U.S. marshals escort, from left, Bradford L. Huebner, of Ottawa Hills, Michael L. Teadt, of Maumee, and Charles N. Emmenecker, of Sylvania, from U.S. District Court in Toledo following their arraignment, Thursday, Sept. 20. They are charged on allegations that they were involved in a $24 million fraud scheme involving the sale of Iraqi dinar currency and two non-existent hedge funds.
The owner and two employees of a Toledo business that markets high-yield returns in the sale of Iraqi currency have been indicted by a federal grand jury on conspiracy and wire-fraud charges for allegedly duping investors out of more than $23 million.
Bradford L. Huebner, 65, of 2936 Pembroke Rd., Ottawa Hills, is charged with conspiracy to commit wire fraud, wire fraud, and multiple counts of money laundering. He is being held in the Lucas County jail.
An 83-count indictment naming Mr. Huebner, who is chairman of BH Group, 17 N. St. Clair St., which specialized in the sale of Iraqi currency, Charles Emmenecker, 65, and Michael Teadt, 66, was unsealed on Thursday after the three men were arrested.
All three men pleaded not guilty during their arraignments Thursday in U.S. District Court in Toledo.
Also indicted was Rudolph Coenen, 47, of Jacksonville, the owner of Bayshore Capital Investments LLC. He is charged with conspiracy to commit wire fraud, wire fraud, and money laundering.
According to the indictment, the men fraudulently marketed and sold dinars, the currency of Iraq, causing investors of the BH Group to lose nearly $23.8 million. They also are accused of selling more than $700,000 in nonexistent hedge-fund assets.
Mr. Emmenecker of 4634 Whistling Oaks Ct., Sylvania is charged with conspiracy to commit wire fraud and wire fraud. Mr. Teadt of 620 River Rd., Maumee is charged with conspiracy to commit wire fraud, wire fraud, structuring transactions to evade reporting requirement, and false statement. They were released from jail after posting $250,000 unsecured bonds.
The indictment said that beginning in August, 2010, the men falsely told investors and promoted through the Internet, email, and weekly telephone conferences that buying the dinar involved minimal risks because the currency was protected and regulated by the "Overseas Investment Protection Act, and a presidential executive order, guaranteeing 90 percent reimbursement."
However, federal prosecutors said such a law and presidential order don't exist, and the U.S. Treasury Department doesn't retain "trillions" of Iraqi dinar for investment purposes as the men purportedly presented to potential investors.
According to the indictment, the sale of Iraqi currency and the nonexistent hedge fund promoted by BH Group attracted "in the tens of thousands" of customers in the United States and other countries.
Attorney Richard Kerger, who represents Mr. Huebner, said that the operation and representation of the dinar and hedge funds offered by BH Group was “entirely lawful.” Saying that Mr. Huebner was a longtime businessman in the area, Mr. Kerger said any noncompliance with federal regulations was “unintentional.”
“I think it’s an unfortunate prosecution,” he said. “There may have been irregular activities but I don't think it was criminal. I think at the end of the day, the charges will be found to be not substantiated.”
The "irregular" activities referred to him depositing less than $10,000 at the bank to avoid paperwork. Apparently he believed he was helping the bank and did not realize it was a federal regulation, Mr. Kerger said.
At their arraignments Thursday, Mr. Emmenecker and Mr. Teadt were ordered by Magistrate James Knepp II to surrender their passports and not travel outside the boundaries of the court's jurisdiction without the court's approval.
A detention hearing for Mr. Huebner was set for 10:30 a.m. today. He also is charged with structuring transactions to evade reporting requirement and willful failure to file currency transaction reports.
Assistant U.S. Attorney Joe Wilson argued that he should be held without bail because of the possibility that he would flee.
The indictment alleges that Mr. Huebner, Mr. Emmencker, Mr. Teadt, and Mr. Coenen, through his Florida-based Bayshore Capital Investments, promoted two Iraq and Middle East-related hedge funds that offered "seats" or "placements" of $750 that in most cases were not returned to investors.
Dick Eppstein, president of the Better Business Bureau in Northwestern Ohio and Southeastern Michigan, said he started hearing get-rich-quick claims related to investing in the Iraqi currency in 2010.
The BBB also started hearing from more consumers who were curious about the companies that were selling them. Particularly, people were interested in BH Group.
In 2010, the BBB received 839 inquires about the company. By 2011, that spiked to almost 5,000. Mr. Eppstein said his office had received 900 inquires about BH Group so far this year.
In response, Mr. Eppstein researched the dinar and the theory behind those pushing it as an investment.
“What I was being told is, it’s a 99 percent chance they’ll never be worth anything but it’s a 1 percent chance they will be. So you can’t just come out and say it’s a scam.”
Still, in October, 2010, Mr. Eppstein put an alert in the BBB’s monthly newsletter cautioning consumers against viewing the investments as a can’t-miss prospect that would make them wildly wealthy.
The alert noted there was a possibility the dinars might increase in value, but said purchases should be looked at as a gamble, not an investment.
“We tried to make people understand this was incredibly speculative,” he said.
The BBB alert brought strong criticism from people associated with BH Group.
“As much as I could know, was they fervently believed these dinar could be worth something,” Mr. Eppstein said “That’s the impression I got in my conversations with them a few years ago.”
The BBB received one consumer complaint, lodged in 2011, against BH Group. Mr. Eppstein did not know the specific nature of the complaint, but said it was apparently resolved to the customer’s satisfaction.
Mr. Huebner is a 2010 inductee into Whitmer High School's athletic hall of fame for his football career in the 1960s.
After high school, he was recruited to Miami University in Ohio, then transferred to the University of Toledo and lettered for the Rockets.
He gave the lead gift — $200,000 — for the Whitmer turf program and stadium renovation plan in 2007. He was appointed president in 1976 of the former Hardy & Dischinger Co., of which his father was once chairman.
He was involved in the development of a private disco called Nirvana; the site is now a Party City store.
Mr. Teadt, a Maumee High School graduate, worked for years in public affairs and communications with Owens-Illinois, according to previous Blade stories. He ran for a seat on the Maumee city council in 1983, but narrowly lost. He appeared to run a marketing consultancy firm from his home in Maumee.
Mr. Emmenecker was vice-president and general manager of American Sports and Amusement Parks, which built a large sports complex at Angola and Holland-Sylvania roads in the early 1990s. The site is now occupied by Sportway of Toledo.
Staff Writer Erica Blake contributed to this report.
Contact Mark Reiter at:firstname.lastname@example.org 419-724-6199.