Magnolia Couple Charged With Duping Friends and Neighbors in Ponzi Scheme

Soon to be known as The Madoff.
James Liddell and Leslie Collins are a married couple in Magnolia. According to Washington's Department of Financial Institutions, they're also the creators of a ponzi scheme that netted nearly $4 million.

The DFI says that the con broke down like so.

Liddell and Collins told eight investors -- including parents of their children's classmates and neighbors in Magnolia -- that they were the middle men in a complicated business transaction where they bought, refurbished and resold point of sale terminals. Basically, they said they were going to make money selling souped up cash registers to Seattle-area pharmacies.

For three years, from 2005 to 2008, the DFI says Payright Merchant Services, the name of the company set up by Liddell and Collins, worked like any other ponzi scheme. Original investors, some promised returns as high as 50%, were repaid with the money brought in by new blood.

The pyramid set up by Payright started to crumble the same as all the others. As new investment pools dried up, Liddell and Collins had a hard time making good on promised returns.

The first complaint against the pair came in April of last year. They've since been charged with violation of the Securities Act of Washington and have been fined $25,000.

Of course, weightier punishments may be yet to come in civil court. Or in the disapproving looks they get from neighbors who think they've screwed them.

As always, the lesson is if it sounds too good to be true it probably is. And also, anytime you hand over your money to someone else, no matter how smart or friendly they seem at the P.T.A. meeting, a background check is always a necessity.

If investors had bothered to do the minimum amount of research on Liddell they would have seen that he'd already been named in a cease and desist order in for securities fraud. Back in 1987, he was convicted of theft after stealing $125,000.

comments powered by Disqus

Friends to Follow