Deer
Creek -
Elite Way to the
Masses Money - Fraud
Victim Fung falsely charged as Prescott’s bilk
millions!
By Edward Snook
Investigative Reporter
Also Contributing:
R. S. Errol
Investigative Reporter
Editor's
note: This is the second in a series of articles involving multi-million
dollar scams perpetrated by numerous individuals. This is the story
of just one of hundreds of victims.
Sunnyvale,
CA – Back in 1988, LeRoy E. Fritts, aka Roy Fritts and
Roderick A. Prescott, aka Rick Prescott, revived a business called National
Trust Services -- NTS. They invited business owners and wealthy individuals
to a free, one-hour seminar, enticing them with, “We will
show you how the elites like the Rockefeller’s and certain politicians
use complex trusts (blind trusts) and charitable foundations to run
their lives, gain wealth and you can do the same. Sovereignty to the
People!”
In
Gary Allen’s landmark book, “Rockefeller File,” the
author stated: “All trusts are not equal. Only a handful of
attorneys in the country know how to establish the type of trusts the
Rockefellers have. These specialized trusts are most emphatically not
the sort your friendly local solicitor can create for you. They not
only can eliminate probate, cut inheritance taxes, and reduce income
taxes; unlike corporations, they can achieve almost total privacy…With
a little effort, taxes disappear.” Think back to Nelson Rockefeller’s
confirmation hearing in 1974, when he announced the fact that he did
not pay any income tax. Why can’t we all be like Nelson? Maybe
the elitists want to keep their methods private and maintain class superiority
or could it be that the ordinary citizens are simply without the necessary
money, influence and power to achieve this standard of living. The NTS
information was intriguing to those people who wanted to move up the
economic ladder and it seemingly provided a legal way to achieve upward
mobility.
Tuition
or “educational endowment” for this program was $9,500 cash
for a two-and-a-half-day workshop under the tutelage of Fritts and Prescott.
Newcomers were “educated” in the art of contracts related
to the formation of Business Trusts in which to hold their businesses
as opposed to standard vehicles like corporations or sole proprietorships.
Additionally, the seminars initially provided detailed instruction regarding
how to complete the IRS tax return Form 1041 incorporating the Trust
Indenture, minutes and resolutions. As a result of this training, some
clients felt confident enough to complete their own tax returns all
the while living their lives in trust. Scores of successful and intelligent
business people were unknowingly duped by Leroy Fritts and Rick Prescott
due to their lies, deceptions and Fritts’ near-hypnotic abilities.
One
person who bought into the program was a well-educated ex-chemical engineer
turned commercial real estate expert named Samuel S. Fung. Fung had
achieved the professional status of Certified Commercial Investment
Member (CCIM) thus being recognized as an expert in commercial real
estate which was a rarity in his profession in 1989.
![](/archive/aug-06/images/deercreek-sam-fung.jpg)
An innocent
Sam Fung ponders false charges.
NTS,
through its charismatic spokesperson Roy Fritts purported that their
complex trusts limited liabilities and reduced the risk of lawsuits.
Fritts often told anecdotal stories to his audience for the purpose
of not only impressing them but more so in an effort to underhandedly
mislead them into a mental state of acceptance where he and Prescott
could then easily empty the clients bank accounts. Fritts stated that
the Kennedy family’s attorney told him that between the time that
Mary Jo Kopechne died and before the Chappaquiddick accident was reported,
valuable assets were drained from the Trust in which the car was held
in an effort to avoid an attachment of assets. Fritts went on to claim
that he was consulted about trusts by Dianne Feinstein while she was
the mayor of San Francisco and he discovered how Feinstein and her spouse
Richard Blum used business trusts to obtain many lucrative construction
jobs with change orders signed by Mayor Feinstein. This alleged activity
may have possibly created an estimated net worth of at least $38 million
as reported in their 1992 and 1993 financial-disclosure forms. Included
in NTS’ extensive client base was the super wealthy Bogdanovich
family, holder of Star-Kist Foods and the Heinz Ketchup brand. Following
a workshop attended by Bogdanovich it is reported that he offered to
buy out NTS so the program would no longer be available to the masses.
It should be noted that the Bogdanovichs’ reportedly had their
Washington DC attorneys and CPA’s validate the Trust programs
before they made their offer. Their offer was subsequently rejected.
In a recent interview Fung stated, “If I had any reservations
about NTS they disappeared when I witnessed the Bogdanovich offer. I
was even more interested in the program knowing that high-powered attorney’s
and CPA’s had validated NTS.”
In
the early 1990’s IRS Agent Dennis S. Brown was assigned to investigate
NTS. In 1993, Brown led a raid on NTS headquarters domiciled in a Sunnyvale,
CA house belonging to the parents of Rick Prescott. Fritts was living
there at the time and used part of the home as an office for NTS. The
IRS seized computers and other materials, which were reportedly later
returned to NTS. This further validated NTS activities to Sam Fung,
as any prudent person would believe that if the government returned
“suspect evidence,” then they must be condoning (legalizing)
the activity.
Later,
Fritts and Prescott contacted Sam Fung who at that time was an established
Bay Area commercial realtor to find new office space for NTS. While
performing this task it occurred to Fung that through networking with
his new clients he could solicit the NTS client base for commercial
real estate leads. Fung attended as many workshops as his schedule would
allow in order to create real estate contacts.
![](/archive/aug-06/images/royfritz.jpg)
NTS spokesperson Roy Fritts
NTS’
cult-like culture
Fritts
and Prescott instructed their members/clients to refer their friends
to the program and bestowed upon the members/clients the title of “Trust
Counselor.” Trust Counselors were compensated for their referral
effort with commissions or a “referral fee.” NTS also advocated
the idea that a Trust Counselor could or should become an agent -- Trustee
-- of their referred clients’ trusts, performing duties and receiving
further compensation from these trusts. According to many Fritts had
an almost hypnotic ora about him. One client stated, “We all felt
unbelievably elevated when Roy was with us. In retrospect, I can certainly
understand how people are lured into cults.”
In
1995, NTS formed Fountainhead Global Trust (FGT), an investment trust
exclusively for NTS clients that offered huge annual returns. Fung also
invested in FGT with a minuscule amount of money he was able to accumulate.
One of FGT’s phony investment vehicles was Cash for Title (C4T),
a chain of car-title-loan pawn shops located in the southern Untied
States. Fritts later claimed he was the silent owner of C4T and took
credit for over 300 million dollars that were collected through the
program. Investors were told their dollars were funding C4T when in
reality the great majority of the money was being deposited into private
bank accounts offshore. C4T was exposed and charged as a Ponzi scheme
in 1999: SEC v. Homa Gause et al., case number: 99CV06895. Much of funds
raised were eventually deposited with the Bank of Bermuda and this bank
reportedly settled related money laundering charges for about $80 million
by returning a fraction of the money to investors while the Securities
and Exchange Commission (SEC) stated that the seizure was only a few
hundred thousand dollars. What became of the remainder of the mega-millions?
The missing money fueled the rumor mill regarding Fritts’ half-a-million
dollar Country Coach RV; Karla Prescott’s shopping sprees to Rodeo
Drive in Beverly Hills where she purchased clothing costing thousands
of dollars and the jewel of their empire, the Deer Creek Ranch in Selma,
Oregon, purchased with the embezzled funds of their loyal followers.
Charles Homa and Michael Gause lived extremely lavish lifestyles off
of C4T funds. Ultimately these two and several others were charged,
prosecuted and sent to prison.
Fung,
like most NTS clients was invited to attend investment seminars held
in the Cayman Islands. Here, Fung came to realize that the total of
FGT funds were beyond imagination and this revelation led to his failed
attempts to convince the FGT Board to allocate funds for commercial
real estate investment through his business.
In
an effort to find NTS’s money, IRS Agent Dennis Brown from N.
Highland, CA issued summons letters in 2000, to Fung demanding his bank
records. Due to faulty “legal” advice Fung sued Brown in
U.S. District Court case number: C-01-4947-MHP in San Francisco attempting
to stop the summons. Fung thought this was the correct course of action
since he had little to do with NTS operations and he had no NTS money,
hidden or otherwise. Assistant United States Attorney (AUSA) Thomas
Moore defended Brown and won a judgment in Brown’s favor. In accordance
with Fung’s attested affidavit dated 9/26/05, “while walking
out of the courtroom with a smiling Brown at his side, Moore screamed
at me, “Fung I am going to get you! I am going to get all you
NTS people!” Fung was astonished at Moore’s overt and unprofessional
display of contempt and vitriol. It is obvious from Brown’s actions
that he bought into the false allegations that the Prescott’s
and/or others leveled at Fung. In other words, agent Brown was sent
on a “wild goose chase” by sophisticated criminals.
The
Prescott’s and Fritts fight
at Deer Creek Ranch in 1999
After
much infighting regarding the control of embezzled funds in 1999, Rick
Prescott along with his spouse Karla and some of their cohorts took
off with absconded investor’s money and headed to sunny San Diego
with the intent of starting up a “new NTS”: Trust Educational
Services (TES). In an effort to kick-start the new fraudulent endeavor
they charged clients $15,500 for their workshop. Roy Fritts, the odd
man out, was left high and dry. Or was he…?
![](/archive/aug-06/images/rickandkarla-prescott.jpg)
Karla and Rick Prescott with Pat Fritts
A
friend of Fritts’ contacted Fung and stressed his opinion that
Fung should move to the Deer Creek Ranch in Oregon to assist Fritts
because he had visited the Selma location numerous times and was familiar
with NTS structures. Fung rejected the request out of consideration
for his wife and their infant triplets. Coincidentally, Jackie Edlefsen
from Wasco, Oregon contacted Fung to discuss Fritts’ supposed
dire situation but Fung successfully convinced Edlefsen that she should
be the one to go to Selma and help Fritts. In 2000, Edlefsen and Fritts
finally enticed Fung to leave San Jose and move to Oregon to work for
them. Soon after Fung matriculates north he discovers that Edlefsen
and Fritts had formed Hope Life Foundation (HLF) to be a mirrored image
of NTS, whereby they excluded Fung from all but the fringe operations.
Subsequently,
Fung’s acquaintance Eric Aaron Lighter, a real estate developer
from Hawaii, came to visit in June, 2002, intending to meet Fritts.
Fritts invited them to his Merced, CA home-office and during this meeting
Fritts allegedly bragged that Linda Gause (ex-spouse of Mike Gause,
manager of C4T) had asked him to handle approximately $100 million dollars.
Apparently, the SEC through negligence, inability or international legal
restrictions failed to seize these funds. Fritts further stated that
he could not spend the cache of money until a ten year period of time
had elapsed in an obvious awareness of the ten year statute of limitations
imposed for this type of criminal activity. Fritts then reportedly and
accidentally discovered that Edlefsen had attempted to relieve him of
some of the funds by requesting wire transfers to her personal bank
account from an offshore source. Honor among thieves?
Now
living in Oregon, Fung frequently commuted to his San Jose, CA office
in order to tend to his commercial real estate business. In 2002, he
commenced an additional commercial real estate practice in southern
Oregon. In December, 2003, the U.S. government sued Fung on a permanent
injunction related to Fung’s assisting people with their tax returns
through the use of his legally purchased software, case number: 1:03-CW-3123,
while Fung was associated with an established commercial real estate
firm in Medford, OR. Fung settled without admitting any wrongdoing.
In March of 2005, the U.S. Attorney forwarded the last document to be
completed by Fung that required Fung to divulge his clients.
During
this time one of NTS’ clients, prominent psychiatrist Irwin Gootnick,
(author of “Why You Behave in Ways You Hate And What You Can Do
About It” and a featured guest on the Oprah show) nominated Fung
to be a trustee of Gootnick’s trusts. According to Fung, Gootnick
frequently called him while he served in this capacity, stressing about
the possibility of IRS audits. As Fung began to become suspicious and
questioning of Gootnick and his possible dishonesty, Gootnick reportedly
informed Fung that he was opting for the services of a high-powered
law firm in San Francisco. According to Fung Gootnick let it be known
during one conversation that he had under-reported a large amount of
income. At this juncture Fung ended his relationship with Gootnick.
Fung then blew the whistle on Gootnick in the aforementioned AUSA document
request of Fung’s clients in accordance with Title 18 USC on or
about April 27, 2005, which requires anyone with knowledge of a crime
to report said crime to the proper authorities. However, many times
when reporting crimes against protected individuals the report gets
lost in a three card monty.
The
U.S. government eventually sued Roderick Prescott and TES in case number:
02-CV-0692-L. During this lawsuit, Prescott made false statements against
Fung in an apparent attempt to deflect his personal liability by implicating
an innocent individual. These statements proved damaging as Fung was
arrested along with Fritts and Prescott on August 3, 2005. The grand
jury indictment dated April 12, 2005, case number: 5:05-cr-00215-JW
stated that Fung had knowledge about and aided and assisted in the preparation
of false tax returns for a dozen NTS clients. However, Fung, like hundreds
of other victims was instructed by Fritts and Prescott in what he thought
was the correct and legal procedure for preparing tax forms.
The
question begging an answer is why is Fung being charged instead of at
least two CPAs who actually did most of the NTS clients’ tax returns?
Additionally, why aren’t the other NTS clients, specifically those
whom Fung assisted, being charged criminally if they filed false tax
returns with or without Fung’s assistance? Note that the clients
provided Fung with their financial data and he merely entered the figures
into his computer tax program which calculated the taxes owed. Selective
and malicious prosecution comes to mind when pondering these questions.
Perhaps the tax returns weren’t false but it avails Fung to be
a convenient target for government retaliation.
Later,
when Fung found out his defense attorney was not working in his best
interest, Fung filed documents alleging prosecutorial misconduct. His
attorney resigned immediately. At that time, Fung learned that the new
prosecuting attorney was none other than AUSA Thomas Moore who had publicly
threatened him years earlier according to Fung’s sworn affidavit.
Finding
himself in the cross hairs of a seemingly vindictive AUSA and IRS agent
Fung is searching for answers to more questions. Why did the government
not take into consideration Prescott’s motives for implicating
Fung? Was this indictment payback for Fung’s lawsuit against Brown
in light of Moore’s expressed blatant unprofessional conduct?
Then again, why did agent Brown wait for more than a decade to bring
these charges while doing nothing to close down NTS as millions were
swindled from investors? Remember Brown initially raided NTS in 1993,
eventually returning all the records to NTS without a referral to prosecutors.
This act once again confirmed the legal status of NTS to Fung.
Emily
J. Kingston, resigned as an AUSA shortly after being named to be Fung’s
original prosecutor and joined the private practice law firm of Sideman
and Bancroft, LLP located in San Francisco. The Observer discovered
that this is the same so-called high-power law firm that Irwin Gootnick
retained after his relationship with Fung was terminated. Coincidence,
or is this a blatant conflict of interest? Upon reflection, could this
overwhelming conflict be the reason why Gootnick hasn’t been indicted
for alleged tax evasion and money laundering or again, just an example
of the three card monty?
Note
well that in the U.S. Bankruptcy Court, Hawaii, case number: 05-50023
and Adv. Pro. number 06-90001, Dr. Wing C. Ng, an attorney and CPA stated:
“Gootnick continued to hide taxable income, by, among other things,
failing to report same...The income generated and being ‘hidden’
or ‘laundered’ and in spite of Mr. Prince’s legal
advice, the Gootnicks continued with the NTS tax scam for more than
two years, which may arguably demonstrate their criminal intent to evade
taxes.” Dr. NG continued, “In my professional opinion as
a tax practitioner for twenty-eight years, I have not seen such brazen
behavior on the part of a taxpayer to cheat the United States and the
States of Revenue. It is just ridiculous.” Ng seems to have discovered
the very alleged conduct that caused Fung to become suspicious of the
Gootnick’s.
Shouldn’t
a reasonable person think that Moore, purporting to be an ethical person,
would recuse himself from this case due to his past threats against
Fung? In addition there may be a transparent protective barrier in the
above mentioned law firm as Gootnick’s attorney Richard Nelson
is a former AUSA in Northern District of California. Could this also
have some bearing on why Gootnick and his wife have never been charged
with any crime to date?
Margie
Paris, a criminal law professor at the University of Oregon, stated:
“There’s this old saying that a grand jury would indict
a ham sandwich if the prosecutor wanted them to. When the grand jury
declines to indict, it’s really because the prosecutor doesn’t
want them to.” How true!
Is
wrongfully charging and harassing an innocent man like Sam Fung an outrageous
act of malicious prosecution? It is general knowledge that during the
years Fung has lived in Oregon he has been an active, contributing citizen
of his community performing volunteer work, including acting as a director
of a local non-profit organization, which has greatly benefited the
community. He’s a dedicated husband and a responsible father to
his young children. It is our firm belief and strong contention that
Sam Fung is an honest and upright person who believed he was acting
both ethically and legally in everything he did. The Observer has obtained
letters written by Fung to clients regarding dishonesty on their tax
returns. If Fung had any intent to do wrong he certainly would not have
addressed suspected wrongdoing. Scam artists/crooks don’t confront
wrong, they simply go along to get along in an effort to make more money.
And, let’s not forget Fung’s suspicions of Gootnicks alleged
dishonesty. Apparently Fung’s suspicions and questions caused
Gootnick to run to the protection of a law firm employing former AUSA’s
who undoubtedly still have close ties to the United States Attorney’s
Office in San Francisco.
Fung’s
story is convoluted with dark tones and shady characters that frequently
seem to be moving from one side of ethical conduct to the other. Sam
Fung was victimized first by people he trusted; now he’s being
victimized by the “legal system” in which money and power
figure prominently. In retrospect the missing money seems to have been
relegated to last place while Fung gets framed to look like a mafia
don. As they say down at the hall, “good enough for government
work.”
Our
run-away criminal justice system needs our full attention and we desperately
need to restore honesty and accountability into our “halls of
justice” however it remains to be seen if this can be accomplished
in our lifetime. The U.S. Attorney’s Office in San Francisco seems
to have forgotten that a person cannot be a victim and a perpetrator
simultaneously. Sam Fung invested thousands of dollars over the years
with NTS and FGT and why would any prudent person with integrity invest
his hard earned money into a scam if he knows it to be a scam. Leroy
Fritts and the Prescott’s stole Fung’s money just as they
stole millions from hundreds of other highly capable, yet deceived individuals
and businesses.
This
story is not unlike the case we reported about in May 2005, regarding
Tedd Peck a recipient of the Purple Heart in Viet Nam while serving
as a Swift Boat officer. Peck, like Fung was maliciously prosecuted
by AUSA Thomas Moore. Peck was a victim of a fraudulent scam but Moore
attempted to prosecute him based on perjured testimony to a Grand Jury
by Karyn Fazio, the investigating IRS-CID agent. In this convoluted
case Peck’s tax preparer was never indicted or questioned by the
testifying IRS-CID agent. In addition he was never audited or given
a chance to rectify his returns. Our investigation of both cases is
still ongoing and the complete truth will be exposed. It should be noted
that while we publicly indict Thomas Moore for false prosecutions, it
is not up to him but rather to his boss, United States Attorney Kevin
Ryan to decide who to prosecute. And many times, even Ryan is directed
form up above (Washington D.C.) concerning who he should attack. The
bottom line is: The United States Attorney dropped seven major felony
tax charges (the result of public pressure provided by the US~Observer)
against Captain Tedd Peck because he was a victim and not a perpetrator.
They need to do likewise with Sam Fung, for the very same reason…
At
the very least, the US~Observer promises that all of those involved
in the factually false prosecution of Sam Fung will find their names
well known within hundreds of thousands of households across America
and right at the top of Google and Yahoo’s search engines before
this tragic story ends.
Editors
Note: As our investigation widens it is becoming vividly clear that
the major criminals in the Deer Creek Ranch/NTS/FGT debacle is none
other that Rick and Karla Prescott. Karla Prescott has escaped being
charged to date even though there is overwhelming evidence illuminating
her guilt. Karla Prescott greatly profited from embezzled funds over
the years and she continues to profit with the help of individuals in
the legal community. We are committed to exposing and ultimately ending
her crime spree. The US~Observer would prompt anyone with knowledge
of the events and or individuals involved in this article to contact
Edward Snook at:
541-474-7885.