THE GRAND JURY CHARGES:
Introductory Paragraphs
1. Beginning in or about January, 1992, CHARLES DAVID WEEKLEY filed with
North Carolina for the incorporation of an entity known as The Diamond Group
(TDO). WEEKLEY was then employed as a stockbroker in Charlotte, North Carolina.
.2. Using his existing client base, WEEKLEY solicited investors' funds
for TDG projects. During 1992, WEEKLEY obtained from two existing clients
$100,000 for investment in an offshore bank trading program. This investment
ultimately failed.
3. in or about 1993, WEEKLEY was introduced by telephone to HARRY J.
KAMPETIS, a self-described "money manager" from the Pittsburgh,
Pennsylvania area.
4. In or about June, 1993, WEEKLEY obtained from existing clients approximately
$45,000 in loaned funds to use as start-up capital for TDG. At the suggestion
of KAMPETIS, $25,000 of those funds were used to pay for the creation of
a "private placement memo" (PPM) to be presented to potential
investors in TDG. The PPM outlined the goals of TDG, advising that TDG would
"engage primarily in investment and trade in debt obligations in the
international money market."
5. After WEEKLEY obtained the PPM, he solicited other previous clients
to invest in his bank debenture trading program. WEEKLEY informed clients
that their funds would be pooled into a bank debenture trading program and
would generate at least a 20% annual rate of return. WEEKLEY informed investors
that their principal would be more secure than in a bank. By July, 1993,
WEEKLEY had raised approximately $1.1 million from investors. TDG debentures
were issued to each client and the funds were kept in a TDG bank account
at FIRST UNION NATIONAL BANK in Charlotte, North Carolina.
6. In or about November 1993, WEEKLEY and KAMPETIS became partners whereby
KAMPETIS agreed to furnish WEEKLEY with expertise and consultation to assist
in international banking transactions. KAMPETIS also agreed to keep the
books for the venture.
7. On or about November 29, 1993, TDG entered into a "financial
services agreement'' with KAMPETIS whereby KAMPETIS agreed to serve as the
"escrow agent" for TDG.
8. On November 30, 1993, WEEKLEY wire transferred approximately $1.1
million dollars from the FUNB TDG account to KAMPETIS' Mellon Bank account
in Pittsburgh. These funds were wire transferred to a female in California
named Susan Brava, d/b/a Alt Capital, for investment in a bank debenture
trading program. After an unsuccessful attempt at investing the funds in
a trading program, most of the funds were diverted to other ventures not
disclosed in the PPM. These ventures ultimately failed.
9. During the summer of 1994, KAMPETIS and WEEKLEY agreed with Susan
Brana, d/b/a Alt Capital, to invest additional TDG funds in a venture involving
the distribution of "Bynatone," a horse feed supplement. WEEKLEY
raised approximately $909,123 from eight clients, again using the PPM. These
funds were wire transferred from the FUNB TDG account to KANPETIS' Mellon
Bank account in Pittsburgh. Investors were never informed that their funds
were diverted to this venture, which never came to fruition
10. Between February, 1994 through March, 1995, KAMPETIS received from
Brana approximately $570,000 in original TDG funds, of which KAMPETIS returned
$390,000 to WEEKLEY and kept $180,000 for himself WEEKLEY used some of these
returned funds to make initial interest payments to TDG investors. TDG investors
believed that these interest payments represented the proceeds of investments
in offshore bank trading programs.
11. In or about early 1995, KAMPETIS presented WEEKLEY with another investment
opportunity which centered around the activities of GREGORY CAPLINGER a
self-described physician operating a clinic in Santo Domingo, Dominican
Republic. KAMPETIS represented that CAPLINGER had developed a. liquid substance
to treat people affected by the AIDS virus. CAPLINGER was looking for funding
to support his research and to market his medicine commercially throughout
the world. WEEKLEY and KAMPETIS saw this as an opportunity to make large
amounts of money, and to replenish those funds already lost in other prior
ventures.
12. On May 3, 1995, KAMPETIS loaned $50,000 of TDG funds to CAPLINGER's
company, World Medical Services- The funds were wired by WEEKLEY to CAPLINGER's
attorney in Florida.
13. During this time in 1995, WEEKLEY informed investors about Dr. Caplinger
and his program, but never informed them that their funds had already been
used to make loans to CAPLINGER.
14. In or about June, 1995, WEEKLEY raised approximately $1.3 million
from approximately sixteen investors to place in another "bank trade."
Investors were furnished PPM's and a one year debenture note was issued
to each. Investors were promised a 36% annual rate of return.
15. During the first week of July, 1995, the $1.3 million raised by WEEKLEY
was wire transferred from FUN13 TDG account to First Interstate Bank in
Los Angeles where contacts of KAMPETIS were supposed to begin a bank trade.
These funds were frozen by the bank and later returned in November, 1995,
to WEEKLEY.
16. In or about the fall of 1995, KAMPETIS and WEEKLEY incorporated a
new company, Immuno Pharmaceuticals in Pennsylvania. The company was to
market CAPLINGER's abilities and to raise the monies needed to market his
medicine.
17. In or about October 1995, WEEKLEY began wire transferring funds to
CAPLINGER on a regular basis using TDG funds. These funds were raised through
notes that WEEKLEY had issued to investors as well as the issuance of TDG
debentures. Approximately $900,000 of the funds returned to WEEKLEY by First
Interstate Bank were used to help pay for medicine and cover CAPLINGER's
expenses.
18. During the course of approximately two years, a total of approximately
$1.8 million in TDG funds were turned over to CAPLINGER in hopes of producing
lucrative returns. The TDG investors, however, were not aware that their
investment funds were going to CAPLINGER.
19. By in or about Spring, 1996, WEEKLEY ceased making interest payments
to investors. WEEKLEY informed some investors that their monies were "tied
up," but never disclosed that TDG was in financial peril.
20. During the summer and fall 1996, WEEKLEY and KAMPETIS decided to
sell stock in Immuno Pharmaceuticals in an effort to raise additional cash.
WEEKLEY represented that investment in CAPLINGER's medical program would
ensure lucrative returns. Approximately fifteen investors contributed a
total of $230,000 in Immuno stock and the funds were sent to CAPLINGER.
21. CAPLINGER falsely represented to WEEKLEY and KAMPETIS that he was
an accomplished and published medical doctor, with bona fide degrees from
medical schools and institutes in Europe; that he was a candidate at one
time for the Nobel Peace Prize for his working involving AIDS patients.
WEEKLEY and KAMPETIS in turn promoted CAPLINGER's medical program to investors
based on these representations
22. Despite the financial support provided, CAPLINGER's program never
evolved into a successful venture. By January, 1997, WEEKLEY could no longer
raise any funds to support the program.
23, In the spring of 1997, WEEKLEY began receiving calls from investors
regarding the status of their investments and interest payments. WEEKLEY
initially claimed that their funds were "tied up," sometimes referring
to "German bonds." When pressed for Information, WEEKLEY conceded
that their were problems and that them was some litigation involving the
partners. WEEKLEY did not inform investors that their funds had been diverted
to other projects not covered in the PPM and that he had raised additional
funds making false representations. By late spring, WEEKLEY stopped taking
calls from investors.
24. During the course of the scheme, WEEKLEY raised approximately $4,951,213,
which represented $3.9 million from TDG debentures, $790,000 in TDG notes,
and $230,000 in Immuno stock.
25. During and in furtherance of the scheme, WEEKLEY paid approximately
$764,142 in interest to the investors in order to give the appearance of
validity of the investment schemes, always using proceeds from one investor
to pay a previous investor.
Count One
From in or about November, 1993, through in or about the end of 1997,
within the Western District of North Carolina, and elsewhere,
CHARLES DAVID WEEKLY
and
HARRY J. KAMPETIS
combined, confederated, conspired, and agreed with one another to commit
offenses against the United States, including violations of Title 18, United
States Code, Sections 1341 and 1343 (mail and wire fraud), and in furtherance
thereof, caused the commission of at least one overt act in the Western
District of North Carolina, as set forth in the foregoing introductory paragraphs.
incorporated herein by reference,
All in violation of Title 18, United States Code, Section
371.
Counts Two through Nine
The introductory paragraphs set forth above are realleged and incorporated
herein by reference.
From in or about November, 1993, through in or about the end of 1997,
within the Western District of North Carolina, and elsewhere,
CHARLES DAVID WEEKLEY
and
HARRY J. KAMPETIS
having devised a scheme and artifice as described above to defraud certain
individuals and for obtaining money and property from them by means of false
and fraudulent Pretenses, representations, and promises, for the purpose
of attempting to execute, and executing such scheme and artifice, knowingly
and unlawfully did cause to be transmitted by means of the mails, funds
and/or correspondence to and from locations within the Western District
of North Carolina, And aided and abetted one another therein, each such
transmission being a separate violation of Title 18, United States Code,
Sections 1341 and 2:
|
Count |
Investment Amount |
Mailing |
|
Two |
$198,000 |
6/2/95 |
|
Three |
$667,123 |
11/29/95 |
|
Four |
$60,000 |
1/25/97 |
|
Five |
$145,000 |
9/1/95 |
|
Six |
$269,000 |
12/30/95 |
|
Seven |
$770,000 |
1/30/96 |
|
Eight |
$150,000 |
10/31/95 |
|
Nine |
$70,000 |
10/2/96 |
Counts Ten through Sixteen
The introductory paragraphs set forth above are realleged and incorporated
herein by reference.
From in or about November, 1993, through in or about the end of 1997,
within the Western District of North Carolina, and elsewhere,
CHARLES DAVID WEEKLEY
and
HARRY J. KAMPETIS
having devised a scheme and artifice as described above to defraud certain
individuals and for obtaining money and property from them by means of false
and fraudulent pretenses, representations, and promises, for the purpose
of attempting to execute, and executing such scheme and artifice, knowingly
and unlawfully did cause to be transmitted by means of the wires, funds
to and from locations within the Western District of North Carolina, and
aided and abetted one another therein, each such transmission being a separate
violation of Title 18, United States Code, Sections 1343 and 2:
|
Count |
Date |
Transaction |
|
Ten |
8/23/94 |
$10,000 wired from TDG@FUNB to Kampetis@Mellon Bank, Pittsburgh, PA with
further credit to Alt Capital@Merrill Lynch, Los Angeles |
|
Eleven |
11/22/94 |
$60,000 wired from Kampetis@PNC Bank, Pittsburgh, PA to TDG@FUNB |
|
Twelve |
3/30/95 |
$90,000 wired from Kampetis@PNC Bank, Pittsburgh, PA to TDG@FUNB |
|
Thirteen |
6/29/95 |
$12,000 wired from TDG@FUNB to Kampetis@PNC Bank, Pittsburgh |
|
Fourteen |
7/26/95 |
$15,000 wired from TDG@FUNB to Kampetis@PNC Bank, Pittsburgh |
|
Fifteen |
12/15/95 |
$25,000 wired from TDG@FUNB to Kampetis@Integra Bank, Pittsburgh |
|
Sixteen |
2/9/96 |
$5,000 wired from TDG@FUNB to Kampetis@Integra, Bank, Pittsburgh |
Counts Seventeen through Twenty-Two
The introductory paragraphs set forth above are realleged and incorporated
herein by reference.
From in or about the beginning of 1995, through in or about February,
1997, within the Western District of North Carolina, and elsewhere,
GREGORY E. CAPLINGER
having devised a scheme and artifice as described above to defraud certain
individuals mid for obtaining money and property from them by means of false
and fraudulent pretenses, representations, and promises, for the purpose
of attempting to execute, and executing such scheme and artifice, knowingly
and unlawfully did cause to be transmitted by means of the wires, funds
to and from locations within the Western District of North Carolina, each
such transmission being a separate violation of Title 18, United States
Code, Sections 1343:
|
Count |
Date |
Transaction |
|
Seventen |
5/4/95 |
$49,000 wired from TDG@FUNB to attorney for Caplinger @NationsBank of FLA,
Tampa |
|
Eighteen |
10/3/95 |
$25,000 wired from TDG@FUNB to Caplinger@Banco Gerencial, Santo Domingo,
DR |
|
Nineteen |
11/29/95 |
$50,000 wired from TDG@FUNB to Caplinger@Banco Gerencial Santo Domingo,
DR |
|
Twenty |
12/15/95 |
$825,000 wired from TDG@FUNB to Caplinger@Banco Gerencial, Santo Domingo,
DR |
|
Twenty-One |
7/26/95 |
$70,000 wired from TDG@FLNB to Caplinger@Banco Grerencial. Santo Domingo,
DR |
|
Twenty-Two |
9/20/96 |
$40,000 wired from IPI@FUNB to Caplinger@Banco Gerencial, Santo Domingo,
DR |
Counts Twenty-Three and Twenty-Four*
The Introductory paragraphs set forth above are realleged and incorporated
herein by reference.
On or about the dates specified below, within the Western District of
North Carolina, and elsewhere,
GREGORY E. CAPLINGER
did cause the transporting, transmittal, or transfer and attempt to cause
the transporting, transmittal, or transfer of a monetary instrument and
funds (specified below) from a place in the United States (the Western District
of North Carolina) to or through a place outside the United States (the
Dominican Republic), with the intent to promote the carrying on of specified
unlawful activity, and aided and abetted at least one other therein, all
in violation of Title 18, United States Code, Sections 1956(a)(2)(A) and
2 (each transaction constituting a separate violation as follows):
|
Twenty-Three |
11/29/95 |
$50,000 wired from TDG@FUNB to Caplinger@Banco Gerencial, Santo Domingo,
DR |
|
Twenty-Four |
12/15/95 |
$825,000 wired from TDG@FLTNB to Caplinger@Banco Gerencial, Santo Domingo,
DR |
| |
A TRUE BILL |
| |
|
| |
______________
Foreman |
MARK T. CALLOWAY
United States Attorney
BRIAN A. WHISTLER
Assistant U.S. Attorney |