INVESTMENT SCAM

When executives of a technology startup in Los Angeles were offered the opportunity to receive an investment from someone they knew and trusted, they jumped at the chance. Movie producer, Frank Ordoubadi of M2M Entertainment, said he could arrange a once-in-a-lifetime investment deal that totaled 9 figures. Frank introduced them to his “good family friend,” Moyses Levy. "[He] is the second largest landowner in Brazil" and "[he] invests in entertainment companies," said Frank.

Moyses branded himself as an expert in collateralized securities and used an obscure financial instrument known as an international bill of exchange.

The bills worked something like this: Moyses registered liens against his Brazilian land assets in the U.S. With the help of his business partner, James Griffin, he collateralized millions of acres with the U.S. Treasury over a 13-year period. The Treasury agreed to issue bills on behalf of land parcels in equivalent value under two conditions: (a) like a bond, the bill wouldn't be cashable for 5 years, and (b) the bill's beneficiary was required to be a business in the U.S., whereby each bill would be, in essence, representative of a longterm investment into the business.

Frank told stories of how dozens of other startup companies benefited from his friend's uncommon but coveted financial tool because ”every bank in the world” would lend to a bill's beneficiary. The U.S. Treasury backing it meant the bill was as “good as gold." And on several occasions, Moyses, himself, referred to the bill as “U.S. Legal Tender.”

As it turns out, extensive tutorials existed online touting the process of how international bills of exchange were, in fact, "monetized."

On an ordinary Saturday in August 2021 at the Sheraton Gateway Hotel next door to Los Angeles International Airport, in a nondescript half untucked shirt, Moyses sat at a long table by himself cleaning a coffee spill from his pants. He told the startup's execs that he flew in on his private jet earlier that day from North Carolina.

Frank, arriving from Hawaii, joined the meeting as well. He was known for talking a thousand words per minute and that day he didn't disappoint. He monopolized the first hour of the meeting with stories of his Hollywood connections and movie shoots. Needless to say, excitement filled the air as Frank and Moyses relished the ceremony of a new business partner receiving a freshly issued international bill of exchange.

Moyses carefully reached into to his rumpled leather backpack and pulled out an already-opened Fedex envelope which contained the bill brandishing a face value of $100 million. It contained all the markings of what you would expect a Treasury bill to include: holographic watermark, multiple serial numbers, IMAD code and U.S. insignias.

And on the right side of the bill was the most important part, "Drawer: Secretary of the Treasury of the United States."

“Put it in a safe place,” Moyses murmured as he handed it over to the startup's execs.

Enclosed with the bill was a letter addressed from their business partner, James Griffin, along with a newly signed amendment to a UCC Financing Statement which allegedly perfected a partial security interest in Moyses' land assets for which the bill’s value was based upon.

As a credit service for businesses, James' website offered to arrange such bills through the U.S. Treasury.

At this point in time, the startup's execs had paid them over $152,500. And before long, they would pay an additional $60,000. Spend a couple hundred thousand dollars to get a hundred million dollars. Good deal, right?

One month passed and they started getting calls from them. In the morning, Moyses called from the East Coast, “when is the rest of the money coming?” In the afternoon, Frank called from Hawaii, “do you want us to help you monetize that bill? Then pay up, my friend!” The calls didn't stop for months.

Meanwhile, the execs visited several banks on their own in and around Los Angeles and, having presented the bill to various bank managers, they received lukewarm feedback in return. “Too exotic” or “unconventional” they were told. After a couple of months, it was clear no one would lend even one dollar against the bill.

Moyses proclaimed, ”I can collateralize the bill myself in Brazil." And presuming he was unable to monetize it there, "I can go to the National Bank of Kuwait." But before he would try contacting these banks, he demanded more money from them.

Two more months passed. And more money was spent to cover additional fees. All the while, the execs relied on continued representations through text, email and phone calls that their new business partners would secure a bank to arrange a credit facility or loan against the bill.

Unexpectedly, in January 2022, all responsive communication from Frank, Moyses and James ceased with no explanation. The execs were shocked. And that's when reality had begun to set in. They had been defrauded.

Not long after, the execs filed a complaint with the Office of the Inspector General with the U.S. Treasury. And in less than 48 hours, an Officer from the Treasury responded in an email: "All international bills drawn on the U.S. Treasury are fraudulent… This includes the bill you attached.”

The Officer directed them to a section of the Treasury's website detailing the type scam they had encountered, common bogus bill schemes.

Their worst fear had come true. Nearly a quarter million dollars was flushed down the toilet. This would be devastating to any startup tech company. But they pressed on and continued to pursue a refund.

The execs decided to confront them in an email writing that they possessed verifiable confirmation that the bill was fake. Not expecting any response, Moyses broke his silence and replied, “let’s focus on the bigger picture and fund your company right now with an investment." By ignoring the bogus bill entirely, it became clear Moyses was behaving like a typical con artist at this point: keep the scam going no matter what and either deny or ignore any accusations of wrongdoing.

After filing complaints with the FBI, the Secret Service, the SEC and the LAPD, they learned that Moyses, Frank and James already had a history with law enforcement. Yet they managed "to stay one step ahead of authorities every time" said Special Agent Lauren with the FBI. By charging only $200,000 for each bill, apparently it was small enough to stay under the radar.

According to their UCC statement in the public record, more than 184 bogus bills were issued to unsuspecting victims around the world totaling an alleged value of over $100 billion dollars. It was reasonable to believe hundreds of bills were in circulation where each contained marks in equivalence to counterfeit U.S. legal tender, in contravention of numerous federal statutes, including 18 U.S.C § 1343 and 18 U.S.C. § 514.

Upon further investigation, it was discovered that a private bank in New York was suing Moyses for one of the bills. In the case of Magellan Global v. Levy, et al, they swindled over $1 million from Magellan Global and there was an outstanding civil judgement against them from a New York Supreme Court Judge.

It turns out fake international bills of exchange are more common than you might think. In 2016, a 72-year-old man in Oregon employed a Ponzi scheme using the same kind of bills. Over a fifteen-year period, Winston Shrout manufactured and distributed bills that totaled an alleged value of $100 trillion. In the case of United States v. Shrout, a federal judge sentenced Shrout to 120 months in prison for essentially the same scheme that Frank, Moyses and James were operating.

“One of the victims lost everything. Unfortunately, that happened to so many people,” explained Special Agent Lauren with the FBI. “This was a sophisticated operation that hurt hundreds of people.”

As law enforcement investigates the case, the startup's execs thought it would be a good idea to tell their story. If they can prevent others from falling in the same trap as they did, there's some good that can come out of this. "In hindsight we should have known better," said one of the execs. However, "it seemed real because their scheme was so complex." They continue to support authorities in their ongoing investigation.

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If you have any tips or if you feel that you have been the victim of fraud involving international bills of exchange, please contact the Office of the Inspector General at the United States Treasury at the hotline listed on their website.