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 Editorials | Issues | May 2008 
Tri-West Fraud Victims Endure Protracted Wait for Restitution
 Dale Hoyt Palfrey - Guadalajara Reporter
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| | Alyn Richard Waage cooked up the Tri-West Investment Club after fleeing his native Canada in 1998 to avoid prosecution on at least 30 counts of mortgage fraud totaling around 1.2 million Canadian dollars. | | |
Between 1999 and 2001, at least 16,000 persons worldwide lost their shirts in the notorious Tri-West Investment Club fraud, according to United States Department of Justice (DOJ) investigators, who estimate that the perpetrators netted close to 60 million dollars. And by the calculations of one of the crime ring’s insiders, the real figure may be closer to 100 million.
In the aftermath, U.S. authorities sent four of the top male gang leaders to jail, while Mexican prosecutors recently gained convictions against two foreign women loosely tied to the case. The U.S. Attorney’s office has also instituted three civil actions related to Tri-West, seeking forfeiture of millions of dollars of assets detected in Mexico, Costa Rica and Latvia, in order to repay the victims.
While all that sounds like strong action against one of the most successful Internet-based scams on the books, the sad truth is that those taken in by the swindle have yet to collect a dime of their lost investments.
The Guadalajara Reporter tracked down the story of a Chapala-area resident who got duped and has spent years in a futile attempt to recuperate his losses.
John Smith (whose name has been changed to protect his identity) put 1,000 dollars in the Tri-West Club in 1999 on the recommendation of a Canadian friend he qualified as “a sharp businessman.”
His wife subsequently sunk in an additional 10,000 dollars. They collected 1,000 dollars in interest early on, but after that saw nothing more of accrued gains, much less their original investment. “They were good, no question about it,” Smith says of fraudsters.
It was an ingenious pyramid scheme concocted by a slick Canadian operator – Alyn Richard Waage – with the aid of a close-knit band of scoundrels that included his son Cary. Waage’s sister, wife and mother are also among those named as possible suspects by investigators who probed into the case.
A disgraced Edmonton-area real estate agent, Waage cooked up the Tri-West Investment Club after fleeing his native Canada in 1998 to avoid prosecution on at least 30 counts of mortgage fraud totaling around 1.2 million Canadian dollars. It is believed that he briefly set up shop in the Bahamas before taking up residence in Puerto Vallarta. By the end of 1999, he and his immediate family had settled into a palatial mansion that doubled as their business headquarters.
Soon afterwards he crossed paths with Californian James Michael Webb, who came aboard as the Tri-West webmaster. The polished website successfully enticed thousands of unwary investors from dozens of countries around the globe to sink funds into a “Bank Debenture Trading Program” that touted “guaranteed high return” with “no risk” of loss. The club promised an annualized return of 120 percent on investments placed in 1,000-dollar increments, accrued through Tri-West purchases of “promissory bank notes” issued by “key prime banks.”
Some early investors did indeed reap hefty returns as the Waage gang drew from new members to make payouts, the classic Ponzi scheme mechanism. Many, however, opted to follow Tri-West’s suggestion of reinvesting their gains to further boost their earnings. Others fell into the trap of turning themselves into promoters, believing that they would collect large bonuses by signing up new investors.
As it turned out, Waage and his cohorts were frantically spending their ill-gotten gains on choice real estate properties, luxury vehicles and high living.
The result has been devastating for those who put their life savings into Tri-West. Smith says he knows several Lake Chapala area expats who suffered far more substantial losses than his own. He also spoke of a Mexican citizen residing in Texas who took out an 80,000-dollar loan to join the investment club. When the game was up, the man was forced to file for bankrupcty.
The house of cards began to collapse in April 2001 when Waage and two associates were arrested at the Puerto Vallarta airport for entering the country with 4.5 million dollars in undeclared funds. They had arrived by private jet on a flight originating from Costa Rica, via Belize City. Mexican authorities caught them with luggage filled with 1,076 checks and money orders made out to the Haarlem Universal Corporation, a Tri-West shell company headquartered in Belize City.
Waage and fellow Canadian Patrick Clifford Elder were initially denied release on bail, while Waage’s bodyguard, former Puerto Vallarta deputy police chief Gonzalo Cuevas Perez, gained his freedom several weeks after the arrest by posting a 400,000-peso bond. Elder was released on bail in July. Waage hired Marco Antonio del Toro, a top-notch Guadalajara attorney, to finagle a bond that got him out of the Puente Grande prison in August. He promptly fled the country and hunkered down on an estate he had purchased in Costa Rica.
By then U.S. authorities were on to the scam. In September, Waage and Webb were nabbed by Costa Rican police acting on U.S. warrants. Both men were extradited to California in December 2002.
Meanwhile, Cary Waage had been captured in December 2001 at the Dallas-Fort Worth airport en route from Canada to Costa Rica. In April 2002, he pleaded guilty to charges of mail fraud and conspiring to launder Tri-West proceeds. After agreeing to cooperate in the investigation, he was sentenced to 50 months in prison. He regained his freedom in June 2005.
In January 2003, Waage was indicted on six counts of mail fraud, ten counts of wire fraud, seven counts of money laundering and one count of conspiracy to commit money laundering. In May of that year he entered a guilty plea on reduced charges and agreed to forfeit all proceeds from the fraud and pay full restitution to his victims. He is currently serving out a ten-year sentence at the Federal Correctional Institution in Butner, North Carolina and is due for release in September 2011.
Webb faced the same charges. He also took a plea bargain agreement and after serving time, obtained release from prison in December 2005.
The fourth key player busted by U.S. authorities was Canadian Keith Nordick, a former Puerto Vallarta saloon keeper and ex-boyfriend of Waage’s sister Lyn, the alleged Tri-West bookkeeper. Nordick was expelled from Mexico in May 2004 and arrested by the FBI upon arrival at the Los Angeles airport. After pleading guilty to mail fraud and money laundering charges, he is now serving out a five-year sentence at a federal prison in Arizona, with a release date set for January 2009.
Research of sources on the case indicate that Costa Rican authorities seized substantial assets connected to the Tri-West fraud, including approximately six million dollars deposited in that country’s banks, along with property, a yacht, a helicopter, cars, cash and jewelry worth millions more. The Mexican government confiscated real estate, bank deposits and goods valued in 2003 at around five million dollars. The federal prosecutor’s office in Guadalajara told this newspaper that those assets will remain under the administration of a special agency of the nation’s tax department until all judicial procedures related to the case are resolved.
A spokesperson for the DOJ office in Sacramento was unable to provide any information regarding whether any of the assets seized abroad are now in the hands of the U.S. government or how much is now in the kitty. Questions on the current stage of the restitution process and the legal status of at least a dozen other persons who may remain as suspects or fugitives connected to Tri-West have also gone unanswered.
Smith says DOJ officials have provided next to no assistance to victims other than issue form letters that are scarce on useful information. One letter, addressed to “Dear Victim,” stated dryly: “In a criminal prosecution, the restitution to the victims is not dispersed until the defendants are on probation.” Officers Smith has spoken with by phone have demonstrated that a cavalier attitude, with one telling him victims will be “lucky to get pennies on the dollar.”
On two separate occasions, Smith has sent the agency a complete file of his documentation on Tri-West to aid both in the criminal investigation and the handling of victim claims. Perturbed that the effort was never acknowledged, he says, “I’ve done everything possible and I still don’t know if I have a legitimate claim. I’m starting to get the feeling I’m also getting screwed by own government.” |
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