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Music Machine Scam!

Colorado scam has an interesting twist.

"Rick D. Van Vleet allegedly promised his investors a hefty return if they invested in the music kiosks he was pushing.

But Van Vleet lied to them, stealing nearly $3 million in the process, the Colorado Attorney General's Office said Wednesday.

Van Vleet, a Fort Collins resident, was indicted by a grand jury on five counts of securities fraud and two counts of theft of more than $15,000.

All are class 3 felonies, and Van Vleet, 63, could face 84 years in prison and more than $5 million in fines.

He was arrested by Fort Collins police Tuesday and is at the Larimer County Detention Center in lieu of a $500,000 bond.

Between February 2003 and June 2005, the attorney general alleges Van Vleet took more than $2 million from 26 different investors and promised to invest that money in a music kiosk company, the Synergy Media Group."

Now the usual scam would be a simple ponzi: no Synergy Media Group, and no kiosks, just a simple return of capital to get the marks' mouth watering.

What was the pitch?

"The kiosks, called TouchStand, would allow users to play and download MP3 music files to their portable music players for a fee.

The kiosks would display advertising when not in use, and the advertising would be the primary source of income the kiosks generated."

Ah, the ubiquitous "advertising income". Bill Boards anyone?

But the neat part of this fraud is that:

"Synergy Media Group is a registered company with the Colorado Secretary of State's Office, and according to documents from the office, is based in Denver with an office in New York City.

The legitimacy of the company and its music kiosk were not called into question by the indictment."

The Yellow Kid had a similar scheme: he would interview his marks in stock broker's office - just after the business had gone bust, but before the liquidators had arrived to take the furniture and badges of authority.

Full post as published by Misleading Advertising Law on March 18, 2008 (boomark / email).