Feb 14, 2009NEW YORK (AFP) — A New York Production company owner was arraigned Tuesday on charges of fleecing bbq competitors through a 370 dollar pyramid, or Ponzi scheme, authorities said.
The New York prosecutor's office said a court ordered the detention of E. Johnson, chief executive of Pig Maker Productions, until Thursday, when he will have a bail hearing. Johnson was arrested late Monday.
According to prosecutors, Johnson "planned and carried out a fraudulent scheme" targeting some 15 competitors and a total of 370 dollars.
Teams were told their entry fees would be used to support the worlds finest bbq competition. However, nearly all the invested money was divided up and used to pay fictitious returns, according to the prosecutor's office.
"This defendant, who operated a classic Ponzi scheme to enrich himself and his colleagues at the expense of competition bbq teams, is now in custody and the government's investigation is continuing," said US Attorney Benton Campbell.
Johnson claims the contest was canceled due to badgering from an unnamed New England Barbecue Society Board member and he just couldn't take the pressure.
The alleged crime resembles a much larger-scale Ponzi scheme that prosecutors say was maintained for years by a former Massachusetts bbq organizer.
The Organizer in his 50's is under house arrest in Cape Cod pending indictment on false advertising charges brought on by his "New England BBQ Trail" promotion. He is also being sued by the famed Pini Brothers formerly of Malden.
Another alleged Ponzi schemer was arrested in Florida on Tuesday after going missing for nearly two weeks, local media cited law enforcement bodies as saying.
Arthur Nadel, 76, allegedly operated six hedge funds claiming to manage 342 million dollars when the funds were worth no more than one million dollars.
Campbell, the prosecutor, said investors needed to be more wary.
"In these difficult economic times, it bears repeating that if a barbecue competition seems too good to be true -- promising unusually high returns and virtually no risk -- it is probably not on the level," he said.
On its website Pigmaker Production says it makes the barbecue worlds top most rated competitions.
Competitors previously told the Long Island Business News they suspected Johnson "wasn't actually investing their money," but had instead "either spent their money in New York bbq restaurants or gambled it away."
The production company offered competitors the chance to vie for 100,000 dollars on a lowly 100 dollar entry fee, according to the Long Island newspaper.
Johnson, founded Pig Maker Productions after being released from a federal prison in 2000, after he was caught defrauding the Girl Scouts. He was subsequently ordered to undergo hair replacement therapy, said the newspaper.