James Paul Lewis Jr.

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James "Jim" Paul Lewis Jr. operated one of the largest and longest running Ponzi schemes in United States history. [1] [2]

Over approx. 20 years, Lewis collected around $311 million U.S. dollars from investors. He operated under the name of Financial Advisory Consultants in Lake Forest, Calif., and promised high returns. Lewis said that he was investing the money, and he even made dividend and withdrawal payments so that the scam could continue, but was instead using it to finance his own high lifestyle of fancy cars, big homes, and girlfriends. [3]

The ploy Lewis was running was a classic "Ponzi scheme"; in this scheme, new investors contribute funds that get redistributed to earlier investors (including Lewis himself). As long as new investors keep contributing, earlier ones keep getting a return on their investment and the fraud continues. But eventually, new investors stop contributing and the whole pyramid collapses, with the later contributors getting nothing in return for their investment. [4]

As is the case with many Ponzi schemes, Lewis relied on trust and word of mouth to help build his scheme. Many of Lewis' victims were members of churches and church-related groups, of which Lewis was reportedly a member. [5] [6]

In 2003, investors became suspicious when Lewis stopped paying dividends. He claimed that the Dept. of Homeland Security had frozen the funds, and this bought him some time, but eventually the FBI was after him. After a manhunt, Jim Lewis was arrested in Houston, Texas in 2004. [7] He was brought back to California, and in 2006 was convicted and sentenced to 30 years in prison by a federal judge. [8] Lewis was 60 years old. U.S. District Judge Cormac Carney also ordered him to pay $156 million in restitution. In imposing the statutory maximum of 30 years, Judge Carney described the scheme as a "crime against humanity" because of the harm to many elderly victims, some of whom now face a bleak future in the final years of their lives because of their having been made destitute at the hands of Mr. Lewis. [9]

The court appointed receiver, Robb Evans, has since recovered only $11 million. [10] Lewis has since filed an appeal but to no avail. [11] [12]

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References

  1. ↑ "10 Largest Ponzi Scheme Proprietors of the 21st Century — Money Saving Tips for Debt Free Living". Archived from the original on December 2, 2013. Retrieved November 29, 2013.
  2. ↑ "Con Artist Hall of Infamy : James P. Lewis, Jr". Archived from the original on March 25, 2015. Retrieved December 13, 2016.
  3. ↑ Siegel, L.J. (2011). Criminology. Cengage Learning. p. 345. ISBN   978-0-495-91246-0 . Retrieved June 3, 2018.
  4. ↑ FLACCUS, GILLIAN (May 27, 2006). "Calif. Man Gets 30 Years for Ponzi Scheme". The Washington Post. Archived from the original on December 20, 2016. Retrieved May 30, 2018.
  5. ↑ "Faithful drawn into scam". Deseret News . December 26, 2003. Archived from the original on December 20, 2016. Retrieved May 30, 2018.
  6. ↑ Thompson, Don (December 29, 2003). "Many Churchgoers Put Savings in O.C. Funds". Los Angeles Times. Retrieved May 30, 2018.
  7. ↑ "James Paul Lewis Jr., who allegedly operated one of the largest Pon..." January 1, 2000. Archived from the original on December 20, 2016. Retrieved May 30, 2018.
  8. ↑ "James P. Lewis Jr.: Lit. Rel. No. 19445 / October 25, 2005". sec.gov. Archived from the original on May 31, 2017. Retrieved May 30, 2018.
  9. ↑ "Calif. Man Charged In $814M Scam". CBS News . Archived from the original on December 20, 2016. Retrieved May 30, 2018.
  10. ↑ "Archived copy" (PDF). Archived (PDF) from the original on December 20, 2016. Retrieved December 13, 2016.{{cite web}}: CS1 maint: archived copy as title (link)
  11. ↑ "USA V. JAMES LEWIS, JR., No. 10-55618 (9th Cir. 2013)". Archived from the original on December 20, 2016. Retrieved May 30, 2018.
  12. ↑ "James Paul Lewis, Jr., V. United States Of America – C-D-CA". open-public-records.com. Archived from the original on June 3, 2018. Retrieved May 30, 2018.
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