Anatomy of a Scam Investigation: Chapter Nine
Wondering what this is about? The index of prior chapters is here.
So: It's been three months since I wrote about David Bell and his confederates and companies. Have they reformed? Have my sources of information dried up? Have I lost interest?
No, no, and no.
For one thing, career con men do not reform. They die or get locked up.
For another: I'm not going anywhere.
So. What's been going on?
1. David Bell Is Up To Old Tricks Under A Different Name
Recently a tipster — someone ripped off by a bum check — found this series and tipped me off to David Bell's current activities.
Bell is doing business under the name "California Consultant Group, Inc." There's a web site for that company, briefly suggesting that it is in the business of business telephone systems and underground utilities (readers of prior chapters will recognize that as his prior gig and platform for fraud). Bell only registered that domain in November 2011, using the 305 N. Sacramento address in Ontario that you may recall from our Chapter Two inquiries. California Consultant Group, Inc. is a California corporation with familiar elements — it shares that 305 N. Sacramento address with Bell's primary fraud vehicle, UST Development, Inc.
I note that the entities also share the same agent for service of process, an attorney named Dennis Baranowski who also remains counsel for David and Cynthia Bell in their bankruptcy case. Mark Bennett had some rather pointed questions for this attorney even before these additional connections became evident. One wonders why Mr. Baranowski has not withdrawn from his agent position, when the evidence appears irrefutable that UST Development is being used as an instrument for fraud. [Edited March 2, 2012: In Chapter 11, I report that California Secretary of State records now show that Mr. Baranowski has, indeed, withdrawn as agent for service of process for UST Development, Inc., but not for California Consultant Group, Inc..]
So. What is David Bell using California Consultant Group, Inc. to do? A quick Google search revealed something I had previously missed — David Bell had used "California Consulting Group" (possibly a mistake by the complainant) together with UST Development in a scamming a copier vendor last February. Last December — just weeks ago — he used it to hire my tipster to perform a contracting job, wrote him a check for thousands of dollars for his work and materials, and promptly bounced the check. The check (I have a copy for my records and the appropriate authorities) is drawn on Chase, and is in the name of California Consultant Group, Inc., and bears the 305 N. Sacramento address. When my tipster confronted David Bell, he responded — well, let's just say the stereotypical con-man lulling will sound familiar to anyone reading this series: acting surprised, staging phone calls with "accountants" in front of the victim, offering to wire the money, then send a check, then deliver the check, and multiple broken promises. [Note: tipster quote originally included here was removed because of the tipster's safety concerns.]
At that point my tipster did some research and found this series. Bell has purported to make a small payment towards the amount due; we'll see if that check clears. I wouldn't bet on it, would you?
The tipster also told me two other things I found interesting:
1. Even though California Consultant Group, Inc. is registered at the Ontario, California address, it is doing business at 357 W. Bonita Avenue, Pomona, California. Here is a reminder of the importance of the techniques I talked about in Chapter Two — I know I've seen that address somewhere before, but I can't find it in my notes, dammit, because I wasn't comprehensive enough. No doubt the address seemed insignificant at the time — but now, here's the connection.
2. The tipster reported that Bell is keeping assets at the Bonita address — including cars, ATVs, and Catepillars. In addition, Bell has been seen driving a 2012 Mercedes, a 2011 Lexus, and a 2011 Escalade. Hmmm. I wonder if the creditors of David and Cynthia Bell, and the creditors of the UST companies, and the bankruptcy trustees and court know about those assets? Well — they do now, motherfucker.
Anyway, since David Bell only put up the California Consultant Group, Inc. Web Site up in November, they may just be getting warmed up — we'll put some Google Alerts on it.
2. David Bell's Criminal Case Is Progressing
As you may recall, I described in Chapter Seven how David Bell is being prosecuted on fraud-related charges in San Bernardino County.
Since that report, there have been several significant developments:
1. The District Attorney filed an information piling on some additional charges, all related to auto theft and false identification. I'm waiting for the preliminary hearing transcripts. Meanwhile, tipsters tell me that David Bell is accused of posting a job on Craigslist, taking the identifying information of people applying for the job, and using that identifying information to buy cars.
2. At the preliminary hearing the judge found the charges supported by probable cause and held Bell to answer at trial. As a defense attorney I'd caution you not to find this too probative: the probable cause standard is low enough to begin with, and sometimes (particularly, some might argue, in certain counties) in practice the standard sometimes seems on the level of "well, I think I might have heard someone say they heard MeeMaw say that's what happened." Still — add it to the mix, with all of the other information.
3. David Bell's privately retained attorney has filed a motion to withdraw as counsel. I'll bring you a copy of the motion. Will it be based on failure to pay? That's not a bad bet.
David has a pretrial hearing this month. It's open to the public. I wonder if I have plans that day?
3. The Bankruptcy Litigation Is Progressing — And Revealing Interesting Assertions
In Chapter Five we explored some of the litigation filed against David Bell and his confederates in their bankruptcy proceedings. Most of those, you may recall, asserted that certain debts should be non-dischargeable because they were fraudulently incurred. Those cases, too, have progressed.
First, Epay — one of the numerous payroll companies that alleged that the Bells defrauded them — filed a separate complaint against David Bell's brother and confederate Branden Bell and obtained a default judgment when Branden Bell failed to respond.
Second, David and Cynthia Bell's former law firm — who had secured a bench warrant for Cynthia Bell's when she failed to appear for her debtor exam, apparently leading to her arrest — settled with the Bells, on the promise they would make payments. Hope springs eternal, I guess.
Third, the First Sealord case has gotten interesting. You may recall that First Sealord bonded one of UST Development's construction projects, and alleged that David Bell lied about whether he had a prior bankruptcy in applying for the bond and later diverted money that was supposed to go to subcontractors, thus forcing First Sealord to pay on the bond. First Sealord has now filed a motion for default judgment in light of David and Cynthia Bell's failure to participate in the case. if they succeed — and based on the Bells' utter failure to participate, there is every indication they will — the Bells will be saddled with more than $1.7 million in non-dischargeable debt.
But before they filed for default judgment, First Sealord filed a very informative motion for summary judgment laying out their key evidence in the case. We've already reviewed the basics — but the summary judgment motion adds an important new assertion. The heart of First Sealord's case is their argument that David Bell diverted construction income that should have been used to pay subcontractors and vendors, thus triggering First Sealord's bond. This left an open question — what did Bell do with the money? First Sealord thinks they have at least a partial answer. They submit a declaration attaching excerpts from a deposition of a former UST Development partner who testified that UST Development money was used to develop something called "Pedal Spin Studios."
Wait, you might ask. What the hell is a "Pedal Spin Studio?" That, friends and neighbors, would be a chain up upscale spin-class studios of which the "partner/owner" is none other than Cynthia Bell. As a matter of fact, there's one in the town next to mine, and I know a number of women who exercise there. In addition, in her two emails to me, Cynthia Bell suggested that her business has nothing to do with UST Development: "My business is all about making people feel good about themselves, to give them a little escape from the rest of their day."
Note that the allegation in First Sealord's motion was just that — an allegation. It wasn't tested because First Sealord withdrew its motion for summary judgment in favor of the much more straightforward default judgment motion. However, several tipsters corroborate it. In any further litigation, we might see forensic inquiry into source of funds used to develop the Pedal Spin Studios chain.
4. Other Issues Raised By Tipsters
As people search for David and Branden Bell and UST Development online — perhaps because they are victims, perhaps because they've received fraudulent invoices — tipsters continue to contact me.
Multiple tipsters have corroborated the following facts:
The Bogus Invoice Mail Fraud Scheme: Multiple tipsters confirm that UST Development, Inc. continued to send out the bogus invoices that spurred this investigation even months after the Better Business Bureau informed UST Development that it was unlawful — and months after the Bells began monitoring this series of posts. That's highly probative of fraudulent intent. Edited 1/3 to add: I completely forgot to mention that the Better Business Bureau site — which I discussed in Chapter Two — shows that UST Development is engaged in fruitless pushback against their "F' rating, trying vainly to argue that their clearly bogus invoice is merely a "solicitaiton." You can review the details of the complains and responses here (and note that the BBB's approach to complaint closure seems a bit capricious). At any rate, the complaints and responses strongly suggest that UST Development continued to send out the "invoices" after being informed they are unlawful under federal law. Their stock response to complaints is as follows:
I would like to start off by apologizing for any inconvenience or confusion this invoice may have caused. We here at UST sell, service, and maintain business phone systems and inside wiring. The invoice you received was not for services rendered but instead for preventative maintenance for the year to come. The preventative maintenance covers your inside wiring and preventative maintenance for a 12 month period, opposed to being billed for every service call, or at 15 min increment. This is an invoice that is sent out once a year for a full service maintenance agreement. This invoice is optional; it is not a mandatory service. Once again I apologize and I hope this clarifies the misunderstanding.
Many customers call bullshit to that in their rebuttals. A typical final reply from UST Development goes like this:
The solicitation was designed to generate calls, which is has. It was a solicitation, if the consumer did not want the service they do not have to pay.
Note that I explained in Chapter One why, in my view, the invoice is patently fraudulent and unlawful.
Payroll deduction scams: David Bell and his confederates would cycle quickly through different employee health insurers. Bell's entities would withhold money from employee paychecks, ostensibly to pay for health insurance coverage. However, the employees would periodically get letters from the health insurers informing them that their insurance had been cancelled for nonpayment. One employee was left with more than $40,000 in uninsured health care costs. Another UST Development employee found his bank accounts frozen for failure to pay child support. UST Development had been reporting to him that it had been withholding money to make automatic child support payments — but the child support agency in question reported that UST Development never paid over those withheld funds.
Corroboration of the payroll company complaints: Former insiders confirmed that David Bell cycled through payroll companies. On other occasions scheduled pay was short or didn't arrive at all, and on other occasions David Bell called insiders and demanded that they stop payment on a deposit to ward off problems. This is consistent with the payroll companies' allegations documented in Chapter Five.
Corroboration of the Subcontractor Identity Hoax: In Chapter Eight I reported on evidence that David Bell and UST Development had defrauded vendors and payors by opening bank accounts in the name of vendors and then cashing development checks made out to those vendors. In insider confirmed that Bell had opened such fictitious business names and had gone as far as to create a voicemail account for "Main Electric Supply" at the UST Development office.
Cheating small vendors: Several tipsters confirmed that UST Development would order supplies through small independent supplies, pay with a company check, then stop payment on the check and dodge the supplier's calls and demands.
Priorities: Though UST Development and David Bell often professed to lack the funds to make payroll, repay back checks, or pay vendors or subcontractors, he didn't miss the basics — like paying for his cars, flying lessons, and the rather ritzy La Canada Flintridge Country Club. On one occasion, a struggling employee begged to be paid after multiple failures. Finally David Bell cut her a check, which she deposited. The next day, she found herself stranded when her debit card would not work at a gas station. She returned to the office to find that David Bell had put a stop payment on her paycheck and made a payment on his Porsche instead.
5. What's Next?
Some people have been expressing skepticism that there is any point in conducting an investigation like this because there is no indication that the authorities have done anything. I can understand that frustration. Sometimes it seems that if we could dig up evidence that the Bells were growing a spindly-ass ganja plant under an Easy-Bake oven light, they'd be arrested already, and yet David Bell can con any number of people without being arrested. But have faith. Fraud investigations are notoriously slow — a consequence of the ludicrous priorities of our criminal justice system. But sooner or later, the worm turns. As more and more victims sue, and more and more creditors are educated about the situation, and the story of UST Development and David Bell spreads wider and wider, his options will narrow and the jaws will close upon him. Just wait.
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