Kalispell woman named in alleged Ponzi scheme

A Kalispell woman who allegedly convinced members of her church to invest in a bogus investment plan has been ordered by the state to stop.

State Auditor John Morrison has characterized the business as a Ponzi scheme that promised investors a 100-300 percent return on their investment in 30 to 60 days.

Morrison issued a cease-and-desist order prohibiting Tri Energy Inc., H & J Energy Co. and Marina Investor's Group from conducting investment business or acting as sales agents in Montana.

Debbie Loveless of Kalispell is among the six defendants named in the order.

"We believe that at least $257,000 was solicited from nine Montana investors to help fund an alleged coal mining operation and a Middle East gold investment," Morrison said.

Earlier this month, the Securities and Exchange Commission filed a lawsuit against organizers, alleging that the scheme fraudulently raised $12 million to $18 million. The federal suit said the defendants posed as "religious entrepreneurs" who believed "deistically inspired" and "divinely guided" profits would enable investors to raise money to alleviate poverty in Africa and Appalachia.

Investors were told that 5,000 metric tons of Israeli gold were to be stored in Jordan, the deal was to be finalized in Luxembourg and it was politically sensitive because the countries involved would not want the public to know they were conducting business with one another, according to Morrison's order.

Investors were told they could triple their money in the gold investment and the company also would finance the development and expansion of a coal mine in Kentucky.

Instead, the SEC suit alleged, much of the investors' money was transferred to accounts controlled by the defendants. Investors who did get money back were paid with other investors' funds, not genuine profits, the suit alleged.

At Loveless' bidding, one woman invested $100,000, Morrison said. In August 2004, another couple invested $7,000, which they received back when they said they had concerns about the investment and "were in dire straits for cash."

In February, Loveless allegedly visited them and convinced them to reinvest. They mortgaged their home and

invested $29,000, according to Morrison. As of May 3, they had not received any of their investment back as promised, he said.

"There may be additional victims out there and I urge anyone who has been contacted, or may have information concerning any of these entities, to call the investigations team at my office," he said.

Montanans should look for specific warning signs of a Ponzi scheme when presented with an investment opportunity, he said.

Red flags include: Guaranteed double-digit returns, promises of high yields consistent over a long term, risk-free investments, and salespeople emphasizing the exclusivity of an investment opportunity and the importance of keeping the investment a secret from friends and family.

If you have been contacted, or have information concerning this investment operation, contact the auditor's Investigations Division at 1-800-332-6148.

Reporter Chery Sabol may be reached at 758-4441 or by e-mail at csabol@dailyinterlake.com