Ponzi scheme in Detroit had offspring

After investor Mark Carpenter, a registered broker of Ann Arbor, Mich., realized he'd been taken in by a Ponzi scheme allegedly run by Michael Winans Jr., son of gospel music singer Michael Winans Sr., he allegedly set up his own clients by selling the same fraudulent bonds, The Detroit News reported Friday.

"This was a multiheaded Ponzi hydra," said Ken Ross, commissioner of Michigan's Office of Financial and Insurance Regulation -- a state agency with no enforcement powers.

"Carpenter got scammed and then set up his own scam. We found fraud within fraud involving working people who were robbed of their life savings," Ross said.

With more than 150 complaints filed with police, Winans' alleged scam of selling fraudulent Saudi Arabia oil bonds ended in 2008, the News said. Investigators, however, are concerned that some of Carpenter's alleged scams may still be operating.

Allegedly, Carpenter began several scams after starting the TGBG feeder fund for the Winans' scheme -- TGBG standing for To God Be Glory.

"We want to raise the profile of Mr. Carpenter so that investors don't invest another dime with him," said Ross, who has reported his findings to federal, state and local prosecutors, the News said.

A Ponzi scheme makes no investments, but is a fraudulent operation that gives original investors returns using their own money, or the money of subsequent investors.

Copyright 2010 United Press International.