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Investment fraud detailed in court papers

April 11, 2009
By JOHN PEPIN, Journal Munising Bureau

MANISTIQUE - Court records detail how a Manistique man allegedly defrauded friends or relatives out of at total of more than half a million dollars through investment fraud.

Jason Michael Collins, 31, is set for a preliminary hearing in the case before 93rd District Court Judge Mark Luoma in Manistique at 2 p.m. April 22. Collins is charged with 15 felony counts and is currently lodged in the Schoolcraft County Jail on a $50,000 cash bond.

The case initially came to the attention of the Newberry Police Department in August 2006, when two area residents reported a private investment club allegedly operated by Collins had resulted in a combined loss for the pair of about $300,000, according to Michigan State Police troopers.

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COLLINS

According to an affidavit of probable cause filed in Schoolcraft County District Court, two sons of one of the original complainants, and a dentist friend in Ohio were also taken in by Collins' alleged fraud. One of the sons is Collins' brother-in-law.

"All invested money with Collins, with the understanding that Collins was investing their money safely and that investment reports by Collins never showed any loss, up until they received the letter from Collins' civil attorney in August 2006, that the investment accounts had suffered 'catastrophic losses,'" said Det. Sgt. Gregory Cunningham in his written affidavit. "Investments had begun in 2002 and had continued until August 2006."

Police said Collins executed no written agreement with his investors and said he would receive compensation based only on profits.

In August 2002, a friend Collins met in college wired $143,000 into the joint account of Collins and his wife. Police said the friend's "money was lost through risky stock investments by Collins and converted to Collins' own use." Money from other investors would later be used to pay money back to this college friend.

Collins maintained a joint checking account at the Manistique Federal Credit Union, a checking account for his Just Computers business and a mortgage account, police said.

Police said the bulk of the money transferred from the investors to Collins was in the form of personal checks issued to Collins, endorsed by Collins and deposited into his joint account.

"Collins took investor money, placed most of it in his joint account at Manistique Federal Credit Union, commingling investors' monies with each other and with his own money in that account," Cunningham wrote. "Collins never created or maintained joint investor accounts separate from his, or individual investor accounts, as his communications with investors led them to believe."

In August 2002, Collins allegedly wired his friend's $143,000 and over $40,000 of additional investor money to Ameritrade/Datek Stock Trading companies.

According to stock trading records, 2003 was the only year Collins' investment activity resulted in substantial profits.

"A very profitable option trade that year resulted in gross profit of approximately $540,000. However, Collins withdrew by way of wire transfer, $335,750, which records show, he used for personal purchases," police said. "Because of the speculative nature of the trading in the Ameritrade account, by December 2003, the account had a balance of $199 remaining."

In 2004, the Ameritrade account was replenished with $100,000, which was the result of Collins mortgaging the residence and property he purchased with the investor money and profit he withdrew from the Ameritrade account the previous year, police said.

By the end of 2004, that account had a negative balance. Despite a $10,000 deposit in April 2006 and $6,000 in May 2006, by June 2006, the balance was down to $17.66, with no activity for the rest of the year, the affidavit said.

In 2004, three of the investors deposited a total of more than $164,000 with Collins, police said.

"From 2003 through 2006, Collins continued to encourage investors to provide money to him on the representation that he was placing all money into investors' accounts, and that the accounts were in fact showing a profit in all cases, at all times, with all investors, and that Collins made these representations by periodic e-mails sent to the investors, up until July 2006," Cunningham wrote.

Between December 2003 and December 2004, Collins wired more than $47,000 out of his joint checking account to the friend from college. Police said this money came from other investors and was paid to the friend as restitution for money Collins had lost in risky stock trading.

In 2005, four investors deposited a total of more than $103,600 with Collins. Police said no investment activity was conducted with the money, which was allegedly converted by Collins for his own personal use.

With it, Collins paid more money to the college friend and his brother-in-law, the only other investor to receive a substantial amount of money back from Collins, police said. The brother-in-law was paid in excess of $25,000. He had invested a total of more than $30,000 with Collins.

These payouts were to compensate for money Collins had lost in risky trading, police said. In 2005, Collins allegedly wired more than $20,000 to the college friend.

In 2006, the two original complainant investors reportedly deposited a total of more than $30,000 with Collins.

"Induced again, by Collins' regular glowing, but false account status reports to investors," Cunningham wrote.

From this money, $16,000 was wired to Ameritrade for investment purposes, police said. Police said out of the Collins checking and business accounts, more than $32,000 was sent to the college friend, making the total money paid to him in excess of $100,000.

Police said that from 2002 to 2006, Collins used investor money to pay personal expenses and those for his Just Computers business.

From 2004-2006, a seventh investor, a college acquaintance of Collins, invested $1,875. This money was used to pay back the brother-in-law and college friend, police said.

Michigan State Police troopers from the Manistique post said Collins has been charged with six counts of larceny by conversion over $20,000, with each count punishable by up to 10 years in prison; three counts of larceny by conversion over $1,000, each count a 5-year felony and six counts of using computers to commit larceny by conversion, each count punishable by up to 10 years in prison.

 
 

 

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