Federal agents are investigating several people suspected of running a fraudulent investment scheme that helped pay for stock market day trading and gambling trips to Las Vegas.
The alleged scheme used a number of Twin Cities business entities and is believed to have tapped more than 200 investors nationwide for at least $10.9 million, according to a sworn statement filed this month in Minneapolis federal court to obtain three search warrants.
U.S. Postal Inspector Rob Strande, who filed the statement, said the losses have not been determined, but that they could be substantial.
Strande said in the affidavit that the suspects solicited investors by promising returns of 20 to 2,200 percent over the course of one to 18 months. Potential investors were told that their money would go to unspecified ventures -- including gold, diamonds and oil commodities -- he said.
"Any money earned from day trading and collected by new investors would then be redistributed and sent out to all of the investors as lulling payments," Strande said.
In layman's terms, he said, it was a Ponzi or pyramid scheme. He said there is evidence of securities fraud, mail fraud, bank fraud and money laundering.
The affidavit said the investigation found that Kalin Thanh Dao, 31, of Minneapolis, ran the scheme with the help of others from April 2006 to the present. Dao represented herself as CEO of several Minneapolis companies with similar names, including TD Financial Services, NLC TD Financial Services, NLC Financial Services and NLC Venture Group, it said.
(The Star Tribune has found several apparently unrelated businesses that also operate under those or similar names, but which are not under suspicion.)
Dao is neither licensed nor has the background to sell securities in Minnesota, Strande said. In January 2007, Dao and TD Financial Services signed a consent decree from the Minnesota Department of Commerce that ordered them to stop selling securities without a license.
But on Dec. 15, Strande and an unidentified "cooperating witness" attended a catered meeting and dinner in Las Vegas, where about 250 investors were present, he said.
Representing NLC Financial Services at the meeting, Strande said, were Dao; her brother, Dien Son Dao, 28, of Minneapolis; Van Chau, 30, and her husband, Han Chau, 33, of Shakopee; and Thu Nguyet Le, also known as Nguyet Le, 51, of Minneapolis. Investigators secretly recorded the meeting.
Kalin Dao led the meeting, explaining that new investment programs required at least 50 members, each contributing a minimum of $15,000, Strande said. He said that she provided few details, and told him that information could not be disclosed to nonmembers.
Strande said Dao told him that she and others accompanying her had experience as securities brokers.
Investigators with the U.S. Postal Inspection Service and the Internal Revenue Service analyzed nine personal and business accounts owned or controlled by the Daos and their father, Nghia Dao, 56, of Minneapolis; Van Chau; or Le.
Investigators obtained three federal search warrants last week. One for a south Minneapolis home, one for a home in Shakopee, and a third for a commercial office in Minneapolis.
Neither Le nor the Daos could be reached for comment Thursday. A man who identified himself as Han Chau declined to comment.
Strande said that, from December 2005 to August 2007, about $10.9 million in deposits were made in the financial accounts that investigators analyzed, and $10.5 million in withdrawals were made. Many checks and wire transfers went to investors, he said, but many also went to the suspects' personal accounts for personal expenses.
"These personal expenses included ATM withdrawals and wire transfers at/to MGM Grand, Mystic Lake, Mandalay Bay, the Bellagio and Dakota Country casinos," Strande said. "Funds were also transferred into E-Trade corporate brokerage accounts, where the collected money would then be used in day trading activities, gaining or losing value depending on the market."
Strande asked investors in NLC TD Financial Services and anyone who has relevant information to call 1-800-372-8347, then press 8. Callers should leave the name NLC TD Financial Services, along with their contact information, he said.
Dan Browning • 612-673-4493