Scottsdale CPA accused of operating $75 million Ponzi scheme
By Linda Bentley | February 4, 2009
Arizona State Board of Accountancy revokes certification
SCOTTSDALE – The wheels of justice are at a standstill for victims of what appears to be a multi-million-dollar Ponzi scheme run by Dan Wise, a former Scottsdale CPA.
On Dec. 5, 2008 Wise, a Desert Mountain resident with homes in Flagstaff and New York City, signed a consent agreement with the Arizona State Board of Accountancy (ASBA), which ordered his Certified Public Account Certificate revoked.
Wise is prohibited from practicing public accounting as a CPA in Arizona or engaging in activities likely to be confused as such.
The first complaint was filed with the ASBA on July 5, 2008 by Attorney John A. Greene on behalf of a couple who used Wise to prepare and pay their income tax returns.
They paid Wise checks totaling over $525,000, with the understanding Wise would submit his own checks to the IRS and Arizona Department of Revenue for payment of their 2006 and 2007 federal and state income tax liabilities.
The couple received an IRS Notice dated Feb. 4, 2008 regarding their unremitted income tax liabilities for 2006, now accruing interest and penalties along with threats to lien their assets.
The ASBA sent a letter to Wise on July 24, 2008 with a copy of the complaint, requesting a written response within 30 days, indicating what attempts he had made to rectify the matter.
Although required to by law, Wise didn’t respond.
By that time the couple had already filed a civil RICO (Racketeer Influenced Corrupt Organization) complaint against Wise and his wife Cynthia asserting they “conspired through a pattern of racketeering and fraudulent actions” to convert the couple’s personal monies into the Wises’ ill gotten gains, defrauding them out of over $525,000 entrusted to Wise, as a CPA, to pay their 2006 and 2007 personal income taxes.
They also accused the Wises of engaging in conspiracy with Wise’s partners and business associates “in the course of his gambling enterprises, professional fight promotions, real estate dealings, money borrowing, underworld crime figure relationships, criminal activities and other illegal conduct.”
On Sept. 5, 2008, U.S. District Court Judge Susan Bolton awarded the couple a default judgment of $1,575,000 plus interest.
Four days later the Wises filed a notice of appeal.
Thirteen complaints have since been filed against Wise and his various LLCs, including Whispering Winds Properties, which investors say Wise claimed was involved in obtaining second trust deed loans to secure real property, promising returns of 10–16 percent.
Andy Moore, who has known Wise for about 15 years, said Wise convinced him to quit a good job at Smith Barney in 2005 to work for him, initially to take over his boxing management company.
Moore said Wise eventually had him “traveling all over the place” to evaluate projects for investment.
After narrowing down his recommendations to three projects, Moore said Wise never acted on anything.
Moore said Wise told him about Gary, a friend of his from high school whose father was in the plastics business – the plastic used in wallets for credit cards, pictures, etc. – a spoiled rich kid who now lived in Hawaii, had $800 million at his disposal and wanted to do some investing “as a hobby.”
For years, Moore said investors were paid and everyone seemed happy.
In spring 2008, however, suspicions arose when Wise, whom some clients entrusted to pay their bills, began bouncing dividend checks along with mortgage, car and utility payments.
When investors started demanding their money, Moore said Wise blew it all off as a “temporary cash-flow problem,” citing a check for a substantial amount of money had been deposited but there was a ten-day hold on the funds.
Moore said he didn’t realize what Wise was doing until after he lost a home to foreclosure and the $100,000 in cash advances he drew on his own credit cards to bridge the “cash flow” gap were gone.
He said Wise always showed him spreadsheets to account for everything, including money owed Moore, rather than bank or brokerage statements.
Suspicious himself, Moore said he wanted to talk to Gary.
Wise told him Gary would be playing golf the following morning but they could talk at 3 p.m.
The next day, Wise’s cell phone rang at 3 p.m. and, according to Moore, Wise requested Gary call back on the office line, which he did.
After their conference call, Moore said he told Wise Gary was extremely arrogant, to which Wise responded, “See what I have to put up with?”
It wasn’t until after Moore, his brother, parents, grandparents and best friends invested with Wise, did Moore realize there were no investments and everything was a lie.
As he began clearing out his office, Moore came across Wise’s cell phone records and decided to look up the call from Gary, only to find there were no calls from Hawaii and the call that came in at 3 p.m. that day was from a friend of Wise’s in California.
Another complaint was filed with the ASBA on Aug. 12, 2008, regarding a promissory note signed by Wise, guaranteeing the complainant and his wholesale company their respective $100,000 investments would be returned in 60 days with 3 percent interest. The money was never repaid.
A third complaint was filed on Aug. 13, 2008 accusing Wise of converting $10,000 intended for payment of the complainant’s 2007 federal taxes to his own use.
It wasn’t until after the complaint and a police report were filed did Wise repay the $10,000.
On Sept. 11, 2008, another complaint was filed with the ASBA against Wise, this time by Wise’s cousins, who had Wise prepare their 2004–2007 tax returns. They made payments to Wise totaling nearly $300,000, with the understanding Wise would make payments on their behalf to the IRS and California Franchise Tax Board.
Wise failed to make the payments as required.
On May 2, 2008 Wise borrowed $150,000 from his cousins, for which he signed a promissory note but then failed to pay in accordance with the terms of that note.
On Oct. 14, 2008, a fifth complaint was filed with the ASBA by a woman who claimed Wise was involved in “falsifying investments” with her.
Wise failed to respond to the ASBA regarding any complaints.
On Nov. 3, 2008 a group of plaintiffs with civil actions pending against Wise filed an involuntary bankruptcy against him, which halted all other proceedings.
Moore estimates Wise has bilked people out of $75—$80 million and said a local woman became so distraught a few weeks ago over the loss of her entire retirement savings to Wise, she attempted suicide.
Judgments currently recorded against the Wises are in the millions and span from Encino, Calif. to Pompano Beach, Fla.
Wise’s Desert Mountain home is scheduled for a trustee sale on Feb. 25, 2008.
While victims say there appears to be an investigation underway, no criminal charges have been filed against Wise.
Wise promptly returned Sonoran News’ call on Monday evening with a commitment he would initiate a conference call with his attorney at 10 a.m. on Tuesday. Tuesday came and went without a call from Wise or his attorney.