Questionable
finance group escapes
Hawaii inspection

Several states have issued
cease-and-desist orders against
Global Prosperity

By Ian Lind
Star-Bulletin

State regulators blame budget cuts and lack of staff for a decision not to investigate a workshop held earlier this month on Maui by a group accused of investment fraud.

Their decision to ignore the Global Prosperity Group meeting surprised and upset Marc Douglas, a California man who sent information on the group several days before the scheduled meeting.

Douglas said he was "dismayed and let down" after learning that the Office of Consumer Protection would not investigate.

No response was received from state securities regulators or the attorney general's office, Douglas said.

The Aug. 9 session on Maui came near the end of an 18-city sweep by Global.

Douglas estimates the one-day meeting brought in $500,000 for the group, based on results reported in a subsequent conference call among Global directors and associates.

Several other states, including Michigan and Massachusetts, have cracked down on Global by issuing cease-and-desist orders in recent weeks.

Global has no central business headquarters, and is described as an "association of entrepreneurs" governed by a "leadership council."

The Aston Wailea Resort, where the meeting was held, referred questions about the seminar to a Kihei woman, who could not be reached for comment.

Global claims participants can earn $2,000 and more a week, avoid taxes through offshore trusts, and protect assets against IRS liens and other legal judgments.

Participants get "little-known insider secrets of wealth creation, asset preservation, trust creation and utilization," according to the group's advertisements.

Global has been hotly debated on the Internet this year, where Web pages have carried thousands of messages detailing complaints by alleged victims as well as defenses by other participants.

Douglas, a former Global participant, said he has been tracking the group's activities across the country since he was defrauded of more than $100,000.

Patricia Moy, lead attorney for the state Securities Enforcement Branch, said that with just a few days' warning, "there's not a whole heck of a lot we can do."

Moy's office has no staff on Maui, and would have to ask police or other state investigators to assist in such a case.

Jo Ann Uchida, executive director of the Office of Consumer Protection, said "work constraints and personnel constraints" led to the decision not to investigate.

Budget cuts have eliminated half of the Honolulu office's investigators since 1994, leaving eight statewide to handle more than 35,000 calls annually.

Uchida acknowledged that waiting until victims report losing money is "a hard call."

"You would like to be proactive, but on the other hand, investigating every possible violation means diluting your resources so that you can't do anything effectively," Uchida said.

Global Prosperity Group uses the Internet and sophisticated multilevel marketing techniques to sell products ranging from a 12-hour set of cassette tapes costing $1,250 to a weeklong seminar offered for $18,750 per person.

Global offers a system for selling the tapes and seminars to others, including detailed scripts and a telephone conferencing system allowing group calls to "close" individual sales.

Participants have also been duped into investing in fraudulent "prime bank" debentures and currency trades while attending the costly seminars, held outside the United States to avoid regulation, Douglas said.