U.S. seeks $1.3 million tied to Ponzi scheme

Brian Seals

Wednesday, June 10, 1998 | 11:27 a.m.

Two people accused of soliciting funds for an alleged Las Vegas-based Ponzi scheme avoided jail time for contempt Tuesday afternoon in U.S. District Court.

Michael and Denyse Anderson, who ran San Diego-based Financial Growth Consultants, agreed to appoint new trustees to oversee their trust in the Cook Islands. Those trustees will be directed to provide an accounting of their overseas assets and to bring the funds held there back to the United States, in compliance with a federal court order.

The Andersons are the target of a suit brought by the Federal Trade Commission. They had claimed the trust had a "duress" clause that dissolved their control of the trust once litigation began, thus rendering them unable to comply with the court order.

However, in a court filing FTC attorney Greg Shaprio called that claim "a sham." He said that even if such a clause were in effect, the Andersons could appoint new trustees and tell them to send the money back to the United States. The Andersons' agreement to do just that allowed them to stay out of jail for contempt of court, which U.S. Judge Lloyd George threatened them with last week.

A hearing on the status of transferring the overseas funds back to the states is set for Thursday with a follow-up hearing set for the following Tuesday.

"It will be our position if the money isn't brought here next Tuesday, they should be incarcerated," Shaprio said Tuesday.

He said documents show the couple transferred at least $1.3 million to the overseas trust.

The San Diego couple's woes stem from its company, Financial Growth, soliciting investors for Affordable Media LLC, doing business in Las Vegas as the Sterling Group.

The Sterling Group is also the target of state and federal securities investigations as well as a string of individual civil suits.

The company sold to investors $5,000 units of television advertising time to promote impulse items, promising up to a 50 percent return. Those returns attracted numerous investors. But the situation started to unravel earlier this year when investors complained they weren't getting their money back. State and federal officials believe that new investor money was being used to pay old investors.

If the FTC prevails in its suit, the Andersons' money would be used to pay back jilted investors, Shaprio said. George also indicated that would be the case during the morning portion of Tuesday's hearing.

"I expect that these funds will be restored and these people who made significant contributions will have their money restored," George said.

Lawsuits began to surface in mid-April against the Sterling Group and Financial Growth Consultants. Eric Stein, who headed the Sterling Group, disappeared at some point prior to March 30. Angry investors seeking to get their money back went to the Sterling Group's Maryland Parkway office only to find it vacant.

Stein remains at large and is wanted by Nevada authorities on state securities violations. Two other principals in the company, Ina Liberty Bell and Phil Balestrieri, have been arrested and face a Sept. 9 preliminary hearing on fraud and securities violations. They remain free on bail.

Nevada Deputy Attorney General Matthew Gabe said Tuesday that rumors have swirled about where Stein is, but his whereabouts remain unknown.