Unstructured Finance

Tyrone Gilliams fights the law

By Matthew Goldstein

It’s been a while since we last wrote about the legal struggles of Tyrone Gilliams, the Philadelphia commodities trader/hip-hop promoter/wannabe reality show star/self-styled preacher, whom federal authorities have charged with scamming investors out of $5 million. But the University of Pennslyania graduate is making news again with the scheduled start of his Jan. 22 criminal trial in New York federal court.

Gilliams will be on trial with his former lawyer Everette Scott. Both men are charged with working together to “devise a scheme and artifice to defraud” investors out of their money that was supposed to have been invested in Treasury Strips–a derivative of U.S. Treasury bonds the separates the coupon and principal on the underlying note into different securities.

For the details of where the investors’ money allegedly went, read our earlier special report from May 2011 and this feature article from last year in Philadelphia magazine.

Federal prosecutors don’t appear to be taking the trial lightly. Just a few weeks ago, prosecutors revised the indictment against Gilliams and Everette to  spell out more details of how money that was raised to invest in Treasury Strips was largely misappropriated. In a court filing, prosecutors indicated that they could call as many as two-dozen witnesses.

Two potential witnesses include the alleged victim — David Parlin, a Cincinnati, Ohio businessman and John Taylor, who runs an investment vehicle that invested with Gilliams. Others on the witness list include people familiar with the splashy charitable gala event Gilliams held in Philadelphia, that money was allegedly diverted to. The government may also call some of the people–we reported on–who helped line up investors for Gilliams.

Suite Scams revisited

Virtual offices can be a great cost-saver for a solo attorney, a lone accountant or any other professional who can’t afford the expense  of maintaining a separate support staff to run a business. But these outfits, in which a solo professional gets to essentially rent the services of a receptionist, a secretary and conference space, also can provide cover for bad guys bent on doing mischief.

A case in point is Robert Sucarato, a New Jersey man, who was sentenced Friday to 11 years in a federal prison for using a virtual office as a front for an alleged multi-billion hedge fund that bilked investors out of $1.6 million. A few years ago, when I was at BusinessWeek, I wrote about Sucarato long before federal prosecutors were on his trail. The BW story was called “Suite Scams” and it focused on much more than Sucarato and showed how virtual offices were proving to be a useful tool for Wall Street fraudsters with a slick website and a good marketing pitch.

Former federal prosecutors, back when I talked to them, said they were well aware of how  virtual offices were becoming the hallmarks of scams. But they said there was little  they could do to stop it since the due diligence requirements for virtual office operators are minimal.

Tyrone Gilliams keeps going and going despite charges

By Matthew Goldstein

It’s been an eventful month for hip-hop promoter and commodities trader Tyrone Gilliams, the man federal authorities allege defrauded investors out of at least $5 million.

The self-styled Philadelphia philanthropist was indicted by federal prosecutors on securities fraud charges on Nov. 14 after being arrested on criminal complaint in October. The Securities and Exchange Commission this week also filed civil fraud charges against the 44-year-old former University of Pennsylvania graduate and college star basketball player.

The SEC complaint and the indictment closely mirror the allegations we first raised against Gilliams in a Special Report in May, which revealed how Gilliams worked with a network of associates across the country to raise at least $5 million from two investment funds and then diverted that money to support his extravagant lifestyle. The money was supposed to be used for trading in Treasury STRIPS and to generate sky-high returns. But federal authorities contend Gilliams and his TL Gilliam LLC trading firm never did any trading as advertised.

The law catches up to TL Gilliams

By Matthew Goldstein

Tyrone Gilliams Jr. wanted to live a larger than life story–with much of it playing out last year in videos he had produced and plastered all over the Internet. A year later, Gilliams true life drama has him fighting to maintain his freedom.

On Oct. 5, federal authorities arrested Gilliams and charged him with wire fraud in connection with a $4 million investment scheme that Reuters chronicled in a Special Report in May. As noted in yesterday’s arrest story, U.S. prosecutors in New York didn’t begin looking into Gilliams until Reuters reported that he allegedly had used some of his investors’ money to reinvent himself as a Philadelphia-area philanthropist.

Some might dismiss Gilliams as the architect of bizarre but  small-time scheme–especially when so many people across the country are suffering economic hardship. But as I point out in the below video, which  our ace online production team put together,  the sage of TL Gilliams may say more about our culture than we’d like to admit.

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