Offshore scammer given 6 years in U.S Prison for $2.8M Investment Ponzi Scheme

67-year old Garry Milosevich who once operated out of Cinnamon Hill in the south of Grenada is now behind bars in the United States.

Milosevich, formerly of Duluth, Minnesota, was sentenced last week Wednesday in a U.S. District Court in Madison for operating a Ponzi scheme using the mail to defraud investors.

The convict was a close associate in Grenada of a former top official of the New National Party (NNP) government during its stint in office between 1995 and 2008.

Officials of the U.S Federal Bureau of Investigations (FBI) had visited the island on the trail of Milosevich who had left the island for an undisclosed location in Central America.

The convict had taken advantage of Grenada’s “open door policy” to offshore bankers to run afoul of U.S laws.

U.S. District Judge Barbara B. Crabb on April 3 sentenced Milosevich to six-and-a-half years in federal prison, without parole, and ordered Milosevich to pay $775,000 in restitution to 19 victims of his fraud scheme.

Milosevich and co-defendant Daniel Tepoel were indicted by a federal grand jury on April 19, 2007.

Tepoel was convicted on March 27, 2008, of mail and wire fraud, as well as lying to the FBI, following a four-day jury trial. Tepoel was sentenced to 11 1/2 years in federal prison on June 6, 2008, and currently is serving his sentence.

Milosevich remained at large until January 2012, when he was found in Honduras and returned, in custody, to the United States.

Milosevich pleaded guilty on January 17, 2013. His sentence reflects the fact that-unlike Tepoel – he received a reduction in his federal sentencing guidelines because of his guilty plea, and – unlike Tepoel – he did not proceed to trial and obstruct justice by committing perjury.

United States Attorney Vaudreuil recommended the sentence (the highest sentence provided under the sentencing guidelines) and argued that the sentence was warranted because Milosevich was an extremely successful long-term con man whose criminal conduct seriously harmed the many victims of his scheme.

Judge Crabb agreed, finding Milosevich’s sentencing statements “neither credible nor persuasive.”

Judge Crabb told Milosevich that she hoped “someday he would have some understanding of the hell he put the investors through, and how he destroyed their lives.”

From about August 1999 to September 2001, Milosevich and Tepoel solicited individuals to invest in so-called “prime bank guarantees” – supposed financial instruments that are, in fact, completely bogus and do not exist.

They did so using the names Rainbow Management Trust and Interstar Management Limited. In connection with the scheme, Milosevich and Tepoel maintained several bank accounts in the United States and Grenada.

Milosevich and Tepoel provided promotional materials to investors and repeatedly assured them that extremely high rates of return were guaranteed and that their principal would never be put at risk.

Relying on these promises, dozens of investors invested millions of dollars with Milosevich and Tepoel.

Milosevich and Tepoel then used investor funds by spending them on personal items and by using the funds to invest in projects that did place those investors’ funds at risk, including a failed condo resort in Grenada called Cinnamon Hills.

To maintain the illusion that their investment was profitable, Milosevich and Tepoel mailed quarterly statements purporting to show high investment gains, when in fact, these statements were lies.

When investors did not receive their promised gains, they were given numerous excuses for the delay, including the events of September 11, 2001, and supposed theft of the money by government operatives.

Milosevich’s and Tepoel’s constant, but false, reassurances that the money would be forthcoming resulted in investors not reporting the scheme to law enforcement for years.

Ultimately, no investor received any of the promised gains, and most lost all the principal they invested, a total sum of approximately $2.8 million.

The charges against Milosevich and Tepoel were the result of an investigation conducted by the Federal Bureau of Investigation and the U.S. Postal Inspection Service, with assistance provided by the Country of Grenada.

Prosecution of the case has been handled by U.S. Attorney John W. Vaudreuil and Assistant U.S. Attorney Meredith P. Duchemin.


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