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Monday, November 8, 2021

PONZI "PIMP"?: In 2005, Four Years Before Filing Chapter 7 Bankruptcy, Robert Munger Was Sued For Recovery Of "Fraudulent Tranfers" Received From Daniel Broucek--The Mastermind Of A $130 Million West Michigan Ponzi Scheme; According To Federal Bankruptcy Court Documents, Munger's Duray Development, LLC Received "Substantial Interest And Commission Payments" From Broucek


"The commission recipients were key to the expansion of the Ponzi scheme...Pupler Distributing would have been only a fraction of its eventual size" without them, the lawyers said.

It was a West Michigan version of Bernie Madoff, without the fancy-schmancy wardrobe and $10 million Upper East Side penthouse.

In the early 1990s, Grand Rapids schlub, mook, schlemiel, yutz area resident, Daniel Broucek, became involved in the electronic discount card business. According to federal court documents filed in Broucek's bankruptcy case, after "pouring the majority of his time and money into this business for several months, it failed to produce much income."

In order to continue working on his venture and keep his head above water, Broucek made like electricity and took the path of least resistance.

He fabricated a phony business venture to lure in "investors". Existing only in his mind, and never as a legal corporate entity, and hatched solely as a device to produce income for himself, Broucek started Pupler Distributing Company in early 1993. (I guess "Ima Con" was already taken.)

Word spread on the Dutch Calvinist streets of Grand Rapids that Broucek had a business opportunity that would yield a high rate of return on a short-term loan, and he soon had investors willing to plunk down money in his fictitious company.

Broucek initially believed that before the "loans" came due, his electronic discount card business would start turning a profit and the investors would be repaid.


The discount card business sank like the Titanic, and Broucek needed more money to pay the initial investors. 

By telling the same, or largely the same story, and guaranteeing the same inflated rate of return (roughly 45% annually), Broucek obtained more money from new investors, paid the first investors, and "voila!", a Ponzi scheme was born.

And, just as growth for the sake of growth is the ideology of a cancer cell, so too is it the principle of greed.

Broucek's "Pupler" Ponzi scheme quickly grew to proportions that even he never anticipated.

"Investors"were lining up around the block and, before Broucek knew it, his investment scheme had metastasized throughout the West Michigan community, spreading to hundreds of people and consuming millions of dollars.

To keep the Ponzi scheme from collapsing, Broucek kept very careful records.

Initially, the interest rates offered by Pupler were in the range of 45-46% annually. However, proving the old adage: "He who is greedy is always in want," several investors became immune to this exorbitant rate of return, demanding even higher rates. 

In later years, interest rates to some investors skyrocketed to as much as 450% on an annualized basis.

Additionally, some of the original investors requested commissions of finder's fees for referring other investors to Pupler.

The Ponzi scheme collapsed in 2002 after a Grand Rapids bank Corporate Security officer contacted the FBI regarding concerns about the Pupler account.

Broucek filed bankruptcy on November 14, 2002, launching a years-long series of civil forfeiture and bankruptcy trustee adversary proceedings.


On November 8, 2004, bankruptcy trustee Thomas A. Bruinsma filed an Adversary Complaint against Robert Munger and his "Duray Development, LLC" entity. In the complaint, Bruinsma confirmed that Munger/Duray had made "several investments" with Broucek over "many years" and "received substantial interest and commission payments" from Broucek.

Let that sink in for a minute.

Bruinsma revealed Munger was one of the "commission recipients", agents responsible for perpetuating the growth of Broucek's Ponzi scheme.

Bruinsma's complaint went on, stating that Munger "should have known or knew" of the unlawful or fraudulent nature of Broucek's operation, but that Munger "continued or even increased his investments" with Broucek.

On May 25, 2005, Munger signed a formal settlement agreement, agreeing to pay nearly $173,000 to the Trustee, representing his net "Ponzi profits", and two instances of "preference liability" for payments made within 90 days prior to Broucek's bankruptcy filing.



Does this sound like someone you'd want to gamble taxpayer money (in the form of a risky land contact) with?

Didn't think so.