Jean E. Allan
309 Waukewan Road
Center Harbor, NH 03226
603-279-6425
jea@metrocast.net
January 9, 2009
[Sent as attached document via e-mail]
Mr. David Kotz – Inspector General
Office of Inspector General
U.S. Securities and Exchange Commission
Civil Rights & Civil Liberties Complaints
Office of the Inspector General
U.S. Department of Justice
950 Pennsylvania Avenue, N.W.
Room 4706
Washington, D.C. 20530
RE: Issues to include in sweeping review of SEC Investigations practices and procedures.
Dear Inspector Generals:
Please consider this a follow-up communication to my last letter addressed to Natasha Dandridge
and dated 12/29/08. I was prompted to write this case history letter after spending this afternoon
listening to the Congressional Hearings that were Chaired by Congressman Kanjorski’s Capital
Markets Sub-Committee. In his opening statement Congressman Kanjorski said the purpose of
the hearing was that Congress needed to understand “How Bernard Madoff, did it!” The rest of
the Committee members to a one cited ‘loss of confidence’ in the capital markets as their major
issue of concern.
Also, at the hearing OIG Kotz promised that he would look at ‘all the tips’. There was also a
statement alluding to the issue of possibly more regulation if warranted. With respect to that
statement, I would point to the herein case study. In this Darwinian world of global capitalism
there will always be predators and prey; and neither, more legislation, nor, regulation will
succeed in instilling moral integrity into the predator; nor knowledge and investment savvy into
the prey.
Since the breaking of the Glass Steagal barrier the concept of ‘investing’ which by definition
contains a risk element, and the concept of ‘saving’, which by current law and regulation should
be protected from risk, have been blurred. Mr. Goldstein, the only victim witness at the hearing
was under the impression that SIPIC was a better insurance policy than the FDIC as it’s
statements of assurances would return up to $500,000 of his principal. Mr. Goldstein is not alone
in this misconception.
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As I understand the object lesson of this ‘sweeping review’, it is to first determine how Bernard
Madoff ‘Did it’, and then to consider internal issues within the SEC as to how better to detect the
‘predators’ while at the same time better educating the ‘prey’.
The following personal case study is my contribution to this ‘review’. My purpose herein is to
lay- out facts and findings already in evidence via documents and affidavit testimony with
respect to what I have found to be prior related schemes in which I was the equal opportunity
target, and where the internal policies and procedures of the SEC and DOJ failed.
The front man of the segment of the organized global capital financial scheme that targeted
American insurance industries was Alan Teale. By 1994, Alan Teale had been indicted and died
in prison. However, the legacy of his ‘networking or pyramid scheme’ appears to have survived
and lives on in the name of Bernard Madoff, and the many ‘feeder firms’.
NOTE: The case study below has been written in narrative form for ease of reading and
comprehension. The supporting documents to these summary statements are available in case
records in several Federal and State Courts; along with other documentation that should exist in
the files of the US DOJ, SEC, FBI, Department of State and FDIC. And, copies of this
documentation are in safe keeping in case any of the heretofore-mentioned files have been
purged, or other wise cannot be located.
NASD Direct Participation Broker Dealer
In 1983, after being a real estate broker, I decided to widen my business opportunities by
becoming a licensed NASD Direct Participation Broker Dealer. I incorporated a separate NASD
DPP Broker Dealer company named INAMAN. It was a wholly owned subsidiary of my primary
real estate company, Business Assets Management, Inc., located on High Street, Portsmouth,
New Hampshire. By late 1983, INAMAN was opened for business.
INAMAN’S first client was a former business associate and client of mine. I had just completed
a construction management contract for his company, Business Helicopters. The job entailed the
design, permitting and construction of a private corporate aviation complex, named Flight One,
at the Manchester Airport, Londonderry, New Hampshire.
My client’s request was that I perform due diligence on a real estate limited partnership offering
by a company called Blondheim. Mr. David Williams was the principal general partner and
Raymond Nolan was a minority partner in the general partnership. My client told me that several
of his business associates had purchased limited partnerships for one hundred thousand dollars
each. He was considering doing the same.
Shortly after I began my due diligence analysis, I recognized the offering to be a Ponzi scheme.
[A complete description of the scheme and the schemers can be found in USA v David
Williams/Blondheim. Several cases were tried in both US District Court in New Hampshire and
New Hampshire Superior Courts. Mr. Williams was convicted and sentenced for 15 years. Many
of my client’s business associates suffered financial losses. The authorities assured me that my
role a ‘whistle-blower’ in uncovering the Blondheim Ponzi scheme would be protected. For
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whatever reasons, it was not, and I became a target of the organized criminals that had been
backing the scheme. This case study is a cautionary tail for all ‘whistle-blowers’.]
One of the reasons that I could easily spot the Blondheim Ponzi scheme was that the properties
involved were local and I could personally view the real estate assets. Subsequent to my
discovering the Blondheim Ponzi scheme, I began a more careful due diligence on all the other
Prospectuses that my office received and notice too many similarities to make me comfortable in
many recommendations, if any. One of the bothersome issues was the way the Partnerships were
being financed. So I continued to concentrate on my primary real estate consulting and sale’s
business.
Sometime in late 1985 a lawyer - whom I now know to have represented several clients that were
stung by the Blondheim bust - said he wanted to list a client’s property with me. He said it was a
development opportunity, and additionally gave me a list of potential developers. I took the
listing. [The property was located in North Woodstock, New Hampshire, and has later become
known as the High Birches Mountain Spring Water property, which is the central asset of all of
my subsequent complaints to SEC, USDOJ, FDIC and Department of State, among several State
authorities, as well as a multitude of civil actions.]
After listing the property I contacted the potential developer buyers whom were on the proffered
list. One of the contacts was a Reginald P. Danboise [Danboise], a dentist by profession, but with
a construction and development business on the side. His associate was the same Raymond
Nolan [Nolan] from the Blondheim case. By that time the authorities had exonerated Nolan as a
cooperative and innocent party; or so I was led to believe at that time.
In any event Nolan assured me that Danboise was an interest buyer in the No. Woodstock parcel
and that he was a legitimate developer. I was taken to several prior sold out residential projects
as an offer of proof. Danboise agreed to put an option on the No. Woodstock land, if my
company Business Assets Management, Inc. [BAM] agreed to partner with him during the
permitting process. David Gottesman was the lawyer for the partnership. It was agreed that the
partnership would dissolve after the permitting process was completed.
However, by early 1986 it became apparent that the property, which by then was an asset owned
by Senter Cove Development Co., Inc., was also a marital asset; and, Danboise determined, as
was his right in the agreement, to buy my company out of the partnership, which he did. BAM
contracted to continue to complete the permitting process for an equity position in the project.
Soon after Danboise gained sole possession he gave a first mortgage to Plymouth Guaranty
Bank, Plymouth, New Hampshire. The primary shareholder of Plymouth Guaranty Bank was
Milo Pike, a former employer of mine. (I had quit my employment at his company Pike
Industries, Inc. in 1980, due to sexual harassment issues. I did not bring formal charges at that
time. However at the same time I quit, Milo Pike had been indicted on bid rigging charges. I am
of the opinion and belief based upon verbal communications that Milo and others in the
company, to include his then in-house counsel Edward Fitzgerald, that they believed and were
acting upon the suspicion that it was I who blew the whistle on the bid rigging.) Unbeknownst to
me until years later, Milo and his associates had incurred financial losses in the Blondheim bust.
By mid-1986 it was public knowledge that I had been the Blondheim whistle-blower. A decade
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later I learned that Danboise had also been a close associate of the Blondheim Ponzi schemers,
but that information came too late to change my fate in 1986.
Shortly after the first Plymouth Guaranty mortgage was in place, Danboise informed me that he
and his wife/ business partner Bonnie were getting a divorce. They had agreed to sell all their
business assets as part of their financial settlement. BAM was offered 100% of the stock of the
Senter Cove Development Co. Inc. [Senter] that was the sole owner of the property in No.
Woodstock, which by now was almost completely permitted and valued at $5.2 million.
My business attorneys, McLane Graf Law Offices, refused to represent BAM in the purchase of
Senter, and in fact dumped me as a client without any explanation. Attorney William Shaheen
agreed to represent BAM at the stock purchase closing. [A decade later I had reason to believe
that Attorney Shaheen had a conflict, which he never revealed to me at the time of the sale. His
legal services were compromised.] However, the stock of Senter was purchased in March 1987
for $150,000 cash and note and the assumption of the first mortgage and contractor fees. BAM
had several offers in hand to purchase the permitted project, which by that time was called High
Birches, prior to purchasing the stock of Senter. Contractually the Danboises’ were to remain on
the Plymouth Guaranty first mortgage until such time the project was either sold or refinanced.
Within weeks Plymouth Guaranty reneged on its commitment to fund the bond for the road
permits, and in fact, made a demand call on the first mortgage. BAM needed to replace the first
mortgage financing quickly. Stephen Oakes, of Oakes Financial, who offered to refinance the
Plymouth Guaranty first mortgage including additional funds that would allow the permitting
process to be finalized, approached BAM. The new loan was for $1.56 million. [Again
unbeknownst to me Oakes was a front for Richard A. Cabral; another Blondheim Ponzi schemer
that had suffered financial loses after I blew the whistle on the Blondheim Ponzi scheme. I found
out a decade later that Cabral was also a partner with the attorney who listed the No. Woodstock
land with me in the first place. Also a decade or so later I was informed that the Patriarch Crime
family had a interest in the Blondheim Ponzi scheme. It is public hearsay that the New
Hampshire ‘crime family’ representative was a client of the Shaheen Gordon Law Offices: A
clear conflict of interest.]
Finally in August 1988 the all the necessary permits had been granted to complete the
construction of the High Birches real estate development project. The permits included, among
others, water and sewer. The water permit gave permission to draw up to 500,000 gallons of
water per/day to satisfy the needs of the permitted real estate development, which had anticipated
the construction of a condominium hotel and up to 400 residential dwellings. No more than three
days later, an abutter made a legal claim for 58 of the 120-acre property. Upon further
investigation by my then lawyers, Merrill & Broderick, after filing a Petition to Quiet Title, it
was agreed that the abutter’s claim was valid.
The High Birches real estate development project was ruined. The lawsuits began. The clear
solution was for Senter to purchase the out parcel that had been claimed by the abutter, while at
the same time, it prepared to sue the surveyors and engineers. The out parcel was purchased on
September 11, 1989. However, unbeknownst to BAM, Senter, and me, in October 1989, the
engineers and certain corporate creditors and corporate lawyers Devine Millimet Stahl and
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Branch along with litigation lawyers Shaheen Gordon conspired among themselves. In one
instance Shaheen Gordon failed to show up for court hearing against the first mortgagee, Cabral.
And, in another matter Shaheen Gordon allowed a Devine Millimet lawyer to file an illegal
agreement with the second mortgagee, BankEast. The BankEast agreement was recorded in
several New Hampshire Registry of Deeds.
At the same time, Devine Millimet continued to represent BAM, Senter and me in an effort to
either refinance or sell the stock of Senter Cove. In the refinancing effort Devine introduced me
to a finance company allegedly owned by Mr. John Iuele. Mr. Iuele assured me that he could get
refinancing for me with several insurance companies and perhaps even Drexel Burham Lambert
(sic – error in draft named EF Hutton). For several months Mr. Iuele met with me and called me
with respect to his progress. At one time I was instructed to bring all the permitted documents to
a business, which I did. [Years later I found that the business was affiliated with the Blondheim
Ponzi schemers. In fact, years later I discovered that John Iuele was really Whitey Bulger, the
crime boss of the Winter Hill Gang, and top echelon informant for the FBI.]
While I was still working with John Iuele he introduced me to, and I played tennis with John
Iuele, and a man named Gus, whom I now have reason to believe was Cadillac Frank Silemmi, a
Capo of the Patriarca crime family and Blondheim Ponzi schemer. Shortly after giving John
Iuele $6,000 for processing fees for the refinancing, and after getting a highly likely to finance
letter from Drexel Burham Lambert, John Iuele disappeared leaving me with a caution that I was
in harms way. I immediately filed complaints with the New Hampshire Attorney General. To my
knowledge there was no investigation. I did not recognize the true identity of John Iuele until
1995 shortly before his trial in absentia in US District Court, Massachusetts.]
After the Iuele financing fell through, Devine Millimet introduced me to another client, Martyn
Redman. At first Mr. Redman claimed to be representing a company that had major real estate
holdings in Portugal. He was also affiliated with a financing group located in Garden City New
York. The company was called Metro Funding and the principal was Benny Maniscalco.
Redman also claimed to represent a company called Consolidated Funding. And, another called
Parthenon.
After several false starts Mr. Redman finally settled on a purchase and sales agreement where the
purchaser would be a company called First Equity Insurance Company and was headquartered in
Dallas Texas. Devine Millimet was in the process of doing the legal work for the insurance
company’s Form A requirements. As part of the purchase agreement First Equity pledged
publicly traded stock from its capital surplus in the amount of one million dollars. Devine
lawyers informed BAM that Merrill Lynch had verified the pledged stock in a company called
ECOTECH as being valued at around one million dollars.
On or about February 1991, BAM, Senter and me, as guarantor, entered into superseding
agreements with all the creditors, secured and unsecured, of the High Birches project. All
creditors agreed upon a schedule of replacement assets in lieu of their existing mortgages. The
terms of the Creditors’ Agreement was found to be satisfactory to First Equity. Devine Millimet
represented First Equity and my companies and me personally in the sale.
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By March 1991, it was clear that First Equity had defaulted. Mr. Redman had disappeared. In
accordance with the purchase and sales agreement, I took the pledged ECOTECH stock to
Merrill Lynch with instructions to sell it in traunches so as not to flood the market. I had been
told the stock was lightly traded. The first traunch sold and the funds were earmarked for the
creditor’s escrow account that was being held by Attorney Barton Solomon, brother of Karen
McGinley.
A Mr. Miller, who had claimed to Devine Millimet that the stock had been stolen, stopped the
second traunch sale of ECOTECH stock. Several conversations ensued between Devine lawyers
and Mr. Miller who had also identified himself as an attorney. Merrill then informed me that the
market had collapsed for the ECOTECH stock. I immediately filed a formal complaint with the
Boston Office off the SEC. A Mr. Steve Cohen contacted me. He said he could not tell me what
had happened, but perhaps I could guess. I guessed that the stock was a fraud. I had guessed
correctly.
Blondheim Ponzi Schemers in Cahoots with Alan Teale
Robert Tillman in his book titled “Global Pirates” devoted an entire chapter to the “Alan Teale
Empire”. In my search for links between Alan Teale and Martyn Redman I was not aware of the
most direct link until I was subpoenaed to testify in USA v Rennert, [See following citings and
trial excerpts] in September 1996 by the prosecutor, AUSA Andrea Faulkes. At no time did my
attorney Devine Millimet, inform me of the connection, although there is reason to believe that
lawyers in the firm were aware of the connection.]
Public records now show that both Martyn Redman and Alan Teale were British citizens.
Considering the fact that Redman rented the ECHOTCH stock from known associates of Teale’s
and Redman at one time told me that he knew Alan Teale. The link is solid. [In fact, AUSA
Andrea Faulkes told me during an interview that one of the reasons I was subpoenaed in the first
place was that my complaint named Alan Teale. This would suggest that my file had languished
in the SEC records since my initial complaint in 1991. From 1991 until I was subpoenaed in
1996, I had not heard word one from the SEC with respect to my complaint. Also of note is the
fact that initially I was subpoenaed as a subject of the Teale investigation and not a victim. It
wasn’t until after I had been interviewed that AUSA Faulkes and the other investigators
recognized that I was a true victim who had suffered a significant financial loss.]
The only public documents that appear to cover the Alan Teale global scheme that can be located
are found in an article written by Douglas McLeod, in October 8, 2007, on Business
Insurance.com. The article is titled: “High Rates, Tight Capacity Ingredients For Insurance
Fraud”. McCleod began his report by writing that “Scam artists offering too-good-to-be-true
coverage take advantage of lax regulation, cost-conscious buyers.” [This analysis, almost word
for word, has been recently written about Mr. Madoff.]
McLeod goes on to write “The late Alan Teale [he was found dead in prison in 1994], a former
London broker and president of the now-defunct Insurance Exchange of the Americas in Miami,
managed scores of fly-by-night companies from a suburban Atlanta office until the early 1990s.
All of the companies were incorporated in domiciles with light or no regulation, mostly
Caribbean nations, but also Belgium and Ireland, which at the time did not regulate re-insurers.”
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The article continues to point out that “To attract business, these companies needed to be able to
show plausible financial statements to brokers, and Mr. Teale spent considerable time arranging
these.” [Sounds eerily familiar with the testimony provided to the Committee today]. “U.S.
Senate investigators and state regulators examining the companies found that their capital and
surplus accounts variously included worthless penny stocks that were "rented" from securities
swindlers and reported at grossly inflated values, along with Government National Mortgage
Assn. securities that the insurers did not actually own.”
In 1991, McLeod reported “Senator Sam Nunn chaired a series of hearing with respect to Alan
Teale like frauds that had been plaguing the insurance industry. Those hearings uncovered a
“vast network of white color criminals whose operations were global in nature, and whose
activities went far beyond insurance to include crimes committed in the securities and banking
industries”.” It is truly a shame that the trail, while hot, was not followed into those other
industries. Instead the investigators concentrated on Teale thus allowing the other schemers to
continue to prey on the lax laws and regulations that they found in America, Europe and Asia. At
this time Congress, the SEC and DOJ among other Federal and State agencies have another
chance to shore up the loopholes that the 1991 Nunn Hearings found existed.
A recent article in the January 5, 2009 Wall Street Journal reported that “In 1992, Mr. Madoff
had a brush with the SEC's enforcement division, which had sued two Florida accountants for
selling unregistered securities that paid returns of 13.5% to 20%. The SEC believed at the time it
had uncovered a $440 million fraud.” Clearly had the SEC followed up on that investigation, it
may have nipped Mr. Madoff’s criminal enterprise in the bud. Richard Walker, then-chief of the
SEC's New York office, told The Wall Street Journal at the time "We went into this thinking it
could be a major catastrophe." What happened there? Who was responsible for dropping the
trail? An issue for the current ‘sweeping review’?
We now know that as early as 1992 the SEC probe turned up money that had been managed by
Mr. Madoff. He said he didn't know the money had been raised illegally. With no investors
found to be harmed, the SEC concluded there was no fraud. But the scheme indicated Mr.
Madoff was managing money on behalf of other people.
High Birches Spring Discovered in 1993
In 1992, all our lawyers had abandoned my companies, and me. The Shaheen Gordon Law
Office quit without informing me that it had sold me out. Orr & Reno, the law firm for one of the
defendants attempted to convince the New Hampshire Superior Court judge that it did not have a
conflict of interest in performing plaintiff litigation services for me, while defending one of the
defendants. In a hearing that I requested, the Judge Ordered Orr & Reno off the case. With little
time to find new counsel another firm Upton Sander’s & Smith was retained. Unbeknownst to
me at that time the new firm was also conflicted but did not disclose its conflicts.
Cabral, the first mortgagee, and secured by the No. Woodstock property was poised to foreclose.
No lawfirm would defend me in that case, so I acted pro se to enjoin the foreclosure. My
argument was that I had just discovered what all the other parties who had prior access to an
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earlier ground water study already knew: The engineering plans for the High Birches real estate
development were frauds due to the fact that the entire property was holding some of the largest
springs in New England. The property was undevelopable on its face! And, the highest and best
use valuation for the property was as a source for the bottled water industry.
[Subsequent studies done by Senter in order to get permitted as a bottled water source have
confirmed that the springs have a reservoir capacity of over 10 million gallons per day. The High
Birches Springs were permitted by the State of New Hampshire to commercially extract up to 1
million gallons per day. Shortly after the wholesale spring water permit was granted in NH, other
permits to sell High Birches Mountain Spring Water were granted by the State of Massachusetts.
A Tetra Pak packaging facility then began to produce the branded High Birches beverages. It
was located near New Bedford, Massachusetts where the High Birches warehouse was also
located. The Corporate headquarters for Netmark International, Inc., the producer and distributor
of the branded retail beverage products, was located at 10 Post Office Square, Boston,
Massachusetts.]
On May 2, 1994, a concomitant settlement hearing took place in Boston, MA. By then Upton &
Sanders had quit leaving the plaintiffs [me] in extremis. The BankEast creditor, if any, did not
appear to claim its portion of the settlement as per its February, 1991 Creditor’s Agreement. At
that time BankEast had failed, and the FDIC had already made claims to be the receiver of the
company’s assets. At that time, the FDIC’s representative, Attorney Daniel Sklar -the very same
attorney who was a party to the fraud upon me and the No. Hillsborough Superior Court along
with Devine Millimet and Shaheen Gordon – was Noticed. He failed to appear. And to further
compound matters the insurance company for the engineers who had committed the fraud on the
No. Woodstock property was owned by Warren Buffet. He allowed Cabral’s successor in interest
Martha HW Crowinshield to control the settlement. Neither my companies nor I had competent
representation on May 2, 1994.
As a consequence of the May 2 event, Martha HW Crownishield filed legal documents in an
attempt to cancel the water permits, among other things. Senter was given 6 months to attempt to
refinance Crowninshield’s claim upon the Cabral first mortgage on the No. Woodstock property.
Without the cooperation of the FDIC it was impossible to comply with Crowninshield’s demand.
The FDIC did not cooperate with me. [Several years later I found that FDIC was in fact in
cahoots with Crowninshield, as BankEast had been with her predecessor Cabral. Devine
Millimet was counsel to BankEast in the 1988 loan closing that created the second mortgage.
Documents now in my possession clearly show that Devine Millimet committed a fraud upon my
companies and me and BankEast. Facts clearly show that Devine Millimet’s primary clients were
the Teale /Blondheim Ponzi schemers. And, Devine Millimet was also contemporaneously
corporate counsel for the engineers who were responsible for the fraudulent engineering on the
No. Woodstock property in the first place.]
In 1995, my companies and I filed a civil RICO case against Richard A. Cabral, Martha HW
Crowninshield, and FDIC in its corporate capacity, and BONHAM, as FDIC agent.
1996 SIX Charged in Scam with Teale, write McLeod
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McLeod wrote in 1996 on Business Insurance.com: “Stock allegedly used to prop up reinsurers
PHILADELPHIA - Six men are facing federal fraud charges for allegedly supplying worthless
penny stocks to now deceased con man Alan Teale to prop up his network of bogus offshore
reinsurers. A federal grand jury last week indicted Philip A. Rennert and Nolan L.Mendenhall,
officials of Forum Rothmore Inc., a Colorado stock vendor; Michael L. Miller, a Beverly Hills,
Calif., lawyer who advised Forum Rothmore; and Jeffrey C. Hays, David R. Yeaman and George
R. Jensen, officers, owners or promoters of the penny stock firms involved in the deals. ...
[Related Results
Fed indictment alleges international ins. scam. (Alan Teale, Charlotte C. Rentz)
New complaint filed in fraud suit. (health insurance fraud class action suit...
Trust, E-innovation and Leadership in Change
Foreign Banks in United States Since World War II: A Useful Fringe
Building Your Brand With Brand Line Extensions]
The only problem with the above article was that I was never made aware of it at that time. My
then lawyers, Lane Altman also had a conflict and never informed me that named parties in my
1991 complaint had been indicted. There is reason to know that Lane Altman knew the
significance of this indictment because as soon as I was subpoenaed Lane Altman quit
representing me in the civil RICO matter that was by then in arbitration with former Judge
Alberti presiding. The case Judge was Nancy Gertner. The case citing was in re: 95-12496-ng. A
complete record of the case should be found in US District Court in Massachusetts.
Shortly after I received the USA v Rennert subpoena Reginald Danboise, then a dental
employee, of Oral HealthCare Management, Inc. a company owned by my family, took extreme
steps to lock me out of the corporate head quarters in November, 1996. It was shortly after that
incident that my family began to realize who Reginald Danboise really was. It is now clear that
he, among other things, was chosen to be organized crimes’ ‘inside confidence man’. He was
extremely effective.
In early March, 1997 I was subpoenaed to meet with AUSA Andrea Faulkes in order to share my
information with the prosecution. As I have already stated, at the initial meeting AUSA Faulkes
assumed that I too was a Teale insider and not a victim. I never did find out why she had that
prior misconception. Finally, I testified. At the trial one of the defendant’s had complained that
they were being tried when in fact they only made the ‘bullets’, i.e. the bogus stock, and that the
‘shooters’ or ‘schemer’s who were using the bogus stock to defraud its victims were allowed to
continue in business. This statement is precedent in light of the recent collapse of the global
financial industry.
A confirmation that the ‘schemers’ were somehow being protected came when, after my
testimony I met with ASUA Faulkes and other investigators. I requested that as an actual
financial loss victim my portion of the scheme be opened for further investigation. I was
informed that at the ‘highest levels’ my request had been denied. I was on my own. And, the
worse was yet to come.
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Post USA v Rennert Testimony Events – 1997
Within days of my completed subpoenaed testimony, I was informed that the High Birches pump
house had been sabotaged. The water piping, valves and controls in High Birches pump house
had been smashed. The heating system supplying the pump house water system had been shut off
allowing the water pipes to freeze and burst. I filed complaints with the local authorities and with
the Attorney General of the State of New Hampshire. I recall I even informed AUSA Faulkes. I
believe it was at that time that she said she would try again to get the attention of the FBI with
respect to our situation. [I am now aware that it was during this period that the FBI was in the
midst of trials and other issues protecting its Top Echelon program, and Whitey Bulger and his
Winter Hill Gang had already been named by me as an alleged perp in other related matters. It
was around this time that I was informed that my records at the Boston FBI had ‘gone missing’.
Apparently the Boston FBI did not want to raise any new complaints of mine at that time. I was
never contacted by anyone from the Boston Office of the FBI, nor the USA prosecutor.]
At this time the civil RICO case that I had brought in 1995, was in arbitration. On September 9,
1997 at a pre-arbitration meeting, the arbitrator signaled that he had read both arguments and was
leaning in my direction. Three days later, on September 11, 1997, the main production well at the
High Birches Springs located on westerly parcel of the No. Woodstock property, along with
several adjacent monitoring wells had been found to be purposely contaminated with a cocktail
of chemicals to include heavy metals and other carcinogens in criminal acts of sabotage, as
defined by USC Hobbs Act and Title 18 RICO statutes.
A series of quick maneuvers by RICO defendants convinced US District Federal Judge Gertner
to give possession of the entire No. Woodstock property to Crowninshield. The local authorities
allowed Motions to be filed in the matter that stated I was the primary suspect. It should be noted
here that the westerly parcel contained the production equipment that had been sabotaged, but it
was the easterly parcel that contained the majority of the springs and at that time they remained
untouched by any sabotage. I pointed this fact out to FDIC. Within days, the monitoring well on
the easterly parcel was also sabotaged with a liquid contaminant which was later identified as a
liquid equivalent in chemical make up to furniture stripper. Crowinshield had 24/7 Security
guards on the site, at the time of the second contamination.
Within a day of the second contamination event, I was personally on the site, and saw a man in a
red van that was later identified as belonging to the Winter Hill Gang. He was checking the
monitoring well on the easterly parcel. It should be noted that only two people knew where that
monitoring well was exactly located – myself and Reginald Danboise. When I attempted to read
the license plate on the red van I was physically restrained from doing so by the local police. The
red van quickly drove off after seeing the commotion.
In January, 1998 Judge Gertner had granted the RICO defendant’s Motion to Dismiss. One of the
compelling reasons that she stated in her Order was that New Hampshire had expressed a desire
‘to police its own environmental problems’. To this day I do not know who from New
Hampshire made the request that Judge Gertner acted upon. Jeanne Shaheen, wife of William
Shaheen of Shaheen Gordon (my former lawyers who committed fraud upon me and the
Hillsborough Superior Court) was Governor, at that time. Attorney John Broderick (former
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senior partner of Devine Millimet and then of Merrill & Broderick; both firms with clear
conflicts of interest against me) was Chief Justice of the NH Supreme Court, at that time.
Also of note is that I was informed by the Federal EPA investigator from the Boston Office, who
had already begun his investigation into the commercial sabotage of High Birches Mountain
Spring Water business immediately after I called him on September 12, 1997, that he had been
“relieved of his duties” by his superiors. The clean-up was now under the control of civil RICO
defendant Crowninshield, and the State of New Hampshire. Crowninshield paid the State of New
Hampshire a reported $100,000 to decommission the main production well [over all my
objections].
Crowinshield then brought a Petition to Foreclose in Grafton County Superior Court where the
No. Woodstock land was located. [Crowninshield had already succeeded in obtaining a favorable
ruling from Judge Edward Fitzgerald, one in the same person who by public accounts had been
appointed to the NH Superior Court bench due to the influence of Milo Pike, one of the
Blondheim Ponzi schemers, and his former boss at Pike Industries.] Essentially the prior ruling
although now known to be in error, found that the water rights had never been separated from the
land and therefore Crowninshield owned the water rights as well as the land. On August 23,
1999, over my strongest pro se objections, Judge Ftizgerald Ordered that Crowninshield’s
corporation Bridgeton, Inc. could foreclose upon both the water and the land on August 25,
1999. Bridgeton was the only qualified, and winning bidder. I filed an Appeal. The Appeal was
heard and denied. The panel of Justices appointed by CJ Broderick to hear the Appeal all were
already biased. The managing Justice, Galway, had been a senior partner in Devine Millimet
during the time of the foregoing narrative. He has since resigned from the bench.[I did not find
this fact out until years later.]
In October, 1999 the heretofore missing successor in interest to the BankEast second mortgage
made a claim upon the so called October 12, Judgment that has been previously discussed this is
where Shaheen Gordon, Devine Millimet and BankEast’s attorney Dan Sklar obtained the
judgment by fraudulent means. The October 1999 successor was the general partner, RFS, Inc. of
RICO defendant FDIC. RFS claimed that it purchased sole interest in the October 1989
Judgment shortly before it made its 1999 claim. [By this time I had also discovered information
that had previously been concealed in the corporate records, that Senter, while owned by the
Danboise’s had committed bank fraud with a property in Fremont, New Hampshire. I reported
this issue to the IRS. Reginald Danboise had filed Chapter 7 Bankruptcy in the early 90’s.]
I had already filed a Petition in Belknap Superior Court in order to force discovery. An
evidentiary hearing was scheduled for July 8, 1998. At the hearing it was clear that the judge had
been primed to be biased toward the fact that I was somehow a criminal as he warned me of my
5th Amendment rights. [The series of subsequent court cases should be available in the record
files of the Belknap Superior Court. But, there is a caveat here. I already have found that the files
are not complete.] The case was dismissed for lack of subject matter jurisdiction, but not before
the Judge made a separate find of facts in favor of FDIC.
In 2001, the parties were back in Belknap County Superior Court again on another Petition
brought by me on a related issue of the property owned by the Jean Vorisek Family Trust on
11
residential property located in Center Harbor. This property had been claimed by RFS as part of
the October 1989 Judgment. The RFS defendants defaulted and a default judgment was granted.
However, just prior to the settlement date, RFS Intervenors by and through its McLane Law
Office lawyers, Motioned for the Judge to re-open the matter. The Motion was granted. My
claim was dismissed.
2001 was a very bad year. My 90-year-old blind mother who I was personally living with and
caring for had become very distressed with the constant threats that were being made to take our
home. She had also experience the distress of being erased from the US Government Pension
records. The erasure caused her great effort to get reinstated. Subsequently she developed a
bladder infection on March 9. By April 14 she was dead from what I allege to be suspicious
causes. I demanded a forensic autopsy, but while she was in the custody of the NH Medical
Examiner her body went missing and the case remains a mystery to me to this day. I demanded
an investigation by the NH State Attorney General. No investigation was done. The information
that I forwarded to the NH AG’s offices is incomplete. I complained to NH Governor Lynch. I
also complained to the NH United States Attorney.
During the summer of 2002, I discovered that my identity had been erased form the Panama
Canal Archives. It is undetermined by me when my information was erased from my father’s
file. My father was Captain Robert A. Allan. He was a Panama Canal Pilot for 32 years. Several
years prior to his retirement in 1966, he had been promoted to the position of Asst Port Captain
of the Atlantic Side. I was born in Margarita, Canal Zone Panama in 1944. I legally entitled to be
both an American and Panamanian Citizen. In January 2003 I was forced to take a trip back to
the Republic of Panama to reinstate my birth information into the records. My birth information
had been erased from the official records in both countries. After returning from Panama, in
March of 2003, I was forced to legally change my name back to my maiden name of Jean
Elizabeth Allan. This also necessitated that I change by legal new name with Social Security
Administration. I was not able to complete the change as it was also discovered that my prior
identity had been stolen and most probably used for criminal purposes. One of the ongoing
complaints, among others, is my requirement from the US DOJ to either issue me a letter of
immunity for any crimes that may have been committed in my former name of Jean E. VorisekQuinn, or, issue me a new social security number. As of this writing US DOJ has done neither.
In June 2003, the New Hampshire USA’s Office of DOJ referred my ongoing complaints to the
Criminal Division in DC. AG Josh Hochberg was the contact person. I continued to provide
information to AG Hochberg, but, he, nor anyone from his office, ever contacted me. On
November 22, 2003, I came home, from running errands, to my home located at 309 Waukewan
Road, Center Harbor, NH in time to put out a suspicious fire that had started. The smell of the
smoke was very caustic. It appears that I inhaled a mixture, which included arsine gas. I filed a
complaint with the local police, and the NH AG. Investigator Damian immediately informed me
that there was no reason to investigate the matter. Case closed. Several months later in August,
2004 I was rushed Code One to Plymouth Hospital where the surgeon performed an emergency
appendectomy on me. The surgeon said my appendix was gangrenous, a common symptom of
arsine gas poisoning. Five years later I still suffer from the affects of that poisoning.
USA v Rennert Appeals
12
[Two days ago, I located the USA v Rennert Appeals information on Google. Over the years I
have attempted to locate public information on USA v Rennert and have had no success. I now
know that some of the related cases were never published. In 2007, Judge Fitzgerald claimed that
with a ‘modicum of due diligence’ I could have located the heretofore unknown 1989 BankEast
v Senter, BAM and Jean Vorisek Quinn case file. The file was misfiled in No. Hillsborough
Superior Court on October 12, 1989: The hearing date that my lawyers had intentionally NOT
notified me of in the first place.] [I consider finding these Appeals incorporated below to be a
similar issue.]
In case no. 417 F.3d 358 UNITED STATES of America v. Michael Lewis MILLER,
Appellant. No. 03-1519. United States Court of Appeals, Third Circuit. Argued December
5, 2003. Decided June 10, 2004.On Remand from the Supreme Court of the United States
April 4, 2005. July 29, 2005. Andrea G. Faulkes, Office of United States Attorney,
Philadelphia, PA, for United States of America. Christopher D. Warren, Philadelphia, PA,
for Appellant.
Before SLOVITER and ALITO, Circuit Judges, and OBERDORFER,* District Judge.
OPINION OF THE COURT
SLOVITER, Circuit Judge the following is of interest to this case study:
“Before us is the appeal of Michael Lewis Miller following the order of the United States
Supreme Court granting certiorari, vacating the judgment of this court, and remanding for further
consideration in light of its decision in United States v. Booker, 543 U.S. ___, 125 S.Ct. 738, 160
L.Ed.2d 621 (2005). As explained below, having determined that the sentencing issues
implicated here are best addressed by the District Court in the first instance, we will remand for
resentencing.”
In April 1997, a jury sitting in the United States District Court for the Eastern District of
Pennsylvania convicted Miller (an attorney), as well as his co-defendants George Jensen,
Philip Rennert, and David Yeaman, for their involvement in a complex scheme involving the
leasing of worthless stocks of three public companies to the Teale Network ("Teale"). See
generally United States v. Rennert, 374 F.3d 206 (3d Cir.2004); United States v. Yeaman,
194 F.3d 442 (3d Cir.1999).1 Teale, a network of fraudulent offshore and domestic
companies, represented these leased stocks as assets available to pay claims pursuant to
reinsurance contracts entered into with a Pennsylvania-based insurance company, the World
Life and Health Insurance Company ("World Life"). When World Life attempted to liquidate
these assets to pay outstanding medical reinsurance claims, the stocks were found to be
worthless. The jury convicted Miller of conspiracy, wire fraud, and securities fraud for his
role in the scheme. Rennert, 374 F.3d at 207.
The District Court also rejected, over the United States' objection, the application of
additional sentencing enhancements for use of special skills (e.g., Miller's legal training) and
for substantially jeopardizing a financial institution (the stock market). Rennert, 374 F.3d at
209.
13
By way of several unpublished opinions, see United States v. Rennert, Nos. 98-1145 & 98-1101,
slip op., 1999 WL 1072198 (3d Cir. Oct. 15, 1999); United States v. Jensen, Nos. 98-1148 & 981104, slip op. 1999 WL 1072195 (3d Cir. Oct. 15, 1999); United States v. Miller, Nos. 98-1147
& 98-1103, slip op., 1999 WL 1072197 (3d Cir. Oct. 15, 1999), as well as one published
opinion, see United States v. Yeaman, 194 F.3d 442 (3d Cir.1999), we affirmed the convictions
in all respects. However, on the United States' cross-appeals, we remanded Miller's case, along
with that of his co-defendants, for resentencing. See Rennert, 374 F.3d at 209. Specifically, we
directed the District Court to reconsider whether there was a causal connection between the
Defendants' misrepresentations and the fraud loss (and, if so, in what monetary amount) and, in
Miller's case, whether an enhancement would be appropriate for Miller's use of special skills
(i.e., his legal training).
Pursuant to our directive, the District Court, on February 3, 2003, held a resentencing hearing
for Miller, Jensen, and Rennert
Considering, however, that in vacating our judgment, the Supreme Court did not discuss, let
alone call into question, Miller's underlying conviction or our holdings thereon, this court will
not remand the issue of Miller's conviction to the District Court. Thus, to be perfectly clear: the
only issue that the District Court is to consider on remand is that of Miller's sentence. Cf.
Agnew, 407 F.3d at 195.
We further note that, in its February 13, 2003 opinion calculating Miller's sentence, the
District Court engaged in a fair amount of judicial fact finding. For instance, the District
Court itself resolved the issue of causation with respect to fraud loss and further determined
the amount of loss occasioned by Miller's crimes. It also decided — without any jury
findings on such topics — that Miller had utilized special skills and had occasioned a loss of
confidence in an important institution. In addition to engaging in such judicial fact finding,
the District Court also necessarily resolved various procedural decisions at the sentencing
hearing; for example, it declined to permit Miller to submit the additional evidence he
proffered at the February 3, 2003 sentencing hearing. Rennert, 374 F.3d at 210. And, as
discussed above, this court affirmed the District Court's factual findings, legal conclusions,
and procedural decisions in all respects.
During the preparations for the trial [USA v Rennert . No. 96-cr-00051] that I testified as witness
for the prosecution. I provided the prosecution with all the material that I had in my possession. I
have no idea whether it was the entire universe of all the material to include communications
between Devine Millimet, Attorney Miller, and their joint client Martyn Redman and/or First
Equity. Considering all the conflicts of interest that my attorney Devine Millimet had with
representing me in the sale of Senter to First Equity, I would suspect that there was material
information that was kept from me. I am aware however that Devine Millimet was working with
its clients First Equity and Martyn Redman on issues of factoring medical receivables, which
was also aTeale scheme.]
14
PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD
CIRCUIT NO. 03-1511
UNITED STATES OF AMERICA v. PHILIP ANDRE RENNERT, Appellant
NO. 03-1518 UNITED STATES OF AMERICA v. GEORGE RAYMOND JENSEN,
Appellant NO. 03-1519 UNITED STATES OF AMERICA v. MICHAEL LEWIS
MILLER, Appellant
On Appeal from the United States District Court for the Eastern District of
Pennsylvania(D.C. Crim. No. 96-cr-00051) District Judge: Hon. Clarence C. Newcomer
Argued December 5, 2003 Before: SLOVITER, ALITO, Circuit Judges and
OBERDORFER
*
, DistrictJudge
(Filed: June 10, 2004)
James H. Feldman, Jr. (Argued)
Law Offices of Alan Ellis
Ardmore, PA 19003-2276
Attorney for Appellant,
Philip Andre Rennert
Peter Goldberger
Law Office of Peter Goldberger
Ardmore, PA 19003-2276
Attorney for Appellant,
George Raymond Jensen
Christopher D. Warren (Argued)
Philadelphia, PA 19103
Attorney for Appellant,
Michael Lewis Miller
*
Hon. Louis F. Oberdorfer, United States
District Court for the District of
Columbia, sitting by designation.
Page 2
2
Patrick L. Meehan
United States Attorney
Laurie Magid
Deputy United States Attorney
for Policy and Appeals
Robert A. Zauzmer
Assistant United States Attorney
Senior Appellate Counsel
Andrea G. Foulkes(Argued)
Assistant United States Attorney
Office of United States Attorney
Philadelphia, PA 19106
15
Attorneys for Appellee
OPINION OF THE COURT
SLOVITER, Circuit Judge.
“Appellants Michael Miller and Philip Rennert were convicted by a jury of
conspiracy, wire fraud, and securities fraud; Appellant George Jensen was convicted by a jury of
securities fraud. Their convictions resulted from their involvement in a complex scheme under
which they leased the worthless stocks of several public companies to the Teale
Network (“Teale”), a fraudulent network of offshore and domestic companies. The
details of the operation of the Teale Network, through its principal Alan Teale,
are set forth in our earlier opinion in United States v. Yeaman, 194 F.3d 442
(3d Cir. 1999), and we repeat only such details as are necessary to decide the issues before us in
this appeal.”
“In essence, Teale represented the worthless leased stocks as valuable assets that could be
liquidated to pay claims pursuant to reinsurance contracts entered into with World Life and
Health Insurance Company (“World Life”), a Pennsylvania insurance company that was already
in financial difficulty. When World Life attempted to liquidate these assets to pay its outstanding
medical reinsurance claims, the stocks were found to be worthless. World Life became insolvent
at some point during or before 1988, but did not reveal its financial difficulty to regulators or to
its insureds. In 1989 and 1990, World Life issued four group medical policies. Teale entered into
contracts reinsuring World Life’s policies from November 1989 to November 1990. Pursuant to
these agreements, Teale assumed 100 percent of the liability associated with World Life’s four
group medical insurance policies in exchange for receipt of 92 percent of the premiums paid
by World Life’s insureds on those policies. Appellants supplied Teale with stocks
from offshore companies that Teale could list as putatively valuable collateral backing the
company, though the stocks were essentially worthless. Yeaman, 194 F.3d at 447. In 1990,
Rennert created Forum Rothmore to serve as an intermediary between Teale and the publicly
traded corporations that desired to lease their stock to Teale. This arrangement created the
appearance of legitimacy in two ways. First, Forum Rothmore helped the Teale Network comply
with Pennsylvania reinsurance regulations that require unlicensed offshore reinsurance
companies, such as Teale, to deposit in escrow accounts collateral (in the form of corporate
stocks) equal to the liability associated with its reinsurance contacts.”
“Second, Forum Rothmore entered into “surplus contribution agreements” with
Teale, which gave Teale the appearance of being backed by independent stockholdings. Id. Teale
and Rennert first met and discussed this fraudulent scheme in August 1990 and executed the first
of their surplus contribution agreements on September 1, 1990.”
“Under the terms of these agreements, public shell corporations leased their stock to Teale and
authorized the sale of the stock, if necessary, to pay claims under insurance policies that Teale
had reinsured. Teale then listed these shares at inflated values on the financial statements
presented to World Life. After receiving insurance premiums from World Life, Teale paid
monthly leasing fees to Forum Rothmore, which in turn split the fees with the stock providers.
Id. The Teale Network was Forum Rothmore’s sole client, and Forum Rothmore was the
was the Teale Network’s only consistent source of assets.”
16
“In particular, Forum Rothmore entered into surplus contribution agreements with Ecotech
Corporation (“Ecotech”). Jensen was at various times in control of and president of Ecotech. On
December 15, 1990, Jensen manipulated Ecotech’s stock price and then leased one million
dollars worth of Ecotech’s stock to Teale. [Teale, the fact show, then leased the ECHOTECH
shares to First Equity who then pledged them to Senter as liquidated damages if the First
Equity failed to close the sale (my emphasis)] Although Ecotech’s shares were virtually
worthless, Appellants fraudulently over-valued Ecotech’s shares on the company’s financial
statements.”
“Members of the conspiracy manipulated the market for Ecotech and other corporations’ stock in
order to maintain the inflated trading prices. Miller, a lawyer, was corporate counsel for Forum
Rothmore and a shareholder in Ecotech. The Ecotech stock at issue was not tradeable and carried
a restrictive legend to that effect. Miller issued opinion letters stating that Forum Rothmore could
remove that legend fromstock certificates so that it falsely appeared that the stock could be freely
traded and leased to Teale.”
“The Government submitted evidence that Miller was paid $130,208 for representing the
company and $104,000 from leasing Ecotech stock to Teale.”
“In 1991, the Pennsylvania Insurance Department discovered World Life’s insolvency and
ordered its liquidation. Because Teale had been paying insurance claims with recently-received
premiums and had no other significant assets to draw upon, this liquidation deprived Teale of the
ability to pay further insurance claims. World Life’s policyholders thus were unable to receive
insurance payments as needed.”
“Following World Life’s liquidation, the Pennsylvania Life and Health Insurance Guarantee
Fund, a state fund through which Pennsylvania insurance companies pay the outstanding
liabilities of insolvent carriers, provided approximately $6.4 million for group medical
reinsurance claims left unpaid as a result of the fraud.”
“Appellants were indicted on February 6, 1996 and were convicted by a jury on April 16, 1997.
At the sentencing hearing held January 22, 1998, the District Court assigned each Appellant a
one-point upward departure for loss of confidence in an important institution, but found no
monetary loss attributable to the Appellants because World Life was insolvent at the time it
entered into reinsurance contracts with Teale. The District Court also rejected the application
of additional sentencing enhancements for use of special skills and substantially jeopardizing a
financial institution. Appellants appealed their individual verdicts and sentencing calculations to
this court in 1998 and we set out the full factual and procedural history of their cases in prior
unpublished opinions. See United States v. Rennert, Nos. 98-1145 & 98-1101, slip op. (3d Cir.
Oct. 15, 1999); United States v. Jensen, Nos. 98-1148 & 98-1104, slip op. (3d Cir. Oct. 15,
1999); and United States v. Miller, Nos. 98-1147 & 98-1103, slip op. (3d Cir. Oct. 15,
1999).”
“The Government cross-appealed, arguing that the District Court had erred in finding that there
was no loss caused by the fraud, in failing to increase Miller’s offense level because he had used
17
special (legal) skills in furtherance of the conspiracy, and in failing to increase all Appellants’
offense levels for causing a substantial effect on a financial institution.”
“In Miller, we rejected Miller’s argument that he acted “only as an attorney.” Instead, we held
that Miller’s involvement went “beyond the role of legal representation” and could not “be
categorized as simple legal advice,” especially given Miller’s ownership of Ecotech stock and his
letters regarding removal of restrictive legends. Miller, slip op. at 6.”
“However, we remanded all three cases for re-sentencing to consider 1) whether there was a
causal connection between the Appellants’ misrepresentations and the fraud loss caused by
Teale’s collection of premiums, and 2) in Miller’s case, whether an enhancement would be
appropriate for Miller’s use of special (legal) skills. With respect to fraud loss, we clarified that
the fraud loss calculation should be based onthe dates of Appellants’ agreement to the
conspiracy, rather than the dates of their misrepresentations. Also, in a related case, we suggested
that the loss calculation might be based on the net gain to Teale or the balance of unpaid claims.”
“On February 3, 2003, the District Court held a re-sentencing hearing for Miller, Jensen, and
Rennert. Miller attempted to present testimony and documents in support of his argument that
the scope of his involvement in the conspiracy was less than that of his co- conspirators and that
the extent of the total loss caused by the fraud was not foreseeable to him. In particular, Miller
attempted to contest the Government’s arguments that he was present at the August 1990 TealeRennert meeting, that he prepared opinion letters in support of the conspiracy, that he received
payments for services as a stock provider, and that he falsified records bearing the date of
Ecotech’s merger with a gold mine to create additional stock shares for Teale.”
“The District Court declined to permit Miller to submit additional evidence that was not already
presented at trial because the issue was “subsumed” by the jury’s verdict and was therefore
immaterial to sentencing. See App. at 350-53 (finding Miller’s factual allegations were “matters
of defense for the trial, not for sentencing”).”
“On the issue of fraud loss causation, the Government presented two witnesses, a representative
from the Liquidations and Rehabilitation Section of the Pennsylvania Department of Insurance
and a general counsel to a third-party administrator. They stated that, had their organizations
known that Appellants’ assets were worthless, they would have halted the flow of premiums
months earlier and forced World Life to obtain a solvent reinsurer.”
“On February 13, 2003, the District Court issued a sentencing opinion concluding that Miller,
Rennert, and Jensen entered into an agreement conspiring to defraud World Life and its
policyholders no later than August 30,1990. The District Court held that the total fraud loss
caused by the Appellants was approximately $3.2 million: the difference between the total
premiums paid to Teale minus the claims paid by Teale to World Life’s policyholders. The
District Court further found that there was “a causal connection between them is representations
of the Defendants and the continued payment of premiums to World Life . . .and the
Defendants.” App. at 12-13.”
“Finally, the District Court increased Miller’s sentence based on his use of
18
special skills and more than minimal planning. The Appellants also received upward departures
for causing the loss of confidence in an important institution (the stock market). The District
Court sentenced Miller to 51 months, Rennert to 63 months, and Jensen to 30 months of
imprisonment. All three Appellants contest the District Court’s factual finding of a causal c o n n
e c t i o n. We explained the causality analysis as follows: Teale could not have
entered and remained in the business of reinsuring World Life but for its
f r a u d u l e n t m i s r e p r e s e n t a t i o n s .”
“Although the District Court made no finding on the issue [before], the record would also appear
to us to support the proposition that World Life was not capable of insuring any of the four group
medical policies without having received a commitment for 100% reinsurance. It follows that if
the Teale fraudulent reinsurance contracts had not been available, World Life would either have
secured other reinsurance or would not have issued the group policies involved. If reinsurance
from a solvent reinsurer had been obtained, all claims under the policies would have been paid to
the reinsurer; if the group policies had not been issued, the employers who purchased the policies
from World Life would have obtained group medical coverage from another source and all
claims of the beneficiaries would have been paid in full. In either event . . . there would have
been a causal nexus between the fraud and all unpaid claims. Id. at 459. In short, we found that
the most reasonable inference is that World Life relied on the Appellants’ misrepresentations
about the value of their stock assets when it paid Teale additional
premiums.”
“Had the true value of the Defendants’ stocks been known, at the very least, the Pennsylvania
Department of Insurance would have stopped the payment of premiums to the Teale Network.”
Although Appellants argue that the District Court’s findings do not answer the q u e s t i o n o f
w h e t h e r t h e i r misrepresentations caused the fraud loss, it is apparent that the Department
of Insurance did not intercede because it didnot know “the true value of the [Appellants’]
stocks.” App. at 13. That lack of knowledge was the result of Appellants’ misrepresentations of
the value of those stocks. This, in turn, caused the Department of Insurance to permit
World Life’s continued operation and caused World Life to continue providing Teale insurance
premiums in reliance on Appellants’ misrepresentations.”
“Appellants’ attempt to sever the c o n n e c t i o n b e t w e e n t h e i r misrepresentations and
the Department of Insurance’s delayed intervention is unpersuasive.”
“If Teale were insolvent, it no longer could meet its contractual obligations to provide
reinsurance to World Life. Because Appellants have identified no contract provision requiring
World Life to continue providing premiums after Teale has materially breached their contract,
we have no reason to assume that World Life would be bound to continue honoring a contract
that Teale had breached.”
“But the fraud victim’s negligence or lack of diligence in uncovering the fraud is not a defense.
United States v. Coyle, 63 F.3d 1239, 1244 (3d Cir. 1995) (“The negligence of the victim in
failing to discover a fraudulent scheme is not a defense to criminal
conduct.”) (citations omitted); see also United States v. Bennett, 9 F.Supp. 2d
19
513, 523 (E.D. Pa. 1998) (“Taking advantage of a victim’s self-interest does not mitigate the
seriousness of fraudulent conduct.”) (quotations and citations omitted). Nor do the Appellants
cite any case law suggesting that courts may not find fraud loss causation where the victim has
not immediately assisted the authorities in investigating the fraud.”
“Miller contends that even if a defendant has been convicted of a conspiracy charge, the trial
court must make particularized findings as to the scope of each conspirator’s involvement in
order to increase the conspirator’s sentence under Section 1B1.3.”
“Under the Sentencing Guidelines, a defendant’s offense level is subject to increase depending
on the amount of loss caused by the fraud. Section 1B1.3(a) provides that the district court
should adjust the specific offense level by taking into account all conduct relevant to the offense.
U.S.S.G. § 1B1.3(a). This includes “all reasonably foreseeable acts and omissions of others in
furtherance of [a] jointly undertaken criminal activity.” U.S.S.G. § 1B1.3(a)(1)(B). Miller asserts
that United States v. Collado, 975 F.2d 985 (3d Cir. 1992), requires that we remand this case in
light of the District Court’s lack of findings as to the precise scope and timing of his agreement
to join the conspiracy.”
“Collado, we stated that the district court must consider whether the loss resulting
from the actions of co-conspirators was 1) “in furtherance of the . . . jointly-undertaken . . .
activity,” 2) within “the scope of the defendant’s agreements,” and 3) “reasonably foreseeable in
connection with the criminal activity the defendant agreed to undertake.” 975 F.3d at 995 (citing
U.S.S.G. § 1B1.3, application note 1); see also United States v. Duliga, 204 F.3d 97, 100 (3d Cir.
2000). We held that the relevant conduct provision depends upon each defendant’s role in the
conspiracy and stated that courts must conduct “a searching and individualized inquiry into the
circumstances surrounding each defendant’s involvement in the conspiracy” in order to “ensure
that the defendant’s sentence accurately reflects his or her role” in the conspiracy. Collado, 975
F.3d at 995”
“We added that district courts also should consider other factors, such as whether the defendant
profited or assisted others in the conspiracy. Id. At 991-94. We further clarified that a conspiracy
conviction does not obviate the need for analysis under the relevant conduct provision. Id. at 993,
997. Collado dealt with the liability of two brothers involved in a larger drug conspiracy. The
district court had not made any factual findings as to the scope of the brothers’ involvement in
the conspiracy or in each other’s transactions, but instead only adopted the findings of
the presentence report in attributing to each of them the drug quantity from the
conspiracy.”
“We remanded the case to the district court to determine when the defendants had joined the
larger conspiracy because the district court had made no finding on the issue and the record was
not clear on this issue. Critically, however, we also affirmed the district court’s attribution to
one brother the amounts the other brother supplied to the conspiracy. We affirmed this finding
based on our review of the record, despite the district court’s lack of explicit findings on this
issue. Because the record was clear on its face, the district court’s lack of particularized findings
was not dispositive. We instead concluded that the district court’s accomplice attribution
conclusion between the brothers was supported by the record evidence of their awareness of and
20
assistance to each other in drug transactions. See id. at 997
Here, the record evidence suffices to support the conclusion that Miller had agreed to the
conspiracy by at least August 1990 and should be held liable for the full amount of loss caused
by the conspiracy. [August 31, 1990 was when First Equity signed the purchase and sales
agreement with BAM. Devine Millemet wrote the agreement]
Miller’s opinion letters on fraudulent stock transactions, his demand letters to protect artificially
inflated stock quotes, and his letters advising the removal of restrictive stock certificate legends
so that non- marketable shares would appear to be tradeable. Miller played a critical role,
enabling the conspiracy to function and providing it an imprimatur of legitimacy.
The record evidence of Miller’s extensive involvement in the conspiracy supports the
District Court’s application of the relevant conduct provision. Rennert-Teale meeting, Miller
provided Rennert with an opinion letter to support Forum Rothmore’s practice of leasing
worthless assets. On July 13, 1990, Miller authored an opinion letter recommending the re-issue
of the restricted Ecotech stock held by Jensen, Rennert, and Miller without a restrictive legend.
This made it appear that Forum Rothmore could provide Teale with millions of marketable
shares. In an August 28, 1990 letter, one week after the Rennert-Teale meeting, Miller wrote to
Teale expressing his interest and commitment to what he termed the “credit enhancement
program” that forms the basis of the fraud charges against the defendants, along with a $25
million offer of stocks from Ecotech and other corporations. Supp. App. at 638-47.
Regardless of whether he was present at the Rennert-Teale meeting, the remainder of Miller’s
actions strongly support the District Court’s conclusion that he had joined the conspiracy by or
before August 1990.
The court continued: “Yet, the cumulative effect of Miller’s aforementioned actions (the June
opinion letter, the July letter recommending re- issue of stock, and the August letter to Teale)
suggests that Miller was too central to the operation to believe naïvely that he and his associates
were all within the bounds of the law. Based on the record evidence, Miller’s explanation is not
credible and the District Court did not abuse its discretion in rejecting Miller’s attempt to submit
evidence regarding his presence at the Rennert-Teale meeting. Miller also attempted to submit
evidence from his personal records and journals that he contended showed that he was not paid
to provide stock to Forum Rothmore with knowledge of his co- defendants’ fraudulent activities,
but only received legal fees and a loan. Miller emphasizes that Forum Rothmore’s faulty
accounting system improperly denominated his payments as stock provider fees, rather than
traditional payments for legal fees.”
“As the Government points out, the designation of Forum Rothmore’s payments as “leasing
fees” or “legal fees” is inconsequential because the payment was made in exchange for Miller’s
services in advancing a fraudulent scheme. Because Miller does not contest the District Court’s
finding that he used his legal skills in furtherance of the fraud, the fact of payment for fraudulent
services is the critical point while the form of his payment is irrelevant. Moreover, as we
noted in Miller, Miller’s services could not “be categorized as simple legal advice.”
Miller, slip op. at 7.”
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“Even if Miller did not falsify records until late 1991, there were still enough other indicia of his
involvement in 1990, discussed above, to support the conclusion that he already had committed
to the conspiracy in 1990, regardless of whether he committed additional frauds in connection
with Ecotech’s merger with the gold mine corporation. In sum, even assuming that Miller would
have been permitted to submit his proffered evidence, Miller’s evidence would not have been
sufficient to undermine the basis in the record for imposing accomplice liability.”
“We hold the District Court did not abuse its discretion in denying Miller’s proffer of
the evidence. We will affirm the judgment of the District Court for the reasons set forth”.
Successors in Interest to BankEast 2nd Mortgage – 2005
While the 1996 USA v Rennert Appeals were processing through the Federal Court system, the
successors in interest to the BankEast loan became emboldened in their desperation.
Although I have no suspects to name in the attack against me in February 2005, the heretofore
Ponzi schemers certainly had motive to shut me up for good. The attack that occurred in the
downstairs hall of my home on February 5, 2005 left me lying unconscious in my own pool of
blood, due to blunt force trauma to my forehead. I have no memory of the event. The last thing I
do remember is coming out of the downstairs bathroom draped in only a towel after bathing. As I
turned the corner the proverbial ‘lights went out’. When I awoke I was dazed and confused. I
finally called my neighbor who drove me to the emergency room at the Plymouth Hospital.
There I was given an MRI scan and seven stitches. I was diagnosed with a concussion, but my
skull had not been fractured. [The treatment records should be on file at the Plymouth Hospital,
Plymouth, New Hampshire.] I still suffer period blinding headaches and sleep disorders due to
the attack.
Then a month later I was served with a foreclosure notice brought by Robin Arkley II’s company
SN Servicing, Inc. for the benefit of its client Ingomar, LP. Judge Kenneth McHugh heard the
case in Belknap Superior Court. [The case file should be on record in the Belknap Superior
Court.] The foreclosure Petition was granted by Judge McHugh who determined that at that time
I owed more than $850, 000 on the October 12, 1989 Judgment (a naked mortgage) which was
only granted due to a fraud upon the court as I have already described herein. [At the time of
Judge McHugh’s decision I was still not aware of the circumstance of the October 12, 1989 fraud
upon the No. Hillsborough Superior Court so I did not argue that defense.] I appealed the case
and lost.
At this time I clearly smelled a ‘rat’ so I took a Petition to US District Court of New Hampshire.
During the discovery process of that case [06-cv-224-sm] was and only after trial Judge
McAullife instructed Arklely’s lawyer from the McLane Law Office to divulge where the
October 12, 1989 case file could be located, did I find, and immediately copy the file.
My federal Petition was dismissed due to Rooker Feldman considerations, but I thought I had
what I needed to go back to Belknap Superior Court to reopen the foreclosure case, which I did.
[Additionally I bundled up the discovery documents and testimony and sent it to US DOJ OIG.
In January, 2007 OIG US DOJ sent me a letter that stated my complaint had been sent to the
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Criminal Division of US DOJ for review. On September 4, 2008 Rep. Carol Shea Porter received
the response from Principal Deputy Attorney General Keith B. Nelson that should be already in
your file.]
An evidentiary hearing on my Petition to re-open the foreclosure matter was finally set on
September 25, 2007 in Belknap Superior Court, Laconia, New Hampshire. Not to my great
surprise: Judge Edward Fitzgerald presided. His Order came swiftly. Essentially he found that
with a ‘modicum of diligence’ I could have found out all this information a long time ago,
therefore, it did not qualify as newly discovered information. The foreclosure could proceed as
scheduled.
I have in my possession a video recording of the foreclosure. By October 3, 2007 I filed an
Appeal with the NH Supreme Court. [A complete record of that Appeal should be on file at the
New Hampshire Supreme Court]. In my appeal I strenuously argued that Judge Fitzgerald was
biased and was not fit to sit on my case then or on any of the prior cases. My argument fell on
the deaf ears of Chief Justice Broderick, who should have recused himself from hearing this case
as well, considering the other prior matters citing his conflicts of interests. Chief Justice
Broderick’s law firm, if the reader will recall, represented me in the initial Petition to Quiet Title
on the abutter’s claim against the No. Woodstock property. Additionally, Chief Justice Broderick
was a senior partner in Devine Millimet when it represented the engineers who committed the
fraud that was the proximate cause of all the subsequent civil matters to include this Appeal.
And, additionally Chief Justice Broderick’s role in the ex-parte communication with Federal
Judge Gertner has yet to be explained to any reasonable person’s satisfaction. It is well settled
law that cases decided by biased Judge’s are void as a matter of law.
Although the New Hampshire Supreme Court affirmed Judge Fitzgerald’s decision pursuant to
the foreclosure it did not reach or consider my argument whether the first mortgagee on the
subject property located at 309 Waukewan Road tortuously interfered. Since that issue remained
undecided, I filed a complaint with the New Hampshire Banking Commission.
On August 14, 2008 I met with the banking and consumer divisions of the New Hampshire
Banking Department. I was requested to file formal complaints against certain of Robin Arkley
II’s companies, which I did. I also filed a complaint against Laconia Saving Bank. In both
complaints I sought an opinion from the New Hampshire Banking Department whether any of
the parties had violated NH banking regulations. I asked for restitution. [The complaints should
be found in the files of the New Hampshire Banking Department.] I have had not response from
the New Hampshire Banking Department as of the date of this writing.
The alleged high bidder at the September, 2007 foreclosure has effectively disappeared.
Currently, I am in foreclosure limbo. I have written numerous letters to Robin Arkley II’s
companies, but have heard no response as of the date of this writing.
Personal Observations
It is difficult for me to separate the above case study and the Bernard Madoff self-confessed to
Ponzi scheme. As the January 11, CNN reporter has cited: “Fraud carries prison time of up to 20
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years, though at this magnitude "it could be decades," says Piesch.
“And there's no such thing as helping a little bit when it comes to being an accomplice to fraud:
If convicted, Madoff's ‘marketeers’ would be guilty of the full scheme. That's just the criminal
side. On the civil side, the intermediaries are likely to face lawsuits from defrauded investors and civil charges, lawyers say, are a lot easier to prove.”
A reasonable person, after reading my case study would have to come to the realization that most
if not all the herein named ‘fraudsters’ and ‘Ponzi schemers’ considering many of them were in
the legal profession, already knew their risk exposure and took all necessary steps to make
certain they protected each other through out the system. “Pay to Play” was but one effective tool
that furthered the enterprise by either committing fraud upon the Court systems, or influencing
regulators and other agents of the government, be they appointed or political.
As everyone who has followed the Bernard Madoff Implosion knows all Ponzi schemes have to
come to an end. The question only remains when and how.
In May, 1998, in Washington DC, in her prepared statement, Debra a Valentine, General
Counsel for the US Federal Trade Commission gave a presentation on “Pyramid Schemes” to the
International Monetary Fund’s Seminar on “Current Legal Issues Affecting Central Banks”.
This cautionary speech was delivered seven years after the Nunn Hearings found that Alan
Teale’s insurance scams had also affected the banking and securities industries. [And, also as a
reminder here, the US Taxpayer is now on the hook for the $700,000 Billion TARP legislation.
And, according to President Elect Obama, there is more out-lay to come.]
Ms. Valentine, more than ten years ago warned that: “Pyramid schemes now come in so many
forms that they may be difficult to recognize immediately. However, they all share one
overriding characteristic. They promise consumers or investors large profits based primarily on
recruiting others to join their program, not based on profits from any real investment or real sale
of goods to the public. Some schemes may purport to sell a product, but they often simply use
the product to hide their pyramid structure.” [To date all the public reporting appears to point to
the fact that Mr. Madoff’s Ponzi scheme was in reality structured as a Pyramid, much like Alan
Teale’s scams were structured.]
Ms. Valentine continued by stating: “A Ponzi scheme is closely related to a pyramid because it
revolves around continuous recruiting, but in a Ponzi scheme the promoter generally has no
product to sell and pays no commission to investors who recruit new "members." Instead, the
promoter collects payments from a stream of people, promising them all the same high rate of
return on a short-term investment. In the typical Ponzi scheme, there is no real investment
opportunity, and the promoter just uses the money from new recruits to pay obligations owed to
longer-standing members of the program. In English, there is an expression that nicely
summarizes this scheme: It's called "stealing from Peter to pay Paul." In fact some law
enforcement officers call Ponzi schemes "Peter-Paul" scams. Many of you may be familiar with
Ponzi schemes reported in the international financial news. For example, the MMM fund in
Russia, which issued investors shares of stock and suddenly collapsed in 1994, was characterized
as a Ponzi scheme.” [Again, a perfect description of what has so far been publicly reported about
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Mr. Madoff and his ‘feeder firms’ that include Robert Jaffe, a known associate of the Blondheim
Ponzi schemers.]
As Ms. Valentine warned the International Bankers: “Both Ponzi schemes and pyramids are
quite seductive, because they may be able to deliver a high rate of return to a few early investors
for a short period of time. Yet, both pyramid and Ponzi schemes are illegal because they
inevitably must fall apart. No program can recruit new members forever. Every pyramid or Ponzi
scheme collapses because it cannot expand beyond the size of the earth's population. When the
scheme collapses, most investors find themselves at the bottom, unable to recoup their losses.
[Again, a perfect description of Mr. Madoff’s and his fellow investor’s plight. The very structure
of the Ponzi scheme can dictates that whenever the collapse occurs, at least 70 percent will be in
the bottom level with no means to make a profit. The real question however is whether there can
ever be profits based upon an illegal scheme in the first place? Certainly, a question for the
authorities going forward. It was not until the AUSA understood that I was not an investor in the
scheme, but that the ECOTECH stock had been pledged to my company as liquidated damages,
did she treat me as a victim.]
The following comments by Ms. Valentine go to the heart of an issue that must be somehow
finally resolved. In 1998, Ms. Valentines stated that: ‘Pyramid schemes not only injure
consumers. In many cases, they affect the daily operations of banks and taint the banking
industry's overall reputation for safety and soundness.”
She continued to opine that: “Many pyramid promoters disparage the bank industry and promote
their own program as a superior alternative to traditional banking and investment. Melvin Ford, a
defendant in the SEC's recent case against International Loan Network, stated that his company's
bonus program was "the most powerful financial system since banking." At the height of his
popularity, Charles Ponzi actually proclaimed that he would form a new banking system and
divide profits equally between depositors and shareholders.”
Ms. Valentine cited: “In FTC v. Cano the Commission observed first-hand the impact of pyramid
schemes on the banking system and individual banks. In that case, the Commission targeted an
alleged Internet pyramid scheme that operated under the name Credit Development International
("CDI"). For an initial payment of $130 and subsequent monthly payments of $30, consumers
could join CDI's "Platinum Infinity Reward Program" and become a participant in its "3x7
Forced Matrix" -- a structure that promised commissions going seven layers deep and that
required each participant to recruit just three new members. CDI represented that participants
could earn more than $18,000 per month in this program.”
The Dirkeim Paradigm – after Emile Dirkheim [1858-1917], who postulated that criminal
behavior is humanity's norm and that ethical conduct is anomalous – should be a concern to all
regulators in this creative destruction world of global finance. Deterring the predators must
encompass more than additional regulation. If the reader would refer back to the USA v Rennert
Appeal cases they mostly concerned themselves with the issue of sentencing; and, more
appropriately the downward departure of sentencing. Finding and defining the ‘financial loss
victim’ appears to be the flaw in the sentencing guideline structure. Who or what institutions
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were actually harmed by Alan Teale or Bernard Madoff, currently the Ponzi schemer ‘de la
journee’.
As I stated in the opening of this letter educating the prey is a must. Ms. Valentine must concur
as she stated in her seminar that: “Consumer education - Law enforcement is the cornerstone of
the Commission's fight against pyramid schemes; however, we also try to educate the public so
that they can protect themselves. In our educational efforts, we have tried to take a page from the
con artists' book and use new online technology to reach consumers and new entrepreneurs. For
example, on the agency's web site at "www.ftc.gov", the Commission has posted several alerts
regarding pyramid schemes and multilevel marketing problems. The Commission records over 2
million "hits" on its home page every month and receives several thousand visitors on its
pyramid and multilevel marketing pages.” [Clearly more has to be done in this area.]
Finally, all the education in the world and all the newly promulgated financial laws and
regulations in the world cannot, nor will they prevent corruption of government. Fines alone
have been considered as the cost of doing business. From my personal experience only a
significant loss of personal freedom acts as a deterrent to organized white-collar Ponzi schemers,
fraudsters, banksters, and gangster the likes of front men Alan Teale and Bernard Madoff
represent. Each front man that is given a serious sentence, should act as a warning to other
predators who are ready at a moments notice to fill the vacuum at the top of the pyramid.
Thank you for your attention to my case study. I am hopeful that it has been helpful to you and
that in turn you will make an investigator available to assist me in gaining the restitution that my
family is entitled to after all these many long years.
Sincerely,
Jean E. Allan
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