Two San Fernando Valley men will be sentenced March 30 for running a Ponzi scheme in which they collected hundreds of millions of dollars from investors who were falsely told over 13 years their money would be used to buy profitable automated teller machines.
Joel Barry Gillis, 74, and 76-year-old Edward Wishner each face up to 80 years in federal prison when they are sentenced by U.S. District Judge S. James Otero, according to the U.S. Attorney’s Office.
They each pleaded guilty to conspiracy, two counts of mail fraud and one count of wire fraud in connection with the loss of more than $100 million by nearly 2,000 investors.
Gillis and Wishner operated Calabasas-based Nationwide Automated Systems Inc., which purported to place, operate and maintain ATMs in high-traffic locations, such as hotels, casinos and convenience stores.
NASI claimed that it operated more than 30,000 ATMs and was involved in more than $1 billion in ATM transactions monthly.
Gillis and Wishner told victims that NASI would lease the ATMs and pay the investors 50 cents for each transaction performed at their particular machine, guaranteeing annual returns of 20 percent on each ATM.
NASI and its salespeople urged some investors to use their retirement savings “by claiming that investments in NASI’s sale/leaseback program would outperform most traditional retirement investment accounts,” according to court papers.
NASI did make monthly payments to investors, but that money came from other investors.
While NASI operated a small number of ATMs — no more than 250, which were owned by the company and not investors — the overall operation was a sham hidden under the veil of a Ponzi scheme, federal prosecutors said.
The scheme unraveled last summer when NASI “bounced approximately $3 million in checks that had been sent by NASI as monthly returns to victim- investors,” according to court papers. “By the end of the month, NASI had drained its bank account, drawing it down to a balance of less than $200,000.”
In response to hundreds of calls from investors, Gillis and Wishner “falsely sought to reassure the victim-investors that NASI was only suffering from accounting problems and technical delays relating to system upgrades, and that timely payment of investor returns would likely resume by the beginning of October 2014,” according to court papers.
Even as the Ponzi scheme was collapsing, Gillis and Wishner continued to raise another $4 million from victim-investors.
The U.S. Securities and Exchange Commission filed a civil lawsuit in relation to the NASI scheme in September, which resulted in a court order freezing the company’s assets and the appointment of a receiver.
— City News Service
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