Kalispell man accused of investment scam
A Kalispell man is alleged to have duped investors in the Flathead with investment scams called The Project and Tri-West Investment Club. On Monday, Montana State Auditor John Morrison said he ordered John Quist to stop selling what he calls illegal securities products.
The Daily Inter Lake
and The Associated Press
A Kalispell man is alleged to have duped investors in the Flathead with investment scams called The Project and Tri-West Investment Club.
On Monday, Montana State Auditor John Morrison said he ordered John Quist to stop selling what he calls illegal securities products.
In a press release, Morrison said The Project and Tri-West Investment Club promised annual returns, although no money was ever paid to investors.
Quist is not registered to sell securities and neither of the businesses is a registered security as required by law, Morrison said.
Karen Powell, deputy state securities commissioner, said state officials launched an investigation into Quist after two Kalispell residents called local authorities recently, worried about investments they made with him.
In the state's cease-and-desist order, officials said Quist convinced one resident to invest $7,000 in Tri-West Investment Club in 2001. The club called itself a "bank debenture trading program" that guaranteed investors a return rate of 120 percent per year.
Quist also convinced the same resident and one other to invest $1,000 and $5,000, respectively, in something he called The Project.
Powell said Quist provided both investors with documentation suggesting that The Project was an investment program that also paid an annual rate of return.
Neither program, however, ever paid any dividends and the investors' money "actually went directly to the enrichment of the founder of the program," officials said in the order against Quist.
Federal prosecutors said earlier that the Tri-West Investment Club was an Internet-based fraud scheme that bilked some 15,000 investors from more than 60 countries out of about $58 million.
In July, a federal judge in Sacramento sentenced Cary Alyn Waage of Canada to more than four years in prison on mail fraud and money laundering charges.
Federal prosecutors said Waage cooperated in their investigation and gave them an inside look into a scheme that led to guilty pleas by two other defendants, Alyn Richard Waage, the younger Waage's father, and Michael Webb.
Morrison's office is seeking fines and restitution from Quist, who has 15 days from the receipt of the order to request a hearing.
No criminal charges have been filed against Quist. Powell, however, said the auditor's office could still forward its findings to local prosecutors to see if they wish to pursue charges.
According to Morrison, Quist has a history of selling illegal securities.
Quist and others were ordered in 1992 to pay more than $7.2 million in restitution and damages for a securities operation in Arizona.
"All too often, these scams look legitimate, even to the sophisticated investor," said Morrison. "I urge anyone, if you are not absolutely sure you are dealing with a legal investment opportunity, to call the State Auditor's Office and make sure the salesperson and product are licensed with the Securities Department."
Warning signs of a scam include:
. High-pressure telephone pitches.
. Offers of a low-risk, high-return investment.
. Promoters who urge you to keep the offer secret.
. Pressure to invest immediately.
. Refusal to give specifics in writing about how the money will be used.
. Off-shore or foreign investments.
The securities department in the state auditor's office may be reached at 1-800-332-6148.