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Big Island Capital fraudster pleads guilty to million dollar Ponzi scheme

9/22/2017 2:40:17 PM

SAINT PAUL – Minnesota Commerce Commissioner Mike Rothman announced that a Mound man has pleaded guilty to operating a Ponzi scheme through which he stole more than $1 million from individual investors. 

Jeremy Richard Lundin, age 30, pleaded guilty to mail fraud and money laundering before Judge Wilhelmina M. Wright in U.S. District Court. A sentencing date has not yet been scheduled.

This case is the result of an investigation conducted by the Minnesota Department of Commerce Fraud Bureau, Criminal Investigation Division of the IRS, Federal Bureau of Investigation and United States Postal Inspection Service.

According to his guilty plea, from approximately December 2014 until May 2017, Lundin claimed that he conducted “options trading” through his company Big Island Capital. Lundin worked through a network of associates and friends to solicit investors to invest with Big Island Capital by promising those potential investors exponential growth through options trading.

Lundin solicited more than $1 million from at least 51 investors. Instead of using the funds for options trading, however, he spent investors’ money to fund his and his wife’s lavish lifestyle. 

According to his guilty plea, as part of the scheme, Lundin provided victim investors with written materials relating to his purported investment strategy. Through these materials, Lundin claimed that the goal of Big Island Capital was to “generate profits with options trading” and that while he could not “guarantee” an exact percent, he would “shoot for” returns of between 40 percent and 80 percent. 

Lundin also entered into contract agreements with victim investors. These agreements, titled, “Big Island Capital Investment Advisory Agreement,” purported that the assets of Big Island’s account would be held for safekeeping in a brokerage account. Lundin regularly represented that the value of the account was several hundred thousand dollars. For example, “Welcome Packet” materials Lundin sent to a new victim investor on November 24, 2015, claimed that the firm’s capital was then $730,000 when, in reality, Lundin did not even open the brokerage account until December 21, 2015.

According to his guilty plea, in order to appear legitimate and promote his scheme, Lundin created phony account statements. He also provided victim investors with online access to fictitious quarterly statements and purportedly “up to date” information about the rate of growth and the market value of the accounts, which commonly and falsely showed double-digit gains.

As part of the scheme, Lundin directed his victim investors to make their checks payable to “Big Island Capital,” he would then deposit those checks into a bank account he had established in the company’s name. Between May 2015 and May 2017, at least $992,000 was deposited into that account. During roughly the same time period, however, Lundin transferred $933,950 from the business account directly into his and his wife’s personal checking account. Lundin and his wife used the majority of those investor funds on personal expenses including travel, luxury automobiles, a boat, jewelry, retail purchases, and more than $366,000 in credit card payments.

Media Contact
Ross Corson
Director of Communications
Minnesota Department of Commerce
p: 651-539-1463 | c: 651-368-5050 | ross.corson@state.mn.us

Fraud

Banking & Finance

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