Opinion ID: 2997206
Heading Depth: 1
Heading Rank: 1

Heading: Backgound

Text: In 1994, Clyde Hood, a man who claimed to be one of only eight people experienced enough to trade international “Prime Bank Notes” announced that he had received a message from God who told him to use his expertise in the secretive and lucrative trading of Prime Bank Notes to “help the little people.” Accordingly, Hood would allow investors to make as many hundred dollar loans as they liked to Omega Trust and Trading, Ltd. The money would be used to facilitate trades in Prime Bank Notes. Each unit, at one hundred dollars a piece, was promised a fifty- to-one return in less than a year. Furthermore, an investor could roll over his or her profits by reinvesting them into Omega, guaranteeing millions of dollars in return for a small initial investment. That was the pitch. Like most things that sound too good to be true, it was; it was a scam. Hood was actually a retired electrician who had come up with the idea for a Prime Bank Notes scam through his association with other scam artists. Sad to relate, God had not spoken to Hood. The whole thing was completely fabricated. Nevertheless, Hood worked hard in creating an image of legitimacy. For example, he created a database of the investors to facilitate communication between the investors (more properly, victims) and himself. Later, he set up a recorded message hotline to keep investors up to date on the status of Omega. The status of Omega was always the same; pay-out was just around the bend. Other written communications stated the same, often times including religious references and biblical quotations. To accomplish this fraud, Hood enlisted the help of others. These individuals would market the scam and explain to potential investors that they could join Omega by sending their monies to Clyde Hood in cash, money order, or cashier’s check. The investor would then receive a “Private No. 02-1070 3 Party Loan Agreement” that purported to represent his or her interest in the Omega funds. One such marketeer was Michael Kodosky. Arlene F. Diamond invested in Omega under Kodosky. She frequently contacted the hotline and Kodosky to check on the status of her investment. At some point between 1996 and 1999— specifically when makes no difference to this opinion— Diamond began marketing the Omega scam. In 1998 she met with Hood and asked him about the ongoing investigation into Omega and told Hood that she knew it was an illegal scam. She also told Hood that she knew a way to circumvent the law. She had two additional meetings with Hood which made it even clearer that she was aware that the Omega Trust and Trading transactions were fraudulent. By the time she returned home from the first meeting with Hood, Diamond was sending out her own Private Party Loan Agreements, maintaining her own investor database and telling investors to make their checks payable to her as opposed to Hood. By late 1998 or early 1999, after Diamond’s third meeting with Hood, she was involved in the Omega scam up to her eyebrows. Various investors were told that they could receive their Omega updates from Diamond and that she was coordinating Omega activities for California. One such individual was Reverend Jody Boyd. Boyd, a retired minister who was earning income by housecleaning and passing out free supermarket samples, was informed that Diamond and Hood were setting up another Omega-like fund in Belize. Boyd declined to invest in that venture. When Boyd called again in the summer or fall of 1999, Diamond told Boyd that she had just attended a victory party for Omega. She asserted that George W. Bush and one of the Rockerfellers were in attendance, as they were on the Omega board of trustees. Pay-out was again delayed—this 4 No. 02-1070 time because George Bush, Senior wanted his son to get the credit for the economic boom inherent in creating so many millionaires. Another minister, Reverend Greg Bryant accepted a request from Diamond to assist in secretarial work involving Omega. While assisting Diamond, Bryant saw large amounts of correspondence which referred to money sent to Diamond. The amounts were typically between one hundred and eight hundred dollars. He also answered Diamond’s phone approximately ten times. These phone calls were usually from people asking about the time frame for Omega’s payout. The callers were assured that pay-out was imminent. By September 1999, Reverend Bryant was duped into investing in Omega. Diamond informed him that she needed the money quickly if it was to be invested. As per her instructions, Bryant sent Diamond two hundred dollars, payable to Diamond’s account, New Hope Trust. In November 1999, Diamond sent Bryant documents to open a trust for his Omega pay-out. The letter was marked, “URGENT!!! RUSH!!! Must be returned immediately!!” The sense of urgency led Bryant to believe that he must make any additional contributions to Omega immediately and he gave her an additional thousand dollars. When Bryant inquired about the status of Omega in early 2000, Diamond told him that pay-out was delayed by satellite limitations caused by sunspots and magnetism. Later still, possibly in early 2000, Reverend Boyd called Diamond to get an Omega update. Boyd was told that Diamond had just attended another Omega victory party in San Francisco. Shortly after that conversation, Diamond sent Boyd a power of attorney document giving Diamond control over Boyd’s finances. Boyd balked at signing such a document. Linda Stark, who was involved in Omega as an investor since 1998 received the same message as everyone else; payNo. 02-1070 5 out was right around the corner. She received this message a number of times in 1998, 1999, and 2000. By 2000, Stark was instructed by Diamond that additional monies for investment should be deposited into Diamond’s New Hope Trust account. Diamond also instructed Stark to send the money in cash via FedEx. The cash was to be wrapped in aluminum foil. Stark did so. After repeated calls about the status of Omega and consistently being told that pay-out was coming soon, Stark concluded that she had been defrauded—she was, of course, right. One final individual’s experiences with Omega deserve some attention because they show the depths of Diamond’s exploitation. Neva McKibben met Diamond in 1999 while they were both working in the Omega offices in Mattoon, Illinois. McKibben was responsible for cleaning the offices, for which she received one hundred dollars per week. It was in this capacity that she overheard that Hood was involved in “offshore trading.” McKibben asked Hood if she could invest $25,000 from an IRA into Omega. Hood refused to take her money but said that he would invest on her behalf. Diamond, however, lacked such a fine-tuned conscience. In February 2000, Diamond asked McNibben about her Omega investment and the return Hood told her to expect. When McNibben said that Hood had promised a fifty-to-one return, Diamond told McNibben that she could get two hundred-to-one if she gave Diamond the money instead. Diamond told McNibben not to tell Hood about the arrangement. In less than six months, Diamond had swindled McNibben out of her family’s entire retirement savings of $57,600. By 2000 things were starting to go bad for the conspiracy. That year, various peripheral actors were subpoenaed to testify before a Grand Jury investigating Omega. Diamond schemed to interfere in the investigation by encouraging the witnesses not to testify. In one instance, she supplied a 6 No. 02-1070 witness with a legal-looking document which purported to excuse him from testifying. Another incident involved Diamond telling a subpoenaed witness that she was an attorney and advised the witness not to testify. When that witness failed to appear before the Grand Jury, she was summoned for a hearing before the Chief Judge of the Central District of Illinois. Diamond met with the witness after the hearing and asked for and obtained a written report on the hearing. Diamond then informed the witness that she would not need to appear before the Grand Jury again. On August 28, 2000, the same month Diamond was ar- rested, a search warrant was executed on Diamond’s Mattoon, Illinois apartment. Among the items seized were Omegarelated documents, a notebook computer, and Diamond’s passport. The passport indicated trips to Belize, Canada, and the United Arab Emirates. Among the documents were various Cease and Desist Orders from Hawaii and Missouri. Also included were documents prepared by Diamond that purported to make financial claims against governmental officials—judges, prosecutors, investigators, and such. Various e-mails were recovered. These messages were complaints from investors averring fraud on the part of Omega. Other e-mails from Diamond were responses to inquiries about investing in Omega. In those messages, Diamond told investors to send cashier’s checks to New Hope Trust or to send cash wrapped in aluminum foil. There were also Private Party Loan Agreements and copies of checks written to Omega or Diamond. These loan agreements indicated a total dollar figure of just over $1.5 million. The warrant also turned up a fake Mexican Certificate of Deposit and a fake $100 million United States Federal Reserve Note. When Diamond’s notebook computer was analyzed, investigators found databases of Omega investors. The information went back as far as 1998. Another database purported to track the Omega investment amounts. Digging further, investigators found files on Diamond’s Palm Pilot which No. 02-1070 7 named bank information for banks in Belize, Dubai, the Cayman Islands, and Antigua. Also included on the Palm Pilot was a list of book titles, including How to Hide Your Assets and Disappear and The Law of Fraudulent Transactions. Of the numerous bank accounts probably used by Diamond in perpetrating this scam, IRS agents analyzed three. The first of these was a Bank of America account in Diamond’s own name. This account showed little activity—$3,100 went in and $3,100 went out during the thirteen month life-span of the account. Another Bank of America account, the New Hope International Trust account, with Diamond as general manager, showed deposits totaling $50,000. This money was deposited and withdrawn in three to four months. The final Bank of America account, the New Hope Trust account, with Diamond again acting as general manager, showed activity for three years. The deposits, which totaled some $1.8 million, were in the form of cash, checks, money orders, cashier’s checks, and wire transfers in one hundred dollar increments. The bulk of these deposits were checks made payable to Arlene Diamond and New Hope Trust; others were payable to Omega. $1.5 million had been withdrawn from this account, of which $240,000 was definitively traced to Hood. The whereabouts of the remaining $1.25 million is still unknown. Some months later, while incarcerated and awaiting trial, Diamond struck up a conversation with another inmate, Nelani Jackson. After failing to convince Jackson to invest in Omega, Diamond confided in Jackson that she was a con artist and that Omega was a scam. Digging the hole deeper, Diamond explained to her new “friend” that during the course of the scam, she would never use her own name when dealing with real estate, personal property, or utilities. She also explained that she would meet prospective investors in public places to keep her residence hidden. Deeper still—in relation to one of the more creative yarns— 8 No. 02-1070 Diamond explained that she and Kodosky had read an article about George Bush and a Rockerfeller meeting on the West Coast to discuss investments. The conspirators decided that it would make Omega look legitimate if they wove this real meeting into the tangled web of the Omega scam. Thus, we have the genesis of the Omega victory parties. She continued, telling Jackson that she discouraged refunds by telling investors that pay-out was just about to occur. Finally, Diamond told Jackson that some of the Omega money she had received went to Hood and some went to her own foreign bank accounts. Obviously, with such large amounts of money flowing through Omega, something had to be done to launder the money. This process began in 1996 with Hood asking Chris Engel, a co-conspirator, to deposit Omega monies into fourteen various personal and business accounts controlled by Engel. Engel would then withdraw the money in cash or cashier’s checks at Hood’s direction. Often times, hundreds of times, in fact, Engel would withdraw cashier’s checks to purchase real estate. Some of the approximately $4.5 million laundered by Engel was in the form of checks made out to Diamond and endorsed over to Engel by Diamond, or checks directly from Diamond. From April 1999 to September 1999, Engel’s sister, Susan Hoehne, assisted in laundering Omega funds by depositing them into her business account and then obtaining a cashier’s check which she would then send to Engel. Further laundering involved Miller Hardwoods, a sawmill started up with Omega money during the spring of 1998. Hood supplied Raymond Miller with approximately $1.4 million to get the mill up and running. Hood estimated that roughly $500,000 of the Miller Hardwoods start-up money came from Diamond’s New Hope Trust account. The money provided to Miller was often in the form of cashier’s checks purchased by Diamond and Bank of America. No. 02-1070 9 In yet another transaction, Hood flew to Dubai, United Arab Emirates to purchase an oil refinery. Hood told Diamond about his intentions and directed her to wire $80,000 from her New Hope Trust account to his account at the Standard Charter Bank in Dubai. Diamond transferred the money as requested. Apparently, Diamond liked the bank in Dubai enough to entrust $240,000 to it. She did this by transferring money from her New Hope Trust bank account and wiring it to the United Arab Emirates. A letter from Diamond to a bank employee also indicates that she wanted to send more money to her Dubai account. At trial, Diamond testified on her own behalf and essentially denied all of the incriminating evidence presented therein. She claimed that she did not know Omega was a scam until Hood testified against her on June 11, 2001. She further denied knowledge of the cashier’s checks that she had obtained in relation to the Miller Hardwoods account. After the jury found her guilty of all the charges against her, Diamond proceeded to sentencing. The court found that Diamond was liable for the full amount of money involved in the Omega scam, as that amount was reasonably foreseeable to her. She was ultimately sentenced to the lowest possible sentence under the guidelines—two hundred ten months imprisonment and three years of supervised release.