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UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF NORTH CAROLINA
STATESVILLE DIVISION

July 12, 1999

  UNITED STATES OF AMERICA BILL OF INDICTMENT

v.

 
(01) CHARLES DAVID WEEKLEY Violations:
(02) HARRY J. KAMPETIS 18 U.S.C. §1341
(03) GREGORY E. CAPLINGER 18 U.S.C. §1343
    18 U.S.C. §371
    18 U.S.C. §2

 

THE GRAND JURY CHARGES:

Introductory Paragraphs

1. Beginning in or about January, 1992, CHARLES DAVID WEEKLEY filed with North Carolina for the incorporation of an entity known as The Diamond Group (TDO). WEEKLEY was then employed as a stockbroker in Charlotte, North Carolina.

.2. Using his existing client base, WEEKLEY solicited investors' funds for TDG projects. During 1992, WEEKLEY obtained from two existing clients $100,000 for investment in an offshore bank trading program. This investment ultimately failed.

3. in or about 1993, WEEKLEY was introduced by telephone to HARRY J. KAMPETIS, a self-described "money manager" from the Pittsburgh, Pennsylvania area.

4. In or about June, 1993, WEEKLEY obtained from existing clients approximately $45,000 in loaned funds to use as start-up capital for TDG. At the suggestion of KAMPETIS, $25,000 of those funds were used to pay for the creation of a "private placement memo" (PPM) to be presented to potential investors in TDG. The PPM outlined the goals of TDG, advising that TDG would "engage primarily in investment and trade in debt obligations in the international money market."

5. After WEEKLEY obtained the PPM, he solicited other previous clients to invest in his bank debenture trading program. WEEKLEY informed clients that their funds would be pooled into a bank debenture trading program and would generate at least a 20% annual rate of return. WEEKLEY informed investors that their principal would be more secure than in a bank. By July, 1993, WEEKLEY had raised approximately $1.1 million from investors. TDG debentures were issued to each client and the funds were kept in a TDG bank account at FIRST UNION NATIONAL BANK in Charlotte, North Carolina.

6. In or about November 1993, WEEKLEY and KAMPETIS became partners whereby KAMPETIS agreed to furnish WEEKLEY with expertise and consultation to assist in international banking transactions. KAMPETIS also agreed to keep the books for the venture.

7. On or about November 29, 1993, TDG entered into a "financial services agreement'' with KAMPETIS whereby KAMPETIS agreed to serve as the "escrow agent" for TDG.

8. On November 30, 1993, WEEKLEY wire transferred approximately $1.1 million dollars from the FUNB TDG account to KAMPETIS' Mellon Bank account in Pittsburgh. These funds were wire transferred to a female in California named Susan Brava, d/b/a Alt Capital, for investment in a bank debenture trading program. After an unsuccessful attempt at investing the funds in a trading program, most of the funds were diverted to other ventures not disclosed in the PPM. These ventures ultimately failed.

9. During the summer of 1994, KAMPETIS and WEEKLEY agreed with Susan Brana, d/b/a Alt Capital, to invest additional TDG funds in a venture involving the distribution of "Bynatone," a horse feed supplement. WEEKLEY raised approximately $909,123 from eight clients, again using the PPM. These funds were wire transferred from the FUNB TDG account to KANPETIS' Mellon Bank account in Pittsburgh. Investors were never informed that their funds were diverted to this venture, which never came to fruition

10. Between February, 1994 through March, 1995, KAMPETIS received from Brana approximately $570,000 in original TDG funds, of which KAMPETIS returned $390,000 to WEEKLEY and kept $180,000 for himself WEEKLEY used some of these returned funds to make initial interest payments to TDG investors. TDG investors believed that these interest payments represented the proceeds of investments in offshore bank trading programs.

11. In or about early 1995, KAMPETIS presented WEEKLEY with another investment opportunity which centered around the activities of GREGORY CAPLINGER a self-described physician operating a clinic in Santo Domingo, Dominican Republic. KAMPETIS represented that CAPLINGER had developed a. liquid substance to treat people affected by the AIDS virus. CAPLINGER was looking for funding to support his research and to market his medicine commercially throughout the world. WEEKLEY and KAMPETIS saw this as an opportunity to make large amounts of money, and to replenish those funds already lost in other prior ventures.

12. On May 3, 1995, KAMPETIS loaned $50,000 of TDG funds to CAPLINGER's company, World Medical Services- The funds were wired by WEEKLEY to CAPLINGER's attorney in Florida.

13. During this time in 1995, WEEKLEY informed investors about Dr. Caplinger and his program, but never informed them that their funds had already been used to make loans to CAPLINGER.

14. In or about June, 1995, WEEKLEY raised approximately $1.3 million from approximately sixteen investors to place in another "bank trade." Investors were furnished PPM's and a one year debenture note was issued to each. Investors were promised a 36% annual rate of return.

15. During the first week of July, 1995, the $1.3 million raised by WEEKLEY was wire transferred from FUN13 TDG account to First Interstate Bank in Los Angeles where contacts of KAMPETIS were supposed to begin a bank trade. These funds were frozen by the bank and later returned in November, 1995, to WEEKLEY.

16. In or about the fall of 1995, KAMPETIS and WEEKLEY incorporated a new company, Immuno Pharmaceuticals in Pennsylvania. The company was to market CAPLINGER's abilities and to raise the monies needed to market his medicine.

17. In or about October 1995, WEEKLEY began wire transferring funds to CAPLINGER on a regular basis using TDG funds. These funds were raised through notes that WEEKLEY had issued to investors as well as the issuance of TDG debentures. Approximately $900,000 of the funds returned to WEEKLEY by First Interstate Bank were used to help pay for medicine and cover CAPLINGER's expenses.

18. During the course of approximately two years, a total of approximately $1.8 million in TDG funds were turned over to CAPLINGER in hopes of producing lucrative returns. The TDG investors, however, were not aware that their investment funds were going to CAPLINGER.

19. By in or about Spring, 1996, WEEKLEY ceased making interest payments to investors. WEEKLEY informed some investors that their monies were "tied up," but never disclosed that TDG was in financial peril.

20. During the summer and fall 1996, WEEKLEY and KAMPETIS decided to sell stock in Immuno Pharmaceuticals in an effort to raise additional cash. WEEKLEY represented that investment in CAPLINGER's medical program would ensure lucrative returns. Approximately fifteen investors contributed a total of $230,000 in Immuno stock and the funds were sent to CAPLINGER.

21. CAPLINGER falsely represented to WEEKLEY and KAMPETIS that he was an accomplished and published medical doctor, with bona fide degrees from medical schools and institutes in Europe; that he was a candidate at one time for the Nobel Peace Prize for his working involving AIDS patients. WEEKLEY and KAMPETIS in turn promoted CAPLINGER's medical program to investors based on these representations

22. Despite the financial support provided, CAPLINGER's program never evolved into a successful venture. By January, 1997, WEEKLEY could no longer raise any funds to support the program.

23, In the spring of 1997, WEEKLEY began receiving calls from investors regarding the status of their investments and interest payments. WEEKLEY initially claimed that their funds were "tied up," sometimes referring to "German bonds." When pressed for Information, WEEKLEY conceded that their were problems and that them was some litigation involving the partners. WEEKLEY did not inform investors that their funds had been diverted to other projects not covered in the PPM and that he had raised additional funds making false representations. By late spring, WEEKLEY stopped taking calls from investors.

24. During the course of the scheme, WEEKLEY raised approximately $4,951,213, which represented $3.9 million from TDG debentures, $790,000 in TDG notes, and $230,000 in Immuno stock.

25. During and in furtherance of the scheme, WEEKLEY paid approximately $764,142 in interest to the investors in order to give the appearance of validity of the investment schemes, always using proceeds from one investor to pay a previous investor.

 

Count One

From in or about November, 1993, through in or about the end of 1997, within the Western District of North Carolina, and elsewhere,

CHARLES DAVID WEEKLY
and
HARRY J. KAMPETIS

combined, confederated, conspired, and agreed with one another to commit offenses against the United States, including violations of Title 18, United States Code, Sections 1341 and 1343 (mail and wire fraud), and in furtherance thereof, caused the commission of at least one overt act in the Western District of North Carolina, as set forth in the foregoing introductory paragraphs. incorporated herein by reference,

All in violation of Title 18, United States Code, Section 371.

 

Counts Two through Nine

The introductory paragraphs set forth above are realleged and incorporated herein by reference.

From in or about November, 1993, through in or about the end of 1997, within the Western District of North Carolina, and elsewhere,

CHARLES DAVID WEEKLEY

and

HARRY J. KAMPETIS

having devised a scheme and artifice as described above to defraud certain individuals and for obtaining money and property from them by means of false and fraudulent Pretenses, representations, and promises, for the purpose of attempting to execute, and executing such scheme and artifice, knowingly and unlawfully did cause to be transmitted by means of the mails, funds and/or correspondence to and from locations within the Western District of North Carolina, And aided and abetted one another therein, each such transmission being a separate violation of Title 18, United States Code, Sections 1341 and 2:

Count

Investment Amount

Mailing

Two

$198,000

6/2/95

Three

$667,123

11/29/95

Four

$60,000

1/25/97

Five

$145,000

9/1/95

Six

$269,000

12/30/95

Seven

$770,000

1/30/96

Eight

$150,000

10/31/95

Nine

$70,000

10/2/96

 

Counts Ten through Sixteen

The introductory paragraphs set forth above are realleged and incorporated herein by reference.

From in or about November, 1993, through in or about the end of 1997, within the Western District of North Carolina, and elsewhere,

CHARLES DAVID WEEKLEY

and

HARRY J. KAMPETIS

having devised a scheme and artifice as described above to defraud certain individuals and for obtaining money and property from them by means of false and fraudulent pretenses, representations, and promises, for the purpose of attempting to execute, and executing such scheme and artifice, knowingly and unlawfully did cause to be transmitted by means of the wires, funds to and from locations within the Western District of North Carolina, and aided and abetted one another therein, each such transmission being a separate violation of Title 18, United States Code, Sections 1343 and 2:

Count

Date

Transaction

Ten

8/23/94

$10,000 wired from TDG@FUNB to Kampetis@Mellon Bank, Pittsburgh, PA with further credit to Alt Capital@Merrill Lynch, Los Angeles
Eleven

11/22/94

$60,000 wired from Kampetis@PNC Bank, Pittsburgh, PA to TDG@FUNB
Twelve

3/30/95

$90,000 wired from Kampetis@PNC Bank, Pittsburgh, PA to TDG@FUNB
Thirteen

6/29/95

$12,000 wired from TDG@FUNB to Kampetis@PNC Bank, Pittsburgh
Fourteen

7/26/95

$15,000 wired from TDG@FUNB to Kampetis@PNC Bank, Pittsburgh
Fifteen

12/15/95

$25,000 wired from TDG@FUNB to Kampetis@Integra Bank, Pittsburgh
Sixteen

2/9/96

$5,000 wired from TDG@FUNB to Kampetis@Integra, Bank, Pittsburgh

Counts Seventeen through Twenty-Two

The introductory paragraphs set forth above are realleged and incorporated herein by reference.

From in or about the beginning of 1995, through in or about February, 1997, within the Western District of North Carolina, and elsewhere,

GREGORY E. CAPLINGER

having devised a scheme and artifice as described above to defraud certain individuals mid for obtaining money and property from them by means of false and fraudulent pretenses, representations, and promises, for the purpose of attempting to execute, and executing such scheme and artifice, knowingly and unlawfully did cause to be transmitted by means of the wires, funds to and from locations within the Western District of North Carolina, each such transmission being a separate violation of Title 18, United States Code, Sections 1343:

Count

Date

Transaction

Seventen

5/4/95

$49,000 wired from TDG@FUNB to attorney for Caplinger @NationsBank of FLA, Tampa
Eighteen

10/3/95

$25,000 wired from TDG@FUNB to Caplinger@Banco Gerencial, Santo Domingo, DR
Nineteen

11/29/95

$50,000 wired from TDG@FUNB to Caplinger@Banco Gerencial Santo Domingo, DR
Twenty

12/15/95

$825,000 wired from TDG@FUNB to Caplinger@Banco Gerencial, Santo Domingo, DR
Twenty-One

7/26/95

$70,000 wired from TDG@FLNB to Caplinger@Banco Grerencial. Santo Domingo, DR
Twenty-Two

9/20/96

$40,000 wired from IPI@FUNB to Caplinger@Banco Gerencial, Santo Domingo, DR

Counts Twenty-Three and Twenty-Four*

The Introductory paragraphs set forth above are realleged and incorporated herein by reference.

On or about the dates specified below, within the Western District of North Carolina, and elsewhere,

GREGORY E. CAPLINGER

did cause the transporting, transmittal, or transfer and attempt to cause the transporting, transmittal, or transfer of a monetary instrument and funds (specified below) from a place in the United States (the Western District of North Carolina) to or through a place outside the United States (the Dominican Republic), with the intent to promote the carrying on of specified unlawful activity, and aided and abetted at least one other therein, all in violation of Title 18, United States Code, Sections 1956(a)(2)(A) and 2 (each transaction constituting a separate violation as follows):

Twenty-Three

11/29/95

$50,000 wired from TDG@FUNB to Caplinger@Banco Gerencial, Santo Domingo, DR
Twenty-Four

12/15/95

$825,000 wired from TDG@FLTNB to Caplinger@Banco Gerencial, Santo Domingo, DR

  A TRUE BILL 
   
  ______________
Foreman         

MARK T. CALLOWAY
United States Attorney

BRIAN A. WHISTLER
Assistant U.S. Attorney

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