Opinion ID: 3040603
Heading Depth: 3
Heading Rank: 1

Heading: The Ponzi Scheme and Recovery Efforts

Text: Murdock pled guilty in a separate case to three counts of mail fraud. Although Murdock guaranteed a five percent weekly return to investors, his investment plan was in reality a Ponzi scheme.2 Approximately 950 individuals invested in Murdock’s business, including the appellants. The total loss to these investors was approximately $20 to $40 million. Murdock had his first personal meeting with the Daanes and Miller in a hotel in Las Vegas. They discussed “opportunities to continue [Murdock’s] program offshore.” A couple of weeks after the Las Vegas meeting, Murdock met with Tere Daane and Arn in Temecula, California, where they discussed expansion of the scheme. Shortly thereafter, Murdock met with Stich. Stich “made a 2 A Ponzi scheme pays investors with money received from later participants. 1200 UNITED STATES v. DAANE demand on his return of his principal.” Murdock finally agreed in writing to repay Stich. After the meeting with Stich, Murdock traveled to Las Vegas to meet with the Daanes. Murdock met the Daanes and Arn at a restaurant in the Orleans Casino. They had a cordial conversation and the Daanes invited Murdock to their house for further discussions. At the Daanes’ residence, the Daanes and Arn presented Murdock with documents entitled “What We Know” and “What We Can Do For Leslie D. Murdock.” The “What We Know” document contained information allegedly related to Murdock’s finances and Ponzi scheme. For example, it stated that Murdock had an active accounts investment total of $10,000,000; Murdock made 3,900 wire transfers through seventeen banks; and Murdock was being investigated by the FBI and Treasury Department for money laundering and bad checks. The “What We Can Do For Leslie D. Murdock” document referred to the creation of an offshore business structure; assistance in securing a second citizenship and passport for Murdock; the ability to “make LDM [Murdock] an invisible investor” and to “get LM [Murdock] of [sic] the federal income tax system.” During the discussions, Murdock, Tere Daane, and Arn moved into the kitchen. When Miller and Trent entered the kitchen, Trent moved toward Murdock and stated, “You don’t know who I am, do you.” Trent surprised Murdock since neither Tere Daane nor Arn had told him that other people would be joining them. Trent immediately demanded the return of $75,000 from Murdock and threatened Murdock that they “were going to the desert until [Trent] was satisfied.” After Tere Daane and Arn intervened to keep the peace, Murdock agreed to take Trent back to Riverside. Arn volunteered to go instead, and Murdock agreed to sign a promise UNITED STATES v. DAANE 1201 to repay Trent $78,000. Arn was to stay with Murdock to “provide upkeep and transfer particulars up to the payment of said funds.” Arn was also supposed to work on obtaining reimbursement for a list of individuals provided by Tere Daane. The total amount of reimbursement to these individuals approximated one million dollars. During their drive to California, Murdock and Arn conversed about the events at the Daanes’ residence. Arn told Murdock that Arn was nervous because there was a gun in the back of Trent’s shorts. Murdock took Arn back to Las Vegas after approximately two weeks in Riverside. Although Murdock assured Arn that he was going to proceed with their plan to restructure the investment program, Murdock later called Arn and informed him that Murdock was going to declare bankruptcy.