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For Immediate Release:  
For Further Information Contact:
October 20, 2005

Office of The Attorney General
- Peter C. Harvey, Attorney General
Bureau of Securities
- Franklin L. Widmann, Chief

 

Paul Loriquet or Peter Aseltine
609-292-4791

 

Attorney General Harvey Freezes $1.4 Million In Funds Linked to Internet Securities Scam

TRENTON – Attorney General Peter C. Harvey has obtained a court order to freeze more than $1.4 million in funds that have been linked to an Internet securities scam involving a fictitious company, Heritage Financial Inc., through which investors around the world have been defrauded of millions of dollars.

Superior Court Judge Donald J. Volkert Jr. of the Chancery Division, Essex County, granted the Attorney General’s request for an order freezing the funds, which are contained in four Merrill Lynch accounts held in the names of various individuals and corporate entities.

Investigators in the New Jersey Bureau of Securities traced funds that victims, at the direction of the con artists, had wired to designated accounts. The investigation revealed that the funds frozen today had been transferred through various accounts at U.S. and offshore banks into the Merrill Lynch accounts.

At Attorney General Harvey’s request, Judge Volkert also ordered that the named holders of the Merrill Lynch accounts appear in court for a hearing before Judge Kenneth S. Levy on November 30, 2005. At that hearing, the Judge will decide whether to require those parties to disclose the source of all funds contained in 13 Merrill Lynch accounts held in their names and whether to permanently freeze those funds, which total more than $70 million.

The Attorney General’s Office and the Bureau of Securities previously seized approximately $620,000 in funds in accounts in Panama and the Cayman Islands.

“These con artists have hidden behind the Internet and stashed their stolen money in an elaborate network of accounts, but we are on their trail,” said Attorney General Harvey. “We will continue to work to apprehend those responsible and secure restitution for victims.”

“Our investigators and lawyers are working diligently to identify and recover funds lost by innocent investors,” said Franklin L. Widmann, Chief of the New Jersey Bureau of Securities. “We urge people to call the Bureau of Securities if they have any information about this fraudulent scheme.”

Deputy Attorneys General Anna Lascurain and Megan Harris are handling the case for the Attorney General. It is being investigated for the Bureau of Securities by Investigators William Hoefling and Adam J. Heck.

Individuals holding low-performing stocks were targeted with cold calls and offered prices for their shares far exceeding market value. They were told that to complete the sale, they must pay an up-front fee, which the con artist usually called a “fully refundable penalty restriction bond,” represented as being for the purpose of protecting investors from fraud. The victims were asked to wire the money to certain accounts.

The fraudulent scheme has been conducted entirely through the Internet, with no legitimate physical address given for Heritage Financial Inc. or its officers and employees. The company has used more than 30 Web sites established with Internet service providers. The Web sites have claimed the company is based at 103 Franklin Corner Road, Trenton, N.J. There is no building at that address.

When people questioned the legitimacy of Heritage Financial Inc. or the purchase offer, they were directed to telephone one of several regulatory agencies that the con artists fabricated and falsely portrayed as legitimate on Internet sites, including the International Exchange Regulatory Commission, the International Securities Department, the Regulatory Compliance Commission, the Securities Protection Agency and the International Registry Corp.

In fact, all of the phone numbers provided by the defendants were linked to the same computer or network of computers through an Internet service that allows personal computers to serve as telephones. The defendants had an account with an Edison-based telecommunications company that allowed them to establish dozens of computer-linked telephone numbers, including numbers with out-of-state area codes.

The Bureau of Securities is continuing its investigation to recover investor funds and track down the perpetrators who opened the bank and telecommunications accounts.

Investors can telephone the Bureau of Securities at 973-504-3600, or call toll-free from within New Jersey at 1-866-838-6240. They also can reach the Bureau through its Web site www.NJConsumerAffairs.com/bos.htm.

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