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Friday, March 7, 2014

FORMER BUCKHANNON ASSOCIATE ARRESTED, CHARGED WITH WIRE FRAUD: Kari Sonovich, Robert Buckannon And A Mysterious $872,305 Wire Transfer

I'm leaving Las Vegas
Lights so bright
Palm sweat, blackjack
On a Saturday night
Leaving Las Vegas
Leaving for good, for good
I'm leaving for good
I'm leaving for good



In the second in a three-part series, Miss Fortune reveals the arrest of Buckhannon associate Kari Sonovich—and details the nearly $900,000 he wired to a bogus British "investor".

KARI SONOVICH ARREST

When Kari Sonovich was arrested in California on February 6 
on three counts of mail fraud, few knew Sonovich’s seismic shock could eventually reach all the way to Battle Creek, Michigan—except for Robert Buckhannon, the person referred to in the Sonovich indictment as “R. B.”. 

The Sonovich indictment detailed three wire transfers totaling $345,000 that occurred on February 5 and February 6, 2009.

According to the January 30 indictment (unsealed after her arrest), between July 2008 and April 2009, Sonovich recruited investors to invest with her Las Vegas company, B&B Consulting Group LLC, by telling them she could place their funds with an international trader who operated at an extremely high level, promising returns of up to 500 percent every 90 days.


When investors deposited funds with her, Sonovich kept some or all of the funds for herself. The indictment alleges that Sonovich received more than $3 million from investors. To date, no investor has received the promised returns, and in most or all instances, no investor has received any of their initial investment back.

Some investors in Sonovich’s scheme became involved at the same time that an earlier investment fraud scheme in which they had invested was collapsing. 

THE EIMT PONZI SCHEME

Former Buckhannon associates Anthony Vassallo and Kenneth Kenitzer ran that Folsom-based Ponzi scheme through their company Equity Investment Management & Trading (EIMT). Both were convicted for that scheme, Vassallo is serving a 16-year prison sentence and Kenitzer was sentenced to a 6-year prison term on February 14, 2014.

Sonovich recruited EIMT investors while she was in Las Vegas, Nevada and Sacramento, California beginning around July 2008 and continuing at least through April 2009. Court documents indicate Sonovich gave them “materially false statements” to induce them to part with their funds.


Sonovich claimed that she could help the EIMT investors recoup their losses by investing with a “Sir Joseph Birch”, a man who supposedly had a warehouse full of gold bars. Sonovich falsely told investors Birch “would return anywhere between 250 to 500 percent every 90 days”. Sonovich falsely represented that she would be paid solely out of the investors’ profits. She told investors that after each 90 day cycle, they would have the opportunity to pull their investments out, leave the investments and profits invested for continuing 90 day periods, or pull out a portion and leave the remainder for an additional 90 day period.

But Sonovich didn’t tell the former EIMT investors who gave her in excess of $3 million dollars was that she did not wire the funds to the shadowy financier “Sir Joseph Birch”—she sent most of the money to her personal bank account and that of Brandy White Elk, a “managing member” of B&B Consulting described in the indictment as “B. W-E.”.

In most instances, court documents state, the investors sent funds to Sonovich through one of two bank accounts: a B&B Consulting Group, LLC business account at Charles Schwab or her personal bank account at Nevada State Bank. 

However, in three instances, funds were wired directly to an overseas account associated with a man who calls himself “Sir Joseph Birch”.

In one of those instances, the wire originated from an individual, “R. B.” The indictment states that “R. B.” was “induced to wire the funds to J.B. by individuals acting in coordination with Sonovich”, who gave “R. B.” the impression that the wired funds belonged to EIMT, whose investors, after the collapse of EIMT, wished the funds to be transferred to “Sir Joseph Birch”.

The “R. B.” in the Sonovich indictment is Battle Creek chiropractor, Robert Buckhannon, and the story of that March 2009 transaction was vividly portrayed by writer Joshua Davis in the December 2011 issue of Condé Nast’s WIRED Magazine in an article about Dave Sanders.


WIRED...AND BUCKHANNON'S $872,306
 
Sanders, the senior vice president of sales and marketing at a company that sold fiber-optic and copper cable, put together a money-recovery team to help investors recoup investments lost to Anthony Vassallo’s Ponzi scheme, EIMT.

Sanders met with investor Vassallo investor Russ Putnam in December 2008, who introduced him to Kari Sonovich and Brandy White Elk. Putnam told Sanders the two were friends of his sister-in-law and owned a mortgage brokerage in Vegas. When they’d heard about Putnam’s troubles, they’d offered to use their real-estate know-how to track down property investments Vassallo had made, Putnam later told IRS investigators.

Sanders met Anthony Vassallo at Putnam’s home that night, and in January 2009 Sanders escorted Vassallo to a Sacramento-area bank to retrieve the $1.2 million of investor money he’d stashed there.

Kari Sonovich began pitching Russ Putnam on her investment opportunity—with a “successful British securities trader” named Sir Joseph Birch. Sonovich said he was a financial adviser to the Vatican and had special access to the markets that allowed him to make enormously profitable trades. Sonovich claimed Birch could help Putnam make some of his money back.

According to the WIRED article, Sonovich and White Elk were staying with Putnam, Sonovich and White Elk were staying with Putnam, and to Dave Sanders the women seemed to be getting increasingly close to Vassallo. Putnam’s wife, Charity, would later report to IRS investigators that White Elk confessed that both she and Sonovich were having sex with Vassallo.

Before long, according to interviews and court documents, it came to light that Vassallo was using the opiate-based painkiller Oxycontin. Charity told IRS investigators she thought Sonovich “could control Vassallo with his drug addiction … and took full advantage of it.”

WIRED reported the alleged coercion quickly produced results. Sonovich revealed that Vassallo had $872,306 on deposit with an investment firm in Las Vegas.

Vassallo’s money was managed by Robert Buckhannon.

In a meeting held on Sunday, February 9, 2009, Sanders and his team met with Buckhannon after he’d shown up at the office of Brandy White Elk expecting to meet with Vassallo and a prospective investor.

According to WIRED, Sanders told Buckhannon he had to immediately initiate a wire transfer of $872,305, the amount Buckhannon allegedly owed Vassallo’s investors. If Buckhannon cooperated, he’d have no further problems. If he refused, court documents show, a member of the recovery team told him that federal agents would harass him and that his business would be ruined.

Sanders handed Buckhannon wiring instructions for SJB’s purported account in the UK, and Buckhannon hastily pulled a laptop out of his satchel. He used an open Wi-Fi connection to log in to his bank account and ordered the transfer. When it was done, he showed them the confirmation screen, Sanders recalls.

Anderson and Sanders looked at each other. They didn’t think it would be this easy.

“You’re free to go, then,” Anderson said.

In March 2009, the federal government filed civil and criminal complaints against Vassallo, charging him with multiple counts of fraud, conspiracy, money laundering, and securities violations.

The court appointed Stephen Anderson, a retired banker, to act as a receiver to recover funds for investors, and he soon went after Buckhannon’s firm. 


The receiver demanded that the company return money that Vassallo had invested, but a few days before an evidentiary hearing was to be held before a federal magistrate judge, Buckhannon’s firm hastily declared bankruptcy and hasn’t repaid any of the money.

The $872,305 disappeared into the purported Sir Joseph Birch fund and has yet to be recovered.
 

If convicted, Sonovich faces a maximum statutory penalty of 20 years in prison and a fine of up to twice the losses resulting from the scheme.

I'm leaving Las Vegas
And I won't be back
No I won't be back
Not this time


COMING MONDAY: WHO IS DAVID R. DAMANTE, AND HOW DID HE "CHANGE THE PLANET"...AND END UP IN FEDERAL PRISON?

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