi scheme. And after analyzing it, Hindenburg came to the conclusion that it was indeed too good to be true.
Hindenburg shared the information he had gathered with the FBI, and soon after, investigators visited Beasley’s home.
The investment plan was private, so Hindenburg couldn’t take his usual approach of shorting the stock. Instead, Hindenburg filed a whistleblower complaint with the Securities and Exchange Commission so that she could receive a reward if the government imposed a significant penalty.
Hindenburg is perhaps best known for revealing that electric truck company Nikola’s trucks were faulty. Nikola had posted footage of one of his trucks actually only rolling downhill.
Investors have started suing J&J — last week, five investors filed an involuntary bankruptcy petition, demanding that the company file for bankruptcy in hopes of getting some of their money back.
Beasley was charged with assaulting a federal officer but has not yet been charged with financial misconduct. Earlier this month, Beasley’s attorney said the incident was a “unique, extreme emotional crisis.” The FBI is still investigating financial crimes.
https://nypost.com/2022/03/24/short-sellers-ponzi-scheme-tip-spurs-las-vegas-fbi-raid-gunfire/ Short Seller’s Ponzi Scheme Tip Spurs FBI Las Vegas Raid, Gunshots