Three Omaha Men Indicted on Charges Related to Alleged Commodities Pool Ponzi Scheme
Following a 2011 CFTC lawsuit, three Omaha men have been indicted on 14 counts of conspiracy and fraud related to an alleged $4.7 million Ponzi scheme. Authorities say approximately 130 Nebraska investors were defrauded.
According to the 14-count indictment, Jonathan W. Arrington, Michael B. Kratville, and Michael J. Welke, through their companies Elite Management Holdings Corp., MJM Enterprises, and NIC LLC, solicited millions of dollars in a purported commodities trading pool.
The men allegedly told investors they had developed a proprietary trading system that could render annual returns of more than 70 percent yet still protect against loss.
The men also allegedly told investors that their companies had met target returns every month since 2002, and that no more than 10% of an investor’s principal would be invested at any one time. According to the indictment, these statements were intentional lies.
“As the Defendants well knew, the earliest Elite investor in the Defendants' newly established investment program wasn't solicited until late summer of 2005,” stated the indictment. Additionally “as the Defendants well knew, the Defendants had no control over what percentage of [the investors’] funds were being traded.”
Court documents specify a number of other egregious lies told to potential investors, among them:
• Elite employed some of the top 10 commodities traders in the world;
• Kratville was friends with Warren Buffett;
• Buffett’s children invested with Elite Entities;
• Several large companies had made multi-million-dollar offers to purchase their proprietary trading system, but that they declined because they wanted to “help the small guy get his children through school.”
Welke also allegedly posed as an investor and raved about Arrington’s “character” to potential investors.
If convicted, the men could face up to 20 years in prison for each charge.