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Investor Fraud Nets 5 Years’ Jail (London Free Press May 23, 2007)
The Ohio man who cited ties with Andrew Lech defrauded 281 people.By: Debora Van Brenk
An Ohio man who admitted he defrauded 281 investors of million- and who claimed close ties with financier Andrew Lech- was sentenced yesterday to more than five years in jail.
Gary McNaughton, 51, will spend the next 63 months in federal prison, said U.S. Attorney Justin Roberts.
“A lot of people, they were devastated, losing their life’s savings or their nest eggs that they were counting on,” Roberts said from Ohio.
In March, McNaughton pleaded guilty to 10 counts of fraud and tax evasion.
He had promised investors- most of them fellow worshippers at the Elyria, Ohio mega-church where he served as youth assistant- double-digit returns on their money.
He told them his friend Andrew Lech from Canada would manage the money through a company called Haven Investments and the investors would be forwarded monthly interest payments.
Instead, McNaughton admitted, the money was recirculated among investors- the later ones received “interest” payments that came from previous investors’ payments.
McNaugthon admitted keeping .6 million.
Investigators found he had bought motor homes, motorcycles, boats and sports cars.
McNaughton’s jail time is in keeping with a plea agreement and with U.S. sentencing guidelines, Roberts said.
McNaughton, who had lived in Ontario and described himself as a childhood friend of Lech, will have to serve his full sentence, likely minus a few days off for good behavior.
“There is no parole in the federal system here,” Roberts said.
Meanwhile, Lech is awaiting trial in London in November on charges of defrauding Ontario and Ohio investors of million.
Lech is alleged to have managed money for several intermediaries- who signed up friends, family members and fellow churchgoers for so-called guaranteed investments.
Lech loses contempt case appeal
Tue, November 28, 2006
By JANE SIMS, FREE PRESS JUSTICE REPORTER
Andrew Lech's hopes of being contempt-free have been quashed by Ontario's highest court.
The Ontario Court of Appeal refused last week to overturn the orders imposed on the disgraced self-proclaimed financial guru from Peterborough.
Lech, 46, who is also facing 88 charges of fraud over ,000, had been serving his third contempt of court sentence -- this time for 15 months -- in a class action lawsuit until last month, when it was stayed pending the appeal heard last week.
Since August, 2003, Lech has been subject of a lawsuit filed in Barrie by 500 stung investors -- many churchgoers from southwestern Ontario.
He remains in custody.
The criminal charges date from January 2001 to September 2003.
The appeal court said it had no basis to overturn the decision, "given the serious, wilful and deliberate nature of the contempt."
Lech was ordered jailed three times when he refused to answer questions at the civil trial.
His latest sentence runs until November 2007.
"Throughout the proceedings, (Lech) has repeatedly breached his promises to the court and demonstrated a flagrant disregard for court orders," the court said.
Lech is central to a -million pyramid or Ponzi scheme involving investments promising returns of 15 to 40 per cent. His preliminary hearing on the criminal charges is set for January.
London Free Press, Nov.18, 2006:
Lawyerless Lech denied freedom
The embattled financier wanted bail to seek a legal team to defend him.
By JANE SIMS, FREE PRESS JUSTICE REPORTER
Fraud suspect Andrew Lech was denied bail yesterday, quashing his hopes of being free and assembling a legal dream team to handle his charges.
Lech, 46, from Peterborough, who is facing 88 charges of fraud over ,000, was ordered detained by Justice of the Peace Stewart Taylor after a two-day hearing that began last week.
A publication ban was placed on evidence at the hearing.
Taylor ordered Lech not to communicate with any of the people named in the charges and some of the intermediaries involved in the alleged fraud scheme.
Lech had been in custody for months on a civil contempt order made before the fraud charges were laid.
The fraud counts allege a -million scam involving hundreds of investors in Southwestern Ontario and Ohio from 2001 to September 2003.
Lech, who was charged in February, stood quietly and looked straight ahead with a hockey jacket draped over his arm when Taylor gave his decision.
Lech's contempt order -- his third -- was stayed last month by the Ontario Court of Appeal, opening the door for him to apply for bail on his criminal charges.
The appeal of his civil case is set for next week.
He was jailed after he failed to answer questions in a Barrie court about a class-action lawsuit filed by 500 investors.
In August, Ontario Court Justice Kathleen McGowan ordered Lech to quit stalling and get on with his criminal case.
Ontario Court Justice John Getliffe scheduled his preliminary hearing for three days starting Jan. 30.
Lech hasn't retained counsel other than London lawyer Glen Donald, who was hired for the bail hearing only.
Lech indicated at earlier court appearances he wanted out of custody to hire lawyers to handle the criminal case.
Donald had no comment after the bail hearing.
Police indicated yesterday that Gary McNaughton, one of Lech's financial associates, had been arrested in Elyria, Ohio, near Cleveland, on four charges, including mail fraud.
London Free Press, Oct. 6, 2006:
With or without a lawyer, disgraced Peterborough financial guru Andrew Lech will begin his preliminary hearing on 88 fraud charges in January.
Yesterday, Ontario Court Justice John Getliffe ordered Lech's hearing to proceed and urged the reluctant inmate to find a lawyer and review his case.
The hearing, to determine if the case goes to trial, is set for three days starting Jan. 30.
Lech is at the centre of a -million scheme police say bilked hundred of church-going investors, many from Southwestern Ontario, from 2001 to September 2003.
Yesterday, Lech, 46, sat in the prisoner's box while assistant Crown attorney John Forrester argued for the go-ahead.
So far, Lech has refused to participate.
The Crown delivered three large binders of evidence, and an application to move the case along, to the Elgin-Middlesex Detention Centre -- where Lech remains in custody -- last week for Lech's review.
Assistant Crown attorney John Forrester told Getliffe the investigating OPP officer picked up the information at the jail yesterday morning.
Lech hadn't signed it out.
Lech's behaviour in criminal court follows the pattern he set during his lengthy civil battle with 500 investors.
He's serving a contempt sentence imposed in Peterborough for refusing to answer questions in the civil case.
The sentence runs until November 2007.
London lawyer Glen Donald appeared for Lech but stressed to the court he's only been retained for a bail hearing.
Lech hasn't applied for bail.
Donald told Getliffe an application is being made to Ontario's highest court to review Lech's contempt sentence on Oct. 12.
Lech has indicated if he was released from custody, he'd be able to retain a lawyer.
But Forrester said Lech "has been saying for years now if he was released he would find the money."
Lech has made more than 20 video court appearances since his arrest last February.
Forrester asked Getliffe to allow the Crown to present its evidence in an abbreviated form, rather than call testimony from 85 people.
Getliffe agreed.
Thu, February 23, 2006
By JANE SIMS, FREE PRESS JUSTICE REPORTER
The self-proclaimed financial guru at the centre of a 66 million dollar investment scheme made his criminal court debut in leg irons.
Andrew Lech of Peterborough was led into a London courtroom in the shackles for his first appearance on 85 just-laid fraud charges related to an alleged Ponzi scheme.
With shaggy hair parted to the side, hanging almost shoulder-length, and wearing the same blue hockey coat he's worn to most earlier appearances in civil court, Lech said nothing during the hearing.
Eighty three of the counts are fraud of more than 5,000, and two of under 5,000.
Each charge except one represents an investor in a scheme which pledged high-interest, tax-free benefits and a return on investments of 15 to 40 per cent.
The other charge is defrauding the public. The charges stem from an OPP probe which began in July 2003. Investigators reconstructed 54 accounts Lech had between January 2001 and September 2003.
The OPP said forensic accountants traced million from more than 400 investors, mainly in Ontario and Ohio. Other investors are from as far away as British Columbia.
The case is being tried in London because "the majority of the victims are in Southwestern Ontario," said OPP Det.-Sgt. Larry Harvey.
London defence lawyer Glen Donald, appearing for Lech in the brief court appearance, protested use of the leg irons.
"It seems a little high-handed," he said to Justice of the Peace Isaac Condo.
Donald noted many accused brought to the courthouse on violent charges are routinely brought in without shackles.
Assistant Crown attorney John Forrester said the irons were used because of Lech's poor record co-operating with the civil courts and a dustup with arresting officers on a contempt of court charge a year ago.
Lech was shackled because he's "a flight risk," Forrester said.
While the charges laid this week are the first criminal counts against Lech, he's no stranger to the court system.
Since last spring, he's been in jail in Lindsay, serving 15 months for contempt for failing to answer questions to lawyers or in court about a class-action lawsuit filed against him on behalf of 500 investors across North America.
Lech was arrested a year ago at an Ontario Hockey League game in Oshawa after months on the lam from another contempt charge arising from the same civil suit.
He'd been jailed for eight months, but was mistakenly let out in July 2004 after serving two thirds of that sentence.
While out after his premature release, Lech wrote to investors that he promised to recover all the money if they dropped the civil action.
For a time, he fled to Europe.
London lawyer David MacKenzie, who represents the investors in the civil case, was in the court yesterday.
He said Lech is still uncooperative and another contempt application is being considered.
The investors were churchgoers. Many of the Americans came from an Ohio evangelical congregation.
The Ontario Securities Commission shut down the scheme in April 2003. By then, retirement funds and savings had been emptied.
When a payment plan was approved by a judge last fall, investors were advised they would only recover pennies on the dollar. Those claims had to be submitted to auditors by the end of January.
Don and Mary Ellen Milligan of London, who lost 450,000 in the scheme and are claimants in the civil suit, welcomed the criminal charges.
Lech's next court appearance is scheduled to be made by video from Lindsay jail on March 7.
"I'm glad its coming to an end in that regard," said Mary Ellen Milligan "It's far from the end and will never be the end for some of us."
Don Milligan said he expects the civil case to go on for years.
Lech's next court appearance is scheduled to be made by video from Lindsay jail on March 7.
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