By Gustavo Arellano
By R. Scott Moxley
By Alfonso Delgado
By Courtney Hamilton
By Joel Beers
By Peter Maguire
By Charles Lam
By Charles Lam
At the end of the afternoon session he attended, Pundt declared, "Well, I like everything I've heard here."
Shortly thereafter, Tarpinski agreed to the deal. Contrary to repeated assertions otherwise, the fine print gave Chelak authority to use the $1 billion at his discretion once it landed in the Channel Islands.
* * *
Whatever elation members of the group felt when Tarpinski signed the contract that day in Newport Beach, they were ultimately disappointed. The undercover agent never transferred the cash. He was stalling. In July 2008, a federal grand jury filed fraud and conspiracy indictments against the men.
Agents arrested Leiske, Martin, Pundt, Ferry and several of their alleged associates who didn't attend the Marriott Hotel meetings: Ronald James Nolte, Dennis J. Clinton, Brad Keith Lee and Joseph T. Schuck. (The entire operation netted more than two dozen arrests.) Everyone has pleaded not guilty, except for Lee and Schuck, who signed guilty pleas and were sent to prison for 24 and 12 months, respectively. Chelak remains a fugitive.
Leiske, Chelak's understudy, is also facing federal charges in Oregon for allegedly defrauding more than $5 million from Billy Bernard Britt. According to that indictment, Leiske claimed his clients included George and Barbara Bush, and he was a gatekeeper to a secret economy. Britt, a famous Amway executive, believed the pitch.
Federal officials were not amused, however. For all of his supposed assets worth hundreds of billions of dollars and high-level spook access, Leiske didn't even own a home, FBI agents discovered. Presently incarcerated, he is scheduled to face trial in the Britt case in January 2012.
The Tarpinski matter—delayed four times by defense lawyers—is set to begin in March 2012 in U.S. District Judge David O. Carter's Orange County courtroom.
* * *
There are three possible interpretations of what happened in the FBI sting. One is that federal prosecutor David A. Bybee is right, and the defendants fabricated a scheme based on the false existence of an underground economy. Or the defendants are right, that they are scapegoat gatekeepers to a clandestine world that won't rescue them now that they've been exposed. Or, lastly, the defendants are shameless schemers, and incidentally, there is a secret, government-sanctioned economy that doesn't include them.
Perhaps the key to the answer is Pundt, the ex-FBI agent with all the high-level government pals. He was a central villain in Bybee's original scenario of the crime. Pundt sold the fake billionaire key details about the deal and vouched for its credibility. John D. Early, Pundt's defense lawyer, said his client "believes this stuff."
Pundt, who faced 10 federal charges, declined to be interviewed but said in an email to the Weekly that the FBI and DOJ "initially acted precipitously and without regard for the actual facts of case." He called the sting "nothing short of outrageous." He also said the agents should be held accountable for their "wanton and reckless" conduct.
At a 2009 pretrial hearing, Bybee emphatically objected to Early's motion to excuse Pundt from the case.
"It is Mr. Pundt who is taking his directions from other co-conspirators in the case," the federal prosecutor argued. "He does his best to see that [Tarpinski transfers] $1 billion into an account the conspirators control."
Yet on Aug. 4, 2010, Bybee flip-flopped, writing in a terse court filing, "New circumstances have come to light such that the United States seeks to dismiss the indictment against Mr. Pundt without prejudice in the interests of justice."
Bybee didn't say the sting investigation erred. He didn't outright call Pundt innocent. His moves created another mystery.
According to multiple sources with knowledge of the case, top-level DOJ officials met in a closed-door Washington, D.C., session and decided to release Pundt. He held a press conference in Iowa, declared himself "completely exonerated" and thanked U.S. Attorney General Eric Holder for intervening. At the event, he said nothing more about the existence of a government-sanctioned, hidden economy.
(Pundt declined the Weekly's request to explain his beliefs on the topic.)
DOJ officials claim the "new circumstances" that came to their attention are state secrets. That part of the Tarpinski file has been sealed. Not even the lawyers for the remaining defendants know what information it contains.
This article appeared in print as "Pyramid Scheme: Men boasting CIA and FBI ties met in Newport Beach to convince a mysterious billionaire to buy into a secret economy—and nothing was what it seemed."