Compliancex

There’s no denying that William Wise, a former self-styled international banker and purported investment guru, is a smart guy. However, whether his business practices lived up to his last name is a matter that’s open to debate.

At 62, Wise should be winding down and looking forward to a comfortable retirement. After all, he has seen fortunes come and go, and he once lived in a million-dollar home. He gave his wife a $12,000 weekly allowance, and showered $10,000 per month on each of several girlfriends.

But instead of heading off to the golf course, William Wise is now under indictment
and looking at decades in prison. This is the story of how it happened.

Some years back, William Wise came from his native Canada to Raleigh, N.C. and set up several businesses with exotic names: Millennium Bank, United Trust of Switzerland, and Sterling Bank & Trust. He licensed Millennium in St. Vincent and the Grenadines and operated a branch in Raleigh. Another office was opened in Napa, Calif.

Millennium was no ordinary bank, but one that specialized in selling high-yielding certificates of deposit to investors. William Wise promised returns upward of 16 percent, or 312 percent higher than the national average returns on CDs.

Business boomed, and between January 2004 and March 2009, Millennium sold nearly $130 million worth of CDs. But it was all a scam, prosecutors now say. Instead of investing the money, William Wise and an employee, Jacqueline Hoegel, are charged with making Ponzi payments to early investors and squandering the rest.

In a civil complaint filed on March 25, 2009, the Securities and Exchange Commission charged Wise and four other people with running a fraudulent scheme. A federal judge granted an assets freeze and appointed a receiver. That same year, William Wise disappeared.

It turned out that Millennium investors lost more than $75 million. Aside from uncovering the outrageous allowances for his wife and mistresses, the receiver discovered assorted other expenses for Wise: $1 million to buy wine, $800,000 to build a hangar for his corporate jet in Atlanta, $450,000 on boats, and an undisclosed amount to throw a New Year’s Eve party on St. Vincent for 50 of his closest friends.

Last Feb. 29, Wise and Ms. Hoegel, who had run his Napa office, were hit with a 23-count federal criminal indictment in San Francisco. Among other things, they were charged with conspiracy, mail fraud, and wire fraud for running what the grand jury called a “massive Ponzi scheme.”

Hoegel was arrested in Sacramento and is now free on bond. She told a reporter she worked for Wise for years, traveling the world to investment conferences and other events. She proclaimed her innocence and complained she had sunk so low that she was forced to live in a small travel trailer parked on a friend’s property.

After being on the lam for three years, Wise turned himself in to federal authorities in San Francisco last April. Before doing so, he talked with the Toronto Star newspaper.

“ I wasn’t hearing the voices,” he said, by way of rationalizing his behavior. And he told the newspaper all the money was gone.

“I don’t have billions squirreled away,” The Star quoted him as saying. “I don’t even have hundreds squirreled away.”

A smart guy. A Wise man. Broke.

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James Welsh is a financial writer specializing in compliance and securities fraud issues. He also writes the daily “Top 10/Street Patrol” column at www.thestreetsweeper.org, and has held staff editing and writing positions at newspapers including The Times-Picayune of New Orleans and the Orange County Register in California.