Sophisticated investors and unsophisticated but curious users were able to discover “these wonderful and expensive Internet 'bargains' and make large, steady returns of up to 30 to 40 percent annually," according to lawyers. Reuters built its own website, which was later shut down. It said at least one partner, Robert David Deible, is charged with professional sports fraud in Australia and fraud in the Philippines, and New York attorney Patrick Carroll is charged with fraud. Another partner, Andrew Andrew Yannati, was charged last year with money laundering, tax evasion and conspiracy. Of the two, only Deible could be reached, but he denied the allegations.
Now, Yannati has been indicted by New York's federal district court on 27 counts related to a multifaceted Internet scam that claimed to involve wealthy investors and giant charities.
The New York indictment describes a two-step process. Yannati allegedly set up a website promising returns of 30 to 40 percent, a figure above the rates of return offered by mutual funds and exchange-traded funds. He then "migrated" users to Yahoo's Hotmail, promising even better gains from future trades.
He ran this scam for two years until the FBI and other law enforcement agencies raided his house in the Bronx in early February, according to a Bronx law enforcement source. Two days after the arrest, on February 15, New York grand jury indicted him on six counts of wire fraud. On Friday, he pleaded not guilty and was released on $500,000 bail. He and Yannati didn't reply to interview requests through a spokesman for their lawyer.