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Gold-Quest owners face fines, jail time if assets not surrendered

A federal judge on Wednesday told representatives of an alleged Indian enterprise called Gold-Quest International that he would fine individuals up to $1,000 a day and order them jailed if they continued to violate his order to turn over assets to a receiver.

The Securities and Exchange Commission accused Gold-Quest, which operated out of 11086 Crystal Crest Court in Las Vegas, of cheating 2,100 U.S. and Canadian citizens out of a total of $27.9 million.

Investors were told Gold-Quest could make large profits trading foreign currencies, but the SEC alleges that Gold-Quest was operating a Ponzi scheme. In a Ponzi scheme, the first investors are paid by money from later investors.

U.S. District Judge Lloyd George on May 6 froze the assets of Gold-Quest and appointed Cook Receiver Services of Lenexa, Kan., to serve as receiver.

The receiver has located $148,000, or less than 1 percent of the money entrusted to Gold-Quest.

SEC officials say Gold-Quest defendants are defying the judge’s order.

At the hearing Wednesday, the judge said he was sending deputy U.S. marshals to accompany the SEC in recovering records and assets from Gold-Quest.

“You better cooperate,” George told John Jenkins, one of three individuals named as a defendant. “I entered the order, and I expect it to be complied with in every respect,” the judge said.

George scheduled a hearing for May 23 so that Jenkins may show cause as to why he should not be fined $1,000 a day and jailed for violating the court order.

The judge questioned why Jenkins and Michael Howard Reed, who claims to be attorney general of the sovereign Little Shell Nation, were 45 minutes late for the hearing. Reed and Jenkins blamed their tardiness on traffic.

George also seemed annoyed that Jenkins left to feed a parking meter and was absent when the delayed hearing started.

Reed acknowledged that he had no law degree except from the Little Shell Nation, a tribe of 3,800 Indians living on a reservation that spans North Dakota, Montana and Canada.

The SEC says that neither the United States nor Canada recognize the tribe, but Reed told a reporter that President Lincoln recognized the tribe. All three individuals charged in the case — Jenkins, Michael McGee and a man called Lord David Greene — are members of the tribe, Reed said.

The other defendants didn’t attend the hearing.

Reed said that Greene was out of the country. Michael McGee answered the phone at Gold-Quest shortly before the hearing. McGee said the lawsuit identified him as an owner of Gold-Quest but he said he was only an employee.

McGee said Gold-Quest was engaged in foreign exchange trading and wasn’t operating a Ponzi scheme.

“There are a lot of things being printed that aren’t true,” McGee said.

“The SEC thinks a whole lot of things,” he said. “I don’t know that I want to continue this conversation.”

Reed told the judge that the company was properly known as Little Shell Gold-Quest International.

“We’re a sovereign nation, and we’re immune from civil suit,” Reed explained following the hearing.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.

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