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Could Due Diligence Have Mitigated Risk in $449M Ponzi Scheme?

On April 14, 2022, the U.S. Securities and Exchange Commission (SEC) announced charges and a temporary restraining order against Las Vegas businessman Matthew Beasley, Jeffrey Judd, and Christopher Humphries for their alleged involvement in a $449 million scheme regarding personal injury settlements. According to the SEC, Beasley, Judd, and Humphries — all based in the Las Vegas area — “told hundreds of investors, including many in their own church community, that they would earn 12.5 percent quarterly returns by making purportedly risk-free investments in J&J Consulting Services.”

Silver Law Group, which deals in Securities Arbitration and Investment Fraud, explained the scam as follows, “Schemers sold victims lawsuit settlement contracts pursuant to third-party lawsuits. Investors were promised high returns in a short period of time and the contracts were described as scarce.” This type of scheme is known as a Ponzi scheme after 1920s fraudster Charles Ponzi, who was also known for selling investors swampland in Florida.

Per the FBI, contracts for the J&J Consulting Services scheme were sold at rates from $80,000-$100,000.00. Instead of honoring their commitment to investors, Beasley, Judd, and Humphries used the money to fund luxurious lifestyles, purchasing high-end vehicles and homes, boats, and a jet.

Investors’ money was wired to Mr. Beasley’s Interest On Lawyers’ Trust Account (IOLTA).

FBI agents paid a visit to Mr. Beasley’s residence in March to talk to him about his alleged involvement in the Ponzi scheme.

When the FBI arrived at his home, Mr. Beasley was positioned at glass French doors, showing only half his body to agents. When an agent flashed his credentials, Mr. Beasley moved into full view, pointing a gun at his own head.

Agents ordered him to drop the weapon. Beasley chose to aim the firearm in their direction. In result, authorities shot him in the chest and shoulder. Mr. Beasley barricaded himself inside his home for multiple hours. Eventually, he admitted to the FBI that the investments he put together were part of the Ponzi scheme.

Photo of Mr. Beasley’s home where the incident took place

Photo Credit: Google Maps

Overwatch focused on using open-source intelligence techniques to investigate Mr. Beasley for this brief. Our primary focus was to see whether performing due diligence on Mr. Beasley could have mitigated some risk and prevented investors from losing money.

Matthew Beasley’s Legal and Business Background    

Mr. Beasley graduated from the University of Missouri-Kansas City School of Law. Established in 2011, his practice, Beasley Law Group, P.C., is located in Las Vegas, Nevada. Beasley Law Group, P.C., specializes in Divorce and Family Law, Business, Accident and Injury, Real Estate, and Lawsuit and Dispute.

Mr. Beasley’s website, beasleylawgrouplv.com, is currently inactive.

Using the Wayback Machine, analysts first identified proof of a web presence for Beasley Law Group, P.C. website in 2016.

A continued review of the website in question indicates that it had remained the same visually since its creation in 2012.

We performed multiple search queries to locate online data concerning Beasley Law Group, P.C. Reviews of the firm have only been created since Mr. Beasley’s story received international press coverage. There were no online reviews or recommendations before that time, which would be unusual for a law practice in Las Vegas with an 11-year history.

A brief Google search for other Las Vegas attorneys returns hundreds of results, with some firms having as little as three years of activity and listing as many as 86 reviews.

Social Media

Mr. Beasley has a limited digital footprint, consisting of a LinkedIn account with no history of activity and a Facebook profile no other posts other than a profile image.

Mr. Beasley’s Personal LinkedIn Profile

Analysts noted that Mr. Beasley has been an officer in at least five other companies besides Beasley Law Group, P.C., but none of those entities are listed on his LinkedIn account.

Facebook page for Beasley Law Group, P.C.

The Beasley Law Group, P.C., page provided no significant data about Mr. Beasley or his practice, unlike most social media pages for Las Vegas-based law firms.

Analysts identified photos of Mr. Beasley on the social media pages of his relatives. Those photos showed access to a cabin and some expensive sports memorabilia.

Business Affiliations  

Nevada Pro Pest Control, Inc.

Nevada Pro Pest Control, Inc., was incorporated on October 29, 2018, and lists Mr. Beasley as the Registered Agent and Jeffrey Judd, another of the individuals under investigation, as President and Treasurer. Nevada Pro Pest Control is an active business, but analysts could not locate a web presence for the business. This is atypical for most businesses in 2022, let alone one in as competitive an industry as pest control.

Following a court order, the Wells Fargo account tied to Nevada Pro Pest Control, Inc. is frozen until April 22, 2022.

It is currently unclear what part, if any, Nevada Pro Pest Control, Inc., played into the Ponzi scheme to defraud investors in J&J Consulting Services.

Argute, LLC

Argute, LLC, was incorporated on May 23, 2018, and is currently not an active business. However, J&J Consulting Services, Inc., which is under federal investigation, is listed as one of the company’s managing members.

We could not identify an online presence for Argute, LLC.

Other Affiliations

We identified two business entities with ties to Mr. Beasley whose officers, Robert Seik and Ima Jean Nikolich received formal warnings or complaints from government entities.

With Mr. Beasley’s support, Robert Seik set up Desert Flora Investments, LLC, which is no longer an active business. Mr. Seik also owns One Way Drug, LLC, dba Partell Specialty Pharmacy, a pharmacy specializing in mixing and altering drug ingredients to match patient needs.

Mr. Seik received a warning letter from the Food and Drug Administration in February 2019. In the warning letter, Seik was told that at his West facility, his firm did not “receive valid prescriptions for individually-identified patients for a portion of the drug products produced.” In addition, the FDA said that the drug products at his East Facility were packed in “unsanitary conditions.”

The following image is a screenshot of the warning letter Seik received from the FDA.

Further research shows that Mr. Seik received a June 2020 closeout letter from the FDA stating he had resolved the issues at his firm.

The second individual, Ima Jean Nikolich, was a managing member of Endar Nikolich Holdings, LLC, set up by Mr. Beasley. In 2013, the Real Estate Commission of Nevada sent Ms. Nikolich a Complaint and Notice of Hearing to address breaches in her obligation to deal fairly with sellers, misrepresentation of a money transfer in escrow, and moving her office location without informing Nevada’s Real Estate Division.

J&J Consulting Services, Inc.

The subject of the FBI inquiry, J&J Consulting Services, Inc., established in May 2005, has no online website or social media presence. This follows the same pattern we identified with other companies established by Mr. Beasley and Mr. Judd.

Aside from public filings with Nevada’s Secretary of State, analysts could only locate J&J Consulting Services, Inc., on Jeffrey Judd’s personal LinkedIn profile, where he is listed as the President. Before J&J Consulting, Mr. Judd worked at Partell Pharmacy as the Vice President of Sales. Above, we mentioned Partell Pharmacy’s founder, Robert Seik, as someone connected with Matthew Beasley. We couldn’t identify any further ties between Seik and Beasley.

OUR ASSESSMENT

The extremely limited online data about Mr. Beasley suggests a lack of transparency in his law practice and professional life. If investors had researched Mr. Beasley’s firm for its credibility, they would have identified no compelling evidence, such as positive reviews, business connections, or employees, that would indicate Mr. Beasley was a trusted or respected legal source. Performing due diligence such as reviewing Mr. Beasley’s digital footprint, business affiliations, associates, and law firm’s reputation could have likely helped mitigate some risk for investors in this $449 million scheme.

Although the practice of Ponzi schemes has a long history, they continue to be effective as fraudsters capitalize on the digital landscape, especially through social media. By practicing due diligence or consulting experts in open-source intelligence, like Echo Analytics Group, you can potentially protect yourself from being the target of the next scam.

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