Prosecutors: South Carolina men, calling themselves ‘3 Hebrew Boys’ ran Ponzi scheme

Case of SC’s ‘3 Hebrew Boys’ heads to jury

COLUMBIA, S.C. — Three South Carolina men accused of bilking people out of more than $80 million lied about how they would invest their money, so it doesn’t matter if investors knew it was risky, prosecutors said Thursday.

Timothy McQueen, the Rev. Joseph Brunson and Tony Pough face nearly 60 federal charges, including conspiracy, mail fraud and money laundering. They called themselves the “3 Hebrew Boys” after the biblical tale of brothers who survived an inferno because of their faith.

“The Elohim that we serve shall deliver us out of this fire,” Brunson said outside the courtroom after closing arguments. “Ditto,” McQueen said. Elohim is a name for God in the Hebrew scriptures.

Jurors were expected to begin deliberating Friday. If convicted, they could be sentenced to decades in prison and pay millions in fines.

Prosecutors accuse the three of preying on debt-plagued investors to ensnare them in a Ponzi scheme, offering what they termed a ministry that would pay off their mortgages, car loans, or other debts, or pay dividends for life. Despite a lack of financial training, they convinced at least 7,000 people — starting in late 2004 — that they knew the secret of how to make money on the foreign exchange market, though they invested less than 0.01 percent of their collections there, prosecutors said.

Their operation was shut down in May 2007, and $17 million was seized.

“If it sounds too good to be true, it probably isn’t true,” said Assistant U.S. Attorney Mark Moore.

Referencing Bernard Madoff’s multibillion-dollar fraud as an example of a Ponzi scheme, he added, “At least he didn’t claim he came in the name of God and market it that way.”

Investors came from two dozen states and soldiers serving in Iraq.

Defense attorneys argued the three intended to honor the contracts or pay the money back. The three paid out more than $22 million to early investors, including several hundred debts paid off.

“It’s a debt-elimination program. That was the intent,” said Brunson’s lawyer, Mike Duncan. He called the $801 million prosecutors say their clients contractually owed “cartoon math.”

“They never made that promise,” Duncan said.

The defense pointed to clauses that specified “no guarantee of return” and a “high degree of risk” for clients investing in the lifelong payments, while those investing in debt-relief programs signed off that they would get their money back if it didn’t work.

They held up an inches-thick pile of paperwork detailing what investors sent in and what they were owed.

“Why in the world, if you’re going to steal their money, would you write all of this down?” asked Louis Lang, who represents McQueen. “Why would you hand out a road map to what you’re doing?”

Prosecutors responded that such record-keeping is needed to keep a Ponzi going, so satisfied early investors persuade others to join. They highlighted a “secrecy” clause which barred sharing the information with law enforcement, media or postal employees.

Prosecutors allege the three spent more than $25 million on themselves for luxuries including three condos in suburban Atlanta, luxury suites at football stadiums, a Gulfstream jet, limousines, a motorcoach and 20 acres in Orangeburg.

But the defense argued those were investments, and their plans included renting out the vehicles and operating a charter jet service.

If investors knew up front their plans for the money, they never would have mailed in their money, said Assistant U.S. Attorney Winston Holliday.

“A waiver doesn’t count when someone steals money from you,” he said. “This is not a case about risk. It’s about defrauding you. All these presentations about money going into the (foreign exchange) market — lies — that’s not risk.”

For a year after their arrests, the three defendants unsuccessfully argued that they be allowed to represent themselves at trial. Several judges repeatedly shot down their motions.

(This version CORRECTS Corrects spelling of ‘Elohim’ and gives definition. Moving on general news and financial services.)