What’s behind the 100 Huntley Street shakeup?

Further to the information coming out of the US regarding Gordon Driver and Ronald and Reynold Mainse of 100 Huntley Street, I asked Dr. Mark Byron, an instructor of finance, economics and management at Sullivan University in Kentucky to break down the financial and regulatory complexities.  

There is a great deal we don’t know and many unanswered questions. While Crossroads Communications Inc. Board of Directors have relieved Ron and Reynold Mainse of their responsibilities at the media company thier father David founded until the board has the facts and fallout around Driver, his Axcess companies and investors; I appreciate how Dr. Bryon points out innocent greed.

…It seems that some of the folks behind the Canadian Pentecostal TV show 100 Huntley Street (it’s been compared to the 700 Club but seems more like the Crouch’s stuff on TBN that that from what I’ve seen of it) were victimized in a Ponzi scheme revolving around commodity trading; at least that was the cover. The folks behind the scheme lost a small fortune on trading but took in a larger one from “marks”.

Bene’s asked for some professional help from his finance buddy-”Post away on your blog, if I’m reading this right it appears the two Mainse brothers [sons of the show's founder] were finders, however I don’t understand enough to say that. Either way, huge blow to this Canadian ministry. People are hurt. ”

According to this Hamilton Spectator piece, the Mainse brothers were what the piece called “finders” who were helping the purported scamster, Gordon Driver, who worked at 100 Huntley Street as a teen.

Driver testified that he was going to sell a computer to Reynold Mainse, Ron’s brother, when Reynold noticed some charts on the computer related to Driver’s supposed trading software.A lot of money is spent on prediction software working on “technical analysis”, trying to make predictions of future stock and commodity market behavior based on past patterns. Such analysis tends to be descriptive of past returns but typically does a lousy job of predicting future returns, with any profits from such programs getting eaten up by trading commissions; at least that’s what I teach my finance students. Please note that the technical analysis isn’t fraudulent in and of itself, but just not overly effective as a general rule.

That being said, such technical analysis gets played up on financial TV shows (the purdy pick-tures of technical charts make “better” TV than fundamental analysis, much as audience members getting slain in the spirit makes “better” TV than serious Bible exposition) and tons of folks, including the Mainses, can get suckered in.
Meanwhile, onto the company pulling off the scam. I looked into the Securities and Exchange Commission’s EDGAR database for any record of Axcess Automation; publically traded companies have to file quarterly 10-Q and yearly 10-K forms of financial data and other information. No such luck.

There is a Texas-based Axcess International (the report has them incorporated in Delaware, but most big US companies have their titular HQ there to take advantage of Delaware’s permissive corporate governance laws) that specializes in miniature tracking devices (RFIDs); here is it’s latest quarterly report (10-Q) with the SEC for the first quarter of 2009. Despite bleeding red ink for the last five year, they seem to have enough promise to have secured new stock investors for the last five years per their statements of cash flow.

If you’d like to take a flyer, you can buy them for US$0.41/share per MSN Money’s page on AXSI. However, they’re so risky that they are traded over-the-counter, not on NASDAQ, well meeting the definition of “penny stock.”

However, that’s not the critter that seems to have gotten the Huntley Street boys scammed. The SEC has no record of them. That’s entirely possible, for they generally regulate only publically-traded companies. Many mom-and-pop companies with a small number of investors don’t have to deal with them, and if Axcess Automation didn’t have enough investors to warrant a SEC filing, they might not be on their radar.

Next stop, the CFTC, who regulates the futures markets in the US; it’s an oddity of US finance where the CFTC is part of the Agriculture department, since it was ag futures that they first started overseeing before oil and financial futures became the biggest part of that market. They do know about these guys and shut them down last month.

The U.S. Commodity Futures Trading Commission (CFTC) announced today that on May 14, 2009, the Federal District Court in Los Angeles, California, entered an order freezing the assets of Gordon A. Driver of Las Vegas, Nevada, and his Las Vegas-based companies, Axcess Automation LLC (Axcess Automation) and Axcess Fund Management LLC (Axcess Fund Management). On the same day, the CFTC filed a complaint charging them with fraudulently soliciting commodity pool participants, misappropriating participants’ funds, and issuing false statements to participants in a $13.5 million fraud involving over 100 participants in the United States and Canada.

“Domestic and foreign regulators will continue to cooperate and combine our resources to combat the pestilence of Ponzi fraud schemes that cross borders,” said CFTC Acting Director of Enforcement Stephen J. Obie.

The CFTC complaint alleges that, from at least February 2006 through the present, the defendants defrauded pool participants, misappropriated pool participant funds and operated two commodity pools as a Ponzi scheme, using newly received participant funds to pay purported profits and withdrawals to other participants.

Defendants allegedly misrepresented to prospective pool participants that Driver’s trading generated monthly profits of around 20 percent and issued false account statements to give credibility to these misrepresentations. According to the complaint, despite accepting over $13.5 million, the defendants used only about $3.7 million for trading during the relevant time period, and Driver’s trading during that time resulted in approximately $3.5 million of trading losses, or 95 percent of the funds invested. Pool participant funds were also allegedly commingled with non-pool funds.

In addition, here’s the court paperwork the CFTC filed in US District Court in California and the order telling Mr. Driver to stop driving his financial scam.

The sad part of the story is that the Mainses got sucked in, seemingly innocently (other than a less-than-innocent lust for a quick profit), to the scheme. A lot of otherwise honest Jewish folks got sucked into Madoff’s scheme and, as, we might remember from the back-history of the Todd Bentley story, his Lakeland host church’s predecessor got rocked when the pastor’s son pulled off a major financial scam at the expense of quite a few parishioners.

It will be interesting to see if the Mainses, like quite a few of Madoff’s victims, were just innocent, if a bit greedy, victims or knew better and sucked people in anyway.

About Bene Diction

Have courage for the great sorrows, And patience for the small ones. And when you have laboriously accomplished your tasks, go to sleep in peace. God is awake.
This entry was posted in 100 Huntley Street, Axcess Funds, General, Gordon Driver. Bookmark the permalink.

14 Responses to What’s behind the 100 Huntley Street shakeup?

  1. Connie Walsh says:

    I am sorry for the Mainses pain.

  2. Torontonian says:

    The entire matter is greatly saddening. There is
    hurting in many places and ,no doubt, on the part
    of viewers. To salvage and restore
    to a previous state will be an arduous task and
    many will be tested on their generosity of forgiveness
    and benefit of the doubt.

    It will be hard for the sons to bring themselves to
    full restoration since the entire episode will linger
    for at least a decade and will continue to hurt.

    It will be greatly taxing on persons to believe that
    there was a naivete on the part of the sons and
    that no harm was intended. Sadly, that will call
    into question their ability to make meaningful
    decisions and be effective leaders.

    Restoration can and will come—with time.

    It is hoped that the son will remember not
    to be sidetracked from the original message
    ever again.

    The forgiveness comes first, the admonition
    comes second. That was the practice of
    Jesus, that should be our practice today.

  3. Torontonian says:

    This is the amended next to last paragraph:

    It is hoped that the sons will remember not
    to be sidetracked from the original message
    ever again.

    Sorry for the typing error.

  4. buckets says:

    It strikes me that the important point here is to clarify what it meant that they were “finders”: specifically, where did they get their ‘finds’ and what was their ‘cut’. If they were exploiting 100 Huntley contacts on a fee-per-referral basis, then it moves them from victims to victimizers.

  5. Bene D says:

    Agreed mostly, Buckets.

    Adding yours to the list of very important questions.

    In the court document we don’t even know who besides Gordon Driver of Hamilton, formerly of Oxnard Ca and currently of Las Vegas is involved.

    As a resident in the US he is the one charged, while the Ontario document names David Rutledge as the other Canadian.

    The defendants are Driver, Axcess Fund Management, Axcess Automation.

    According to the facts in the filing Driver is sole owner of Axcess Automation, and had sole control over Axcess Automation bank accounts and commodities futures. (23 and 24).

    Look at facts 30 and 31. participants (investors) solicit family and friends. The filing calls them point people. (finders)

    Quote:

    “32. Some of the point people who solicited their friends and family, received commissions from Driver and/or Axcess Automation. In some cases, these commissions greatly exceeded their principal investment.”

    Earlier in the document the finders fee is listed as 5%.

    15 investors were from the US, which means that most of the people scammed were from Canada.

    Where did they solicit investors from? Crossroads, church?

    Which makes your question very important.

    Question. How much of those millions were taken from people involved with Crossroads?

    At what point (if any) did Reynold or Ron Mainse realize they were participating in a ponzi scheme and were no longer innocently greedy?

    Question. Is it against the law to take money for bringing someone into an investment fund?

    I see a couple of scenarios here.

    a) one or both Mainse brothers knew this was a scam
    b) participated anyway
    c) Neither knew and drew others in
    d) one knew, one didn’t
    e ) they didn’t find out until investigators made queries, the money stopped or they were told by another investors
    f) the choices they made upon knowing is what in my mind makes the difference between victim and victimizers

    I can’t make the leap from victims to victimizers without facts yet.

    This is a tight family and leaders in their faith group, and perceive themselves as leaders in Canada.
    Easy group to ingratiate yourself into if you are operating a ponzi scheme.

    To be conned brings deep shame, according to experts even deeper shame and a desire to isolate and not talk within religious groups.

    How do we find out the answer to your question?

  6. Undisclosed says:

    As an individual who is not connected to Crossroads or Huntley Street, however one that has been effected by this whole mess, I would like to clear some of the misrepresentations up.

    First of all, Ron Mainse is a man of great integrity. His involvement in this situation is that of a victim. I am aware there are people who have lost money and may have to sell their homes to recoup that which was lost, however Ron and Ann have lost much more. Imagine the feeling they must have of how they were deceived and in turn were used as pawns in a carefully manufactured scheme to screw Christian circles out of their assets.

    If one looks back at the entire time line of events from 2006, it is clear that the ‘accidental’ move by Gordon Alan Driver to Ron Mainse’s street in Flamborough was intentional and one crucial step to ensure success in the scam. Another important step, as Driver detailed in his own statement to the OSC was his initial involvement with Reynold Mainse.

    When Reynold had visited Driver to look at a computer he was selling, Reynolds own interest in an alleged ‘propitiatory’ stock trading software that Driver had allegedly helped to develop started the ball rolling. Drivers was reluctant to discuss the software. Upon further prying, Drivers plan fell into place and Reynold was the second pawn used to carry out the plan.

    If Driver had tried to ‘sell’ the investment idea to anyone, no one would have invested a cent. Without the credibility of Ron and Reynold, no one would have trusted Driver from the beginning, however his apparent reluctance to ‘allow’ others to be involved was the ‘hook-line-and-sinker.’

    The steps the Crossroads board took were completely uncalled for. Ron and Reynold are not named in any legal disputes that I am aware of, however, the board decided to crucify them without even allowing them the explain their sides of the story. Those individuals who are on the board for Crossroads, who have known the Mainse family for years, should be the first ones to defend the character and presume the innocence of those in the leadership roles. Unfortunately, the steps the board made to remove them from position have put a halo of guilt over the characters of Mainse family.

    It is so unfortunate. This Ponzi/Affinity fraud has effected many ‘good’ people. The only ones that should be put to blame would be Driver and the investor for blind trust – I guess there is a lot of blind trust though when it comes to being a Christian.

  7. BD says:

    Undisclosed:

    I extend my sympathy to you also. Thank you for stepping forward.

    How did you get involved?

    The whole point of a confidence man (the accusations against Mr. Driver are not proven in the civil case, and we do not know if there will be any criminal proceedings) is to part his targets with their money for his own gain.

    Confidence men can’t operate without finding innocent people to draw in. They are very good at what they do, and they can look you in the eye and lie as smoothly as a sip of ice cold vodka. You’ve experienced that, and you are absolutely correct, good people are the bait. And good people in this case were kept from truth even longer with the issue of false financial statements.

    Follow the link in the post on why Christians are such easy targets, it’s a timely article.

    We are so used to hearing about scandals in televangelism the default conclusion is ‘guilty.’
    Please speak up and correct misconceptions anytime.

    As you point out, anyone can be a target, being leaders isn’t an exemption from being a victim. Hook the leader, you hook the followers. Anyone who thinks they can’t be conned is only conning themselves.

    Do you have a link to any more OSEC documents?

    Did Ron and Reynolds Mainse receive finder fees as early investors at the top of the ponzi scheme?

    How did you find out you’d been scammed?

    Where you contacted by US or Canadian investigators?

    How many other investors do you know personally?

    Are victims being kept informed of proceedings against Mr. Driver?

    What are you and other victims doing to regain and receive justice?

    Are Ron and Reynold Mainse involved in seeking justice?

    Crossroads has a very conservative circle of leaders – their bottom line is saving the ministry and one of the things they need to consider is public opinion.
    Is Crossroads leadership reacting to the naming of a family member in the OSEC document and the Mainse brothers in the US paperwork?

    The Crossroad board statement didn’t go far enough, given the civil case and possible criminal case, they may not be able to say much.

    Jim Cantelon stating it wasn’t sexual impropriety seems to dismiss the harm to victims and minimize the effects of fraud on people.

    As of yet, I haven’t had a response to my queries to Crossroads.
    I don’t know if that’s prudent PR, the optics look bad, and I don’t think viewers are going to read facts as much as jump to conclusions. These are media people and must understand that.

    Anything else you’d care to add I may have missed with my questions to you which can help others?

    I just posted answers to some questions to a US economics professor to help people look at facts, procedures etc.

  8. Pingback: What’s behind the 100 Huntley Street shake up - part 2 at Bene Diction Blogs On

  9. Jim says:

    Undisclosed, I agree with most of what you said but it sounds like to me that you must of recieved your investment or some of your investment back? You must of been one of the ones at the top or half way, I am thinking of the many vitcims who recieved nothing, where did their money go, how much were the brothers or any other finder paid for finders fees? Where did they money go? For their personal gain? They need to pay back what was taken illegally, how much went into 100 Huntley street?

    Perhaps the best thing I have read was by BD was the following, “Jim Cantelon stating it wasn’t sexual impropriety seems to dismiss the harm to victims and minimize the effects of fraud on people.”

    My thoughts and prayers are with the viticms, I agree with you the brothers are good people but if they made money off others they need to pay it all back this goes for any finder, do the right thing.

  10. Bene Diction says:

    One of the questions I asked Dr. Bryon was:

    “Since the Mainse brothers disappeared a few weeks ago I’m left wondering if they’ve been busy in the US with lawyers, depositions. If Driver is allowed to settle out of court… Wonder if Cdn legal proceedings are possible/probable?”

    This is his response:

    “They probably stayed north of the border, but they are probably laying low. A lot depends on how much trouble they are in. If they are part of the scam, they are likely busy preparing a case to defend themselves or mulling over whether to plead guilty to lesser charges in order to get this behind them and be able to rehabilitate themselves to their fans by Thanksgiving rather than Christmas ;-). Excuse the sarcasm, but I had to get that one in.

    However, it might just be that they got taken in innocently (as I’ve mentioned before, the greedy seeking of a quick buck isn’t innocent, but not criminal on either side of the 49th) and are just laying low until they dust settles, taking a de-facto summer vacation while they avoid answering all the “tacky” questions you and other reporters would ask.”

    It hadn’t occurred to me Ron and Reynold Mainse may have funnelled Axcess finders fees back into the ministry (one of the other commenters brought up that point, thank you!).
    Crossroads uses Price-Waterhouse for their audits.

    Dr. Byron has done an excellent job of explaining what is occurring in the US with the civil case, what Canadian investors can do, the possibility of this becoming a criminal case and the reality the wheels will grind slowly.

    85 Canadians being scammed is no small thing.

    Asking any victim questions when they have had the courage to leave a comment here at BDBO is not attacking or blaming.
    Since the court documents were filed less than a month ago I can only speculate many investors have recently found out they were scammed.

  11. Undisclosed says:

    Bd,

    Fortunately I had not invested a large amount of funds. As any individual should know, many investments can loose, thats why we shouldnt put all our eggs in one basket… and… if it is too good to be true, it probably is.

    Unfortunately however, I do know some people close to me that have lost a lot and this situation will certainly put a long cast shadow over their financial futures… all I can say is that money isn’t everything. I hope there is an effective remuneration from ill gotten gains to those who have lost.

    Also, it isn’t surprising the amount of Christianese Politics involved in this, Im sure it makes the enemy happy to divides us even more.

  12. Susan says:

    First of all, Ron Mainse is a man of great integrity.

    Hogash There cannot be true integrity in a ministry that is based on nepotism and where all the benefits flow to and from Mainses and Rutledges! And those who truly know them and are not part of their charade can testify to all the benefits that Mainse brothers enjoyed and acquired enabling them to buy million dollar homes in an exclusive area north of Burlington, Ontario.

    God doesn’t make mistakes and He knows why He brought all this to the surface as Jesus promised – MK 4:22 “For there is nothing hidden which will not be revealed, nor has anything been kept secret but that it should come to light.

  13. elaien johnson says:

    I am sadden by this issue. I felt that something was not right but I could never really but my finger on it. My heart goes out to David and his wife. You start something I call The Big Idea and you work at it all your life because you have a love for The Word Of God. You are watch by many and its seems to me that this Gordon Allan Driver was there from the beginning at age 17. I believe that Mr. Driver had a plan all along and who knows what they all did as young men that they thought they got away with. It all looked good on the surface but what was really going on. I think the only one here that might be innocent is the father. I have watch him over 30 years and I saw the tries he shed and I think that is why he took him off the program and stroke him time and time again. When he got will say a little out of hand they brushed him off. The father you see to they was not the spite and polish guy. Daivd calls black black and white white. But when he was gone I thought something had been lost. I am a Christian and have been for along time . I use to get up in the mornings and turn on 100 Huntley Street ,sometimes I would sit and listen and sometimes it was just comforting have the program on well I things around the house and every once in awhile what someone was saying on there touched my heart again.Like David Eli and many others in The Word sons and daughter disappoint be I say to David “PRESS ON AMEN” Elaine

  14. danny says:

    i am sorry to see this all happen it is truly a shame. However things like this take place every day and many innocent people get scammed and hurt. The bottom line is trust God and no one else. They did not do their homework and trusted blindly. Unfortunately they and many others are reaping the damaging effects of greed i have seen it happen so many times before and i have also been a victim of blind trust – forget about the get rich fast schemes they are all a part of satans’ attempt to lure you into false security. There is a pot of gold and the other end of the rainbow but its’ on Gods side.

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