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June 19, 2001
Diamond called Omega a loan program, witness says; Testimony doesn't prove Diamond knew program was a scam, defense attorney says
BY DAVE FOPAY
URBANA - Though Clyde Hood lent him more than $1 million to start a lumber business, Raymond Miller said it was Arlene Diamond who actually told him what Omega Trust and Trading was supposed to be about.
Miller testified Monday at the beginning of the second week of Diamond's trial on federal charges in connection with the Omega case. Diamond is accused of soliciting investments for Omega and of being one of the assistants to Hood, the Mattoon man who's admitted Omega was a scam and pleaded guilty to charges in the case.
Though a total of 19 people were indicted in connection with Omega, Diamond's case is the first and so far only one to go to trial. Three other defendants await trial while the remaining pleaded guilty earlier. Omega was represented as an offshore loan or investment program in which those who contributed would see 50-to-1 returns on their money, though the returns never materialized and participants instead spent the money themselves.
On Monday, Miller told how he met Hood in 1998 through his wife's uncle, Franklin Myers, one of the Omega suspects who has pleaded guilty. Hood agreed to lend Miller money to start a lumber business near his home in the Ozarks, he said, and Hood ultimately lent him $1.4 million.
Miller said he became suspicious of Hood when a U.S. postal inspector visited him last year and asked about Omega, "which I'd never heard of." He said he told the inspector he was going to Mattoon the next day to get more money from Hood, and the inspector told him to stop in St. Louis on his way home for more questioning.
In Mattoon, Miller continued, Hood gave him $97,000 in cash and responded to his inquiries about Omega by saying it was an offshore trading company and he'd be told more about it later. Hood told him to take the money and go home, which Miller said he did without stopping in St. Louis as the postal inspector requested.
Miller said he'd often seen Diamond in Hood's office, the location of the never-opened Our Own Original Bakery. The prosecution's attempt to connect her to the Omega scam came when Miller related how she met him in Rolla, Mo., a few weeks later to deliver Hood's promised explanation.
"I called it an investment, but I got corrected," Miller said. "She told me it was a loan."
According to Diamond, the loans took 275 days to mature and resulted in 50-to-1 returns, Miller said. She and Hood both said Hood wanted out of the plan and planned for Diamond to take over, he added.
Miller also said he borrowed $44,000 from his family to invest in Omega, admitting that now seems like "a dumb act" but explaining he could repay Hood's loans if the returns were as projected, benefiting both him and Hood.
He said Omega "sounded like it could work" and felt reassured when Hood and Diamond showed him a purported $100 million U.S. bond they claimed they were trying to authenticate and on which they expected a 30 percent return. Earlier in the trial, a witness from the federal reserve testified that the bond in question wasn't authentic.
Also testifying Monday was Linda Stark of Apple Valley, Calif., who said she invested a total of $1,600 in Omega before becoming suspicious and demanding a refund from Diamond, which never materialized. Stark said she sent her first payment to Michael Kodosky, another Omega defendant awaiting trial, but later was told that Diamond, who lived in Los Angeles, was taking over Omega's California operation.
Messages from Diamond repeatedly said Omega was close to maturing and additional inquiries would only slow down the process, Stark said. In December 1999, Stark related, Diamond told her she couldn't be specific about Omega's return but it would be substantial.
"She said if I looked in the mirror, I would be looking at a millionaire," Stark said.
During her cross-examination of the prosecution's witnesses, defense attorney Diana Lenik tried to show nothing they said Diamond did proved that she was aware that Omega was a scam and not a legitimate program. Miller said he never got money from anyone but Hood and repeated that it was Hood, not Diamond, who told him to return home without meeting the postal inspector.
Lenik and Stark bantered about how Diamond portrayed Omega. Stark said Diamond insisted Omega was a loan program though Stark didn't think anything with such a supposedly large return would qualify as a loan.
Assistant U.S. Attorney Esteban Sanchez said the prosecution's case could end today. Lenik said she wouldn't be able to start her case until next week because some of her witnesses will be traveling from California and elsewhere.
June 15, 2001
Pay-outs to investors would have reached 'quadrillions'
BY CARL WALWORTH
URBANA - Should the Omega Trust and Trading program pay out for three "rolls" as promised to investors, the amount due from just one of the major solicitors would be almost $18 quadrillion.
In numbers, that's $17,885,826,187,764,700.
Records kept for Bill Wilson by his son Jerry Wilson show collections of more than $10.8 million from 16,719 accounts, Jerry Wilson testified Thursday in the trial of Omega co-defendant Arlene Diamond. Among other testimony was that actress Cloris Leachman was one of the investors who called Diamond in California asking when Omega would "fund," or pay out.
Omega investors were told to expect a 50-to-1 return in about nine months, but could leave their money in for three additional rolls, which would be a total return of 200-to-1. The almost $18 quadrillion figure comes from taking the $10.8 million at 200-to-1. No one received the promised return.
Both Bill and Jerry Wilson are among the 15 people who have pleaded guilty to one or more charges in the Omega fraud case, and now are cooperating with authorities.
The records described by Jerry Wilson also indicate that prosecutors have been conservative in the number of people who lost money in Omega, and the total amount involved. The original indictment says at least $12.5 million from at least 10,000 people went through the phony Omega program. Documents filed later indicated at least $20 million was invested in Omega.
Bill Wilson is described as the top aide to Omega founder Clyde Hood of Mattoon, but court records show there were other major solicitors whose records aren't included with ones kept by Jerry Wilson for his father Bill, so the actual amount invested likely is substantially higher, though no one is suggesting how much. Testimony in the Diamond case is that Diamond had at least 1,200 accounts.
Diamond is accused of mail/wire fraud conspiracy, mail fraud, wire fraud, money laundering conspiracy and conducting a financial transaction with proceeds of illegal activity. The trial for three other defendants is set to begin in July.
The other witness Thursday was the Rev. Gregory Bryant of Apple Valley, Calif., who described a series of dealings with Diamond, including a day he spent volunteering to file things in her Los Angeles office. Bryant invested $1,200 in Omega, including a $100 Christmas present for each of his sons, saying that another minister he knows made more than $3 million in some sort of international investment.
While in Diamond's office, Bryant said a person who identified herself as actress Cloris Leachman was among those who called checking on the status of Omega investments.
Bryant said he also heard Diamond tell investors that sun spots and magnetism problems made international communication difficult and held up funding of the offshore investments.
The trial continues on Monday with prosecutors expecting to conclude their case in the middle of the week. Defense attorney Diana Lenik said the defense could take as many as four days before the case goes to the jury, probably late this month.