Warren brothers targeted in Ponzi lawsuit

By ED RUNYAN

runyan@vindy.com

WARREN

About 200 Canadian investors filed a federal lawsuit against Warren businessman Kevin L. Harris Sr., accusing him, his brother Keelan M. Harris and a Toronto, Ontario, woman of running a $22 million Ponzi scheme in 2007 and 2008.

The Toronto-area investors uncovered a variety of information while researching their lawsuit, including a two-page biography Harris had distributed.

In it, Harris is described as a journeyman with the local electrician’s union since 1991 who also had operated a Parkman Road car repair shop. It also said Harris, 45, had begun a career in real estate and business development in 2000 and had joined with a Canadian woman, Karen Starr, in 2005 to form a company that trades foreign currency, known as Forex trading.

It didn’t mention anything about professional training in investments or a college education.

The 1983 Warren G. Harding High School graduate also didn’t mention that he had spent a short time in prison for his role in a 1995 Warren arson and that he had been sued or charged criminally in Warren more than 55 times since 1994.

Also not mentioned in the biography for his brother, Keelan Harris, 34, Kevin’s associate, was that Keelan had also spent time in court and prison.

Keelan had been sued at least 13 times and faced misdemeanor and felony criminal charges in Warren and Youngstown six times, including state and federal prison sentences of more than three years after he broke into the Champion License Bureau in 2003 and took equipment used to make driver’s licenses.

Dominic Ventura, one of the Toronto investors, said it’s too bad he didn’t know more about the Harris brothers when he began to invest in their company, Complete Developments LLC of Parkman Road, in late 2007.

“I wasn’t aware of any of that [criminal and civil complaints],” Ventura said. “We thought they were spotless.”

Ventura said he and his fellow investors were approached by a Toronto marketing company that invited them to invest money in Complete Development’s Forex trading program with the promise of returns on their investment of between 7 percent and 12 percent per month, while 80 percent of their investment would always be protected.

“We thought [the marketing company] had done their due diligence,” Ventura said, adding he and most of the other investors had no dealings with the Harris brothers, only the marketing company.

Most of the investors were skeptical at first, so they started out slowly. But after several months of receiving payments of the type promised, Ventura started to believe it was for real, so he invested additional amounts. He declined to say how much he invested, though three lawsuits filed by the investors in Trumbull County Common Pleas Court said each had invested about $50,000.

Two other investors who sued Complete Development in Trumbull County in December 2008, Paul Daye and Kevin Johnson, invested $134,000.

Judge John M. Stuard of common pleas court entered a judgment against Complete Development in that case in February 2010. Their local attorney, Daniel Keating, said all his clients can do now is wait to see whether there is any money to recover.

“All of us got caught up in the excitement of it,” Ventura said, explaining why the investors were willing to turn over thousands to Harris, who was president of the company. “I got 10 percent for seven months, and I thought it was a great thing.”

One of the ways Complete Development impressed its investors was to invite them in late 2007 to Complete Development’s offices, the former IBEW union hall, 2430 Parkman Road N.W., across from the Trumbull Plaza, to hear a presentation.

“That had a lot to do with legitimizing it,” Ventura said of the trip, attended by about 30 investors.

About eight months after he began to invest, however — in July 2008 — Ventura and many fellow investors realized there was a problem.

The payments stopped, and letters from Complete Development throughout the fall asked the investors to be patient.

“We have had some very impatient members create problems that have the potential to cause us to lose a whole lot more than just our bank accounts,” an e-mail from CDL said Sept. 12, 2008.

One of the investors, Pastor Rodwell Anderson of Grace Mount Zion Apostolic Church in Milton, Ontario, wrote an e-mail to the company Oct. 1, 2008, in which he noted that he had driven from Toronto to Warren on Sept. 18, 2008, to meet with a company representative about his investments but was told no one was available to talk.

“As you are aware, a part of the amount [invested] is for the church, and the rest is a personal loan that I am paying interest on,” Anderson said in the e-mail, part of the lawsuit he filed in Trumbull County in January 2010, seeking return of his $50,000 investment.

The Complete Development office building, which Kevin Harris purchased from the IBEW on land contract in December 2006 for $295,000, is empty today.

The IBEW filed suit against Kevin Harris in April this year, seeking to foreclose on the property because Harris quit making payments.

On June 3, 2009, 213 customers of Complete Development, mostly from the Toronto area plus about six Americans from outside Ohio, filed a lawsuit in federal court in Youngstown, accusing the Harris brothers and a female business partner from Toronto, Karen Starr, of taking $22 million from them in a Ponzi scheme — a fraud in which individuals use money from new investors to pay “fake” profits to earlier investors.

New York City lawyer Harry Wise III, who filed the suit, said Complete Development took in $42 million from investors between early 2007 and September 2008 and paid out $29 million.

By looking at Complete Development’s bank accounts during the discovery process of the lawsuit, it became clear Complete Development invested only about $1 million of the $42 million in Forex, and that was done through a private account in the name of Kevin Harris and Karen Starr, not from a business account, Wise said.

“They apparently never conducted any trading,” Wise said.

In January 2010, federal Magistrate Judge George J. Limbert dismissed the lawsuit, saying it was not specific enough in describing “the circumstances surrounding the alleged fraud.”

Wise appealed the decision and said if he’s not successful on appeal, he’ll likely file the case in Trumbull County Common Pleas Court.

Wise will attempt to recover any money still left. Bank records indicate Complete Development officials wired $3 million to $4 million to foreign bank accounts and sent $2.4 million to a company in Atlanta, Wise said.

Bank records also list some of the following expenses paid out from CDL and 13 business accounts from Jan. 1, 2007, and Aug. 31, 2009: Jewelry purchased at European Jewelers, Ontario, $7,454; Harrod of London (a luxury gift store), $2,563; payments to Complete Development’s marketing company, $931,601; payments to Karen Starr, $313,778; and payments to Keelan Harris, $23,000.

Atty. Gil Rucker of Warren, who represented the Harris brothers, Starr and Complete Development, said Judge Limbert’s decision speaks for itself and declined to comment further. Rucker declined to put The Vindicator in touch with the Harris brothers by telephone.

A call asking to talk to Kevin and Keelan Harris at a Parkman Road auto repair shop Kevin Harris once owned was not returned.

Ventura forwarded The Vindicator a copy of an e-mail from the Youngstown office of the FBI stating that Ventura’s name had been referred to the agency as a “possible victim of a federal crime” in relation to Kevin Harris and Complete Development and adds: “We appreciate your assistance and cooperation while we are investigating this case.”

An FBI spokesman in Cleveland said he could not, however, comment on whether the FBI is conducting such an investigation.

The Better Business Bureau gives Complete Development LLC an “F” rating, its worst.