Michigan Regulator Shuts Down Ponzi Scheme Involving CUSO
The Michigan Office of Finance and Insurance Regulation has stopped a $5 million Ponzi scheme involving an independent contractor licensed through CUSO Financial Services LP who worked from MidWest Financial Credit Union.
According to the Michigan OFIR, Mark Carpenter sold a variety of investments involving crude oil bonds, gold mines and Florida real estate. None of the investments described by OFIR were authorized, reviewed or approved by CFS or MidWest and were not held in accounts with the CUSO or MidWest, according to CFS co-founder and Chief Operating Officer Amy Beattie. Carpenter worked at the $176 million MidWest in Ann Arbor, Mich. from July 2007 through October 2008.
Carpenter did not disclose any of his outside business activities to CFS or MidWest, including his formation of an independent third-party business, TGBG, through which he allegedly ran these activities, Beattie said.
"Following Mr. Carpenter's resignation, CFS and MidWest learned that Mr. Carpenter may have been involved in unauthorized outside business activities in violation of company policies. CFS and MidWest promptly alerted OFIR and the Financial Industry Regulatory Authority to our concerns regarding Mr. Carpenter," Beattie said in a March 4 statement to Credit Union Times.
Beattie said CFS also alerted its clients and encouraged them to report any irregularities to the appropriate regulatory authorities. At Carpenter's resignation, however, neither CFS nor MidWest were aware of the nature or scope of the alleged fraudulent activities as recently described by OFIR, she said.
"CFS and MidWest remain committed to promoting the interests of our customers, and we are cooperating with the regulatory authorities in their ongoing investigation of Mr. Carpenter," Beattie said.