Lead man accused of fraud with Iraqi money
11:00 PM, Mar. 18, 2011
A South Dakota man who banked hundreds of thousands of U.S. dollars by selling Iraqi dinars to investors outside the state has been indicted on federal fraud charges.
The case against 58-year-old online retailer Dave Olmsted of Lead is the first prosecution in the U.S. District of South Dakota for the unlicensed sale of the Iraqi currency, but officials say the investment scam has flourished throughout the country in recent years.
Olmsted was indicted on charges of operating an unlicensed money transmitting business, failure to report on exporting and importing monetary instruments and unlawful structure of transactions to evade reporting requirements.
Before his arrest March 9, Olmsted was getting Federal Express packages every day, filled with shrink-wrapped piles of dinar bills that had been smuggled out of Iraq and into Jordan, court documents say. One U.S. dollar is worth about $1,200 dinars.
Most of the $670,000 worth of dinar he's charged with importing came from a seller in Amman, Jordan. Olmsted allegedly told agents with the U.S. Immigration and Customs Enforcement Service that his business had grown tenfold since 2006.
Last April, Montana-based First Interstate Bank flagged $268,000 of Olmsted's money as having come through "suspicious activity," the court papers allege.
The papers also point out that Olmsted has spent time in prison for tax crimes, has been successfully sued in small claims court several times in Lawrence County during the past 12 years and owes nearly $140,000 in state and federal taxes.
Sellers of the Iraqi currency tell potential investors that the dinar's value will grow as Iraq's government and economy stabilize, and that those who buy the bills now are certain to see huge returns when they exchange dinars for dollars in the future.
What dinar dealers don't say, according to Jim David of South Dakota's Better Business Bureau, is that Iraqi currency cannot be exchanged for dollars in the U.S.
"It seems as if people don't realize that they'd have to take it to Iraq to get anything out of it," David said.
Even if the money were exchangeable, he said, someone who invests in foreign currency has to be careful to note the actual value of the currency before buying any from an online dealer.
"With a lot of these outfits, they've already doubled the price of what the dinars are actually worth," David said.
The Better Business Bureau received six complaints about Olmsted's online dealership, mostly from customers who said they'd bought dinars and never received them. The South Dakota Attorney General's Consumer Protection Division had received 18 complaints of a similar nature, according to spokeswoman Sara Rabern.
All of the complaints came from outside South Dakota, Rabern said. The Consumer Protection Office has not received any complaints of other dinar dealers in the state or of South Dakota residents who've purchased dinars from online dealers in other states.
"This is a pretty new thing for us," Rabern said.
Anyone who thinks they might have been a victim of the scam can call 773-4400. Reach John Hult at 331-2301.
11:00 PM, Mar. 18, 2011
A South Dakota man who banked hundreds of thousands of U.S. dollars by selling Iraqi dinars to investors outside the state has been indicted on federal fraud charges.
The case against 58-year-old online retailer Dave Olmsted of Lead is the first prosecution in the U.S. District of South Dakota for the unlicensed sale of the Iraqi currency, but officials say the investment scam has flourished throughout the country in recent years.
Olmsted was indicted on charges of operating an unlicensed money transmitting business, failure to report on exporting and importing monetary instruments and unlawful structure of transactions to evade reporting requirements.
Before his arrest March 9, Olmsted was getting Federal Express packages every day, filled with shrink-wrapped piles of dinar bills that had been smuggled out of Iraq and into Jordan, court documents say. One U.S. dollar is worth about $1,200 dinars.
Most of the $670,000 worth of dinar he's charged with importing came from a seller in Amman, Jordan. Olmsted allegedly told agents with the U.S. Immigration and Customs Enforcement Service that his business had grown tenfold since 2006.
Last April, Montana-based First Interstate Bank flagged $268,000 of Olmsted's money as having come through "suspicious activity," the court papers allege.
The papers also point out that Olmsted has spent time in prison for tax crimes, has been successfully sued in small claims court several times in Lawrence County during the past 12 years and owes nearly $140,000 in state and federal taxes.
Sellers of the Iraqi currency tell potential investors that the dinar's value will grow as Iraq's government and economy stabilize, and that those who buy the bills now are certain to see huge returns when they exchange dinars for dollars in the future.
What dinar dealers don't say, according to Jim David of South Dakota's Better Business Bureau, is that Iraqi currency cannot be exchanged for dollars in the U.S.
"It seems as if people don't realize that they'd have to take it to Iraq to get anything out of it," David said.
Even if the money were exchangeable, he said, someone who invests in foreign currency has to be careful to note the actual value of the currency before buying any from an online dealer.
"With a lot of these outfits, they've already doubled the price of what the dinars are actually worth," David said.
The Better Business Bureau received six complaints about Olmsted's online dealership, mostly from customers who said they'd bought dinars and never received them. The South Dakota Attorney General's Consumer Protection Division had received 18 complaints of a similar nature, according to spokeswoman Sara Rabern.
All of the complaints came from outside South Dakota, Rabern said. The Consumer Protection Office has not received any complaints of other dinar dealers in the state or of South Dakota residents who've purchased dinars from online dealers in other states.
"This is a pretty new thing for us," Rabern said.
Anyone who thinks they might have been a victim of the scam can call 773-4400. Reach John Hult at 331-2301.
