Oneida Nation Of WI Members File Petition To Retain CA Law Firm Gross & Klein LLP As Legal Representation For General Tribal Council To Recover Losses & Damages From ‘Green Energy’ Fraud Schemes As U.S. Securities & Exchange Commission / SEC Files Complaint And USDOJ Files Criminal Indictment For Wire Fraud & Money Laundering Against Oneida Seven Generations Corp. Associate Ron Van Den Heuvel & EARTH / GREEN BOX ‘Waste-to-Energy’ / ‘Plastics-to-Oil’ Pyrolysis Racket


   

September 18, 2017 Press Release:

Members of Oneida Nation of WI electorate file Petition to retain CA law firm Gross & Klein LLP as legal representation for General Tribal Council

Wisconsin tribe members seek to recover losses & damages from ‘green’ fraud schemes
  

Oneida, WI  –  On Monday, September 18, 2017, at 8:00 a.m., enrollees of the Oneida Nation of Wisconsin (ONWI) delivered to the ONWI Business Committee (OBC) Secretary’s Office a Petition signed by 128 members of the General Tribal Council (GTC – the Tribe’s governing body) in order to convene a special GTC meeting to hear a presentation from Gross & Klein LLP and to vote on retaining the California law firm’s services with the aim of recovering millions of dollars in losses and damages from ‘green energy’ fraud schemes.

On July 17, 2017, the ONWI GTC adopted new requirements for the OBC’s processing of GTC petitions and the scheduling of GTC meetings: “General Tribal Council petitions submitted to the Tribal Secretary’s Office shall be processed and a General Tribal Council meeting be convened within 120 days of receipt by the Tribal Secretary’s Office.”

On June 28, 2017, ONWI-chartered Oneida Seven Generations Corporation (OSGC) and its Delaware-registered subsidiary, Green Bay Renewable Energy LLC (GBRE), filed an appeal with the 7th Circuit Court (Case #17-2341) following U.S. District Court Judge William Griesbach’s June 6, 2017 Order granting the dismissal of OSGC & GBRE’s December 23, 2016, lawsuit against the City of Green Bay in the Eastern District of WI (Case #16-C-1700). Chief Judge GriesbachAugust 24, 2017 Order stated, “Pursuant to Circuit Rule 33, briefing in this appeal is SUSPENDED pending further court order.”

OSGC & GBRE’s lawsuit stems from the City’s Common Council’s 2012 vote to rescind a Conditional Use Permit for OSGC to build a facility purported to safely and profitably convert trash to electricity and other products. Some ONWI members contend that the endeavor was another version of long-time OSGC-associate and Lawrence / De Pere, WI, resident Ron Van Den Heuvel’s international “Green Box Investment Fraud Scheme” currently under investigation by the Brown County Sheriff’s Office and five federal agencies.

OSGC & GBRE are represented by the Wisconsin law firm of Godfrey & Kahn S.C., which successfully sued Green Box NA Green Bay LLC for breach of contract on behalf of individual investor Dr. Marco Araujo (Brown Co. Case # 13-CV-463), and prevailed on appeal (WI Court of Appeals, District III, Appeal # 2014AP2846).

Araujo was later joined in another lawsuit against Green Box NA Green Bay LLC (Brown Co. Case #15-CV-769) with GBNAGB creditors as Co-Plaintiffs, including the Wisconsin Economic Development Corp. (WEDC). From 2009 to 2011 the WI Dept. of Commerce and quasi-public WEDC loaned $1.2 million to Green Box NA Green Bay, LLC, $2 million to OSGC, and another $2 million loan to OSGC subsidiary Oneida Energy, Inc. 

In July 2015, the Brown County WI Sheriff’s Office issued Search Warrants for Van Den Heuvel and Green Box NA Green Bay LLC, and GBNAGB subsequently filed bankruptcy in April 2016 (USBC, Eastern WI, Docket #16-24179).

Ron Van Den Heuvel and his wife, Kelly Van Den Heuvel, also face federal bank fraud charges for schemes using straw borrowers (USDC, Eastern WI, Docket # 16-CR-64). Co-conspirator Paul Piikkila, a former loan officer and former Interim Director of the Green Detroit Regional Centers EB-5 Immigrant Investor program regarding another Green Box NA endeavor in Michigan, has already pled guilty for his role.

Additional counts were added regarding fraudulent loan applications by Ron’s son-in-law / employee using two vehicles owned by Green Box NA parent-company Reclamation Technology Systems (RTS), formerly known as Environmental Advanced Reclamation Technologies HQ LLC (EARTH, previously known as Natures Choice Tissue Corp., a different entity than either Nature’s Way Tissue Corp. – in which OSGC was Ron’s partner – and a different company than the ‘other EARTH,’ Everett Advanced Reclamation Technology HQ LLC, which was administratively dissolved on September 16, 2017). RTS is currently under the management of Stephen A. Smith of Chicago-based Glenarbor LLC / Glenarbor Partners Inc.

Gross & Klein LLP has focus areas in representing Native American tribes and in complex civil litigation and cases involving antitrust and trade law, as well as in cases involving environmental and natural resource issues.

“General Tribal Council will have an opportunity to select its own legal representation, as guaranteed by the ONWI Constitution, and have attorneys advocate for the interests and rights of the full ONWI membership. In order to have someone look out for all of us, GTC needs to hire legal representation which isn’t related to any of us,” said petition organizer Leah Sue Dodge.

 

Watch as current ONWI Business Committee / OBC Vice-Chair Brandon Stevens claims duirng the April 23, 2017 General Tribal Council Meeting that OSGC’s Nature’s Way Tissue Corp. business partner “Ron Van Dan Heuvel was not a part of [OSGC’s pyrolysis] plans”…

and during the July 17, 2017 GTC Semi-Annual Meeting as Fmr. OBC Chair Cristina Danforth continues to support OSGC’s failed & fraudulent pyrolysis endeavors:

  

Why is Fmr. OBC Chair Tina Danforth – who is also President of the Native American Finance Officers Association (NAFOA) and Board member of the Native American Bank NA (NABNA) – such a devoted pyrolysis cheerleader? 

An AUGUST 15, 2011 DOCUMENT
provided by ONEIDA TIMES Publisher YVONNE METIVIER re: Statements made by former OSGC Secretary MIKE METOXEN to former OBC Chair EDWARD DELGADO about four (4) Wisconsin-registered corporate entities formed by OSGC for purpose of the “biomass grant project”
 named the following:

•  Oneida Energy, Inc.

•  Oneida Recycling Solutions, LLC

•  Broadway Manufacturing, LLC, and

•  Oneida Manufacturing, LLC 

  

Italicized notes at the end of the Memo state

the “biomass pyrolysis device”

was being sold to OSGC by

“Alliance Energy

Alliance, LLC”

…and the notes said that the seller of the biomass pyrolysis device was in delinquent status with WDFI as of 04/04/11.

  

HOWEVER . . .

   

Oneida Eye believes “Alliance Energy Alliance, LLC” is a typo and was actually in reference to a company that the Oneida Nation of WI’s General Tribal Council was never informed even existed –

 ALL NATIONS

ENERGY ALLIANCE, LLC

– which was registered w/ WDFI on 05/13/09 and delinquent as of 04/01/11; Registered Agent Mark Anthony Sweet; Principal Office:

2994 E. Service Road, Oneida, WI, 54155.All Nations Energy Alliance LLC business address was Tina Danforth's White Eagle Bar

MEANING THAT COMPANY SHARES
THE EXACT SAME ADDRESS AS
ONEIDA BUSINESS COMMITTEE
CHAIR & FORMER OBC TREASURER

CRISTINA DANFORTH’s
OWN PERSONAL FAMILY BUSINESS

. . .

WHITE EAGLE BAR & GRILL

  


MARK ANTHONY SWEET
 is also the listed as being the Manager of…

ALL NATIONS DEVELOPMENT ALLIANCE, LLC
registered w/ Minnesota Secretary of State on 04/04/10;
Registered Office: 7241 Ohms Ln. #275, Edina, MN, 55439; Principal Office: 350 N. Main Street, Suite 236, Stillwater, MN, 55082
.

  

THINK

     

ABOUT  THAT

 

OBC & OSGC tried

to convince the ONWI

General  Tribal  Council

to borrow millions in loans

to buy a ‘machine’ from

a company located in

rez bar owned by

Cristina Danforth

(fmr. OBC Treasurer,

exiting OBC Chair)

whose sister

Caterina ‘Cathy’ Delgado

was on

OSGC’s

Board of Directors

which the OBC ‘oversees.’

Cristina Danforth obtained & defaulted in bankruptcy on loans against her drinking establishment …
(and secret energy company headquarters) from…

ONEIDA SMALL BUSINESS, INC., which is funded by ONWI Gaming Compact monies and is currently under the management of convicted con-artist and insurance & investment fraudster DANIEL HAWK [husband of Judy Cornelius-Hawk].

According to court documents in Brown County Case No. 2013CV1838,  Oneida Small Business, Inc.  v.  White Eagle Sports Bar & Grill, LLC, Paul Danforth, and Cristina Danforth:

On November 18, 2009, Defendant, White Eagle Sports Bar & Grill, LLC, delivered to Plaintiff a Business Note for consideration. The Note was in the sum of $48,925.16. On August 18, 2006, Defendants, White Eagle Sports Bar & Grill, LLC, Cristina Danforth and Paul Danforth, signed a General Business Security Agreement pledging assets of the LLC as collateral on the Business Note and on August 18, 2006, Defendant, Cristina Danforth, married to Paul Danforth at the time, signed a Continuing Guaranty (Unlimited), personally guaranteeing the loans of White Eagle Sports Bar & Grill, LLC.

As of November 13, 2013, the date of Plaintiff’s Summons and Complaint, there is owed the sum of $54,358.80, comprised of principal, accrued interest and late charges. Interest against the principal accrues at 4.0% interest.

Cristina Danforth, in her Answer to the Summons and Complaint in this case, did not deny she was in default on the note.

As a result of the defaults in payment, Plaintiff, as it is entitled to do under the note, has declared the indebtedness immediately due and payable and demands payment in full and surrender of the business assets which secures repayment of the indebtedness.

…In her answer, Defendant, Cristina Danforth, failed to state any valid counter claim or defense relating to her failure to make payments on the note as they became due.

Excerpt from Defendant Tina Danforth’s handwritten Answer (with her own name misspelled TWICE):

Defendents [sic] demands
a trial by a jury of twelve.

[Oneida Eye suspects that Tina Danforth will eventually get to have at least one trial by jury.]

  

Watch as OSBI Registered Agent Dan Hawk and OSGC & GBRE’s counsel – Attorney Joe Nicks of Godfrey & Kahn SC encourage the ONWI GTC to sue OSGC’s victim – the City of Green Bay – rather than file lawsuits against the fraudsters who utilized ONWI officials & Tribally-owned OSGC’s corporate officers & executives to defraud the ONWI General Tribal Council of tens of millions of dollars in what can only be described as Racketeering Influenced Corrupt Organization / RICO activities.

Note that the vote to allow and encourage OSGC & GBRE to foolishly (or malfeasantly) file suit against the City of Green Bay was merely an ‘Amendment’ to a Main Motion which was itself tabled for over three months and thus died according to Robert’s Rules of Order as used by the GTC…

which means the Amendment to sue Green Bay died with it.

But did OSGC & GBRE let that stop them?

Of course not!

   

   

Here’s how that sandwich went down:

  • December 23, 2016 Complaint & Jury Demand, U.S. District Court, Eastern District of Wisconsin, Docket No. 16-CV-1700, Oneida Seven Generations Corporation & Green Bay Renewable Energy, LLC  v.  City of Green Bay

________________

•  February 7, 2017 Declaration of Leah Sue Dodge in Support of Defendant’s Motion to Dismiss Plaintiffs’ Complaint for Lack of Capacity to Sue, U.S. District Court, Eastern District of Wisconsin, Green Bay Division, Case No. 1:16-cv-01700, OSGC & GBRE v. City of Green Bay

•  February 7, 2017 Declaration of Gregg J. Gunta in Support of Defendant’s Motion to Dismiss Plaintiffs’ Complaint for Lack of Capacity to Sue, U.S. District Court, Eastern District of Wisconsin, Green Bay Division, Case No. 1:16-cv-01700, OSGC & GBRE v. City of Green Bay

________________

•  February 28, 2017 Affidavit of Amber C. Coisman w/ Exhibits A–G, U.S. District Court, Eastern District of Wisconsin, Case#1:16-cv-1700, OSGC & GBRE v. City of Green Bay

•  February 28, 2017 Affidavit of Lisa Summers w/ Exhibit A, U.S. District Court, Eastern District of Wisconsin, Case#1:16-cv-1700, OSGC & GBRE v. City of Green Bay

________________

•  March 14, 2017 Second Declaration of Gregg J. Gunta in Support of Defendant’s Motion to Dismiss the Complaint for Lack of Capacity to SueOSGC & GBRE v. City of Green Bay

________________

CONCLUSION

For the reasons set forth above, the City’s motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim is granted.

 

But did OSGC & GBRE let that stop them?

Of course not!!

  • June 28, 2017 Court Documents for the U.S. 7th Circuit Court of Appeals, Docket No. 17-2341Oneida Seven Generations Corp. / OSGC & subsidiary Green Bay Renewable Energy, LLC / GBRE  v.  City of Green Bay

________________

Pursuant to Circuit Rule 33, briefing in this appeal is SUSPENDED pending further court order.

  

Some local media outlets even reported on it… eventually:

  

Oh, look! What do we have here?

  

 

United States Attorney Gregory J. Haanstad, of the Eastern District of Wisconsin announced that the grand jury indicted Ronald Van Den Heuvel (age: 62) of De Pere, on wire fraud and money laundering charges today. The indictment alleges that Van Den Heuvel fraudulently obtained over $9 million in loans and investments for his eco-friendly “Green Box” business plan but diverted much of the funds to his own purposes.

From 2011 through 2015, Ronald Van Den Heuvel was a businessman in the Green Bay area promoting his Green Box process. The indictment alleges that Van Den Heuvel claimed that the Green Box process could turn post-consumer waste from sources like fast food restaurants completely into usable consumer products and energy. Van Den Heuvel obtained over $9 million in loans and investments, having falsely pledged to use the funds for Green Box operations. Van Den Heuvel spent much of the funds to pay old debts and personal expenses, including a new Cadillac Escalade, pricey Green Bay Packers tickets, and court-ordered support payments to his ex-wife.

As alleged in the indictment, Van Den Heuvel defrauded a range of victims, including individual acquaintances, the Wisconsin Economic Development Corporation (WEDC), a Canadian private investment firm, and Chinese investors in the EB-5 immigrant investor program. In October 2011, the WEDC provided Green Box NA Green Bay, LLC, one of Van Den Heuvel’s companies, with a loan of $1,116,000. The funds were to be used solely to purchase certain equipment to allow for the creation of 116 jobs in a Green Box operation in De Pere, Wisconsin. Instead, Van Den Heuvel diverted large amounts of WEDC funding to his own ends and then submitted false certifications claiming to have spent the funds properly. In addition, in January 2012, the WEDC awarded Green Box NA Green Bay, LLC with a $95,500 grant to reimburse the company for the costs of training new workers. To draw the grant funds, Van Den Heuvel submitted fraudulent time records for training that never happened.

Separately, the United States Securities and Exchange Commission (SEC) announced today that it filed a civil lawsuit against Van Den Heuvel and Green Box Detroit, LLC, in the United States District Court for the Eastern District of Wisconsin. The SEC alleges that Van Den Heuvel violated securities laws by defrauding the Canadian investment firm and EB-5 investors. The case is United States Securities and Exchange Commission v. Ronald Van Den Heuvel and Green Box NA Detroit, LLC, Case No. 17-CV-1261.

Counts One to Ten of the indictment charge Van Den Heuvel with executing the scheme to defraud by use of interstate wire communications, in violation of Title 18, United States Code § 1343. On each of these counts, the maximum penalty is imprisonment for not more than twenty years, a fine of not more than $250,000, or both, plus a mandatory $100 special assessment and a period of supervised release not to exceed three years.

Counts Eleven through Fourteen charge Van Den Heuvel with unlawful financial transactions involving the ill-gotten gains, in violation of Title 18, United States Code § 1957. On each of these counts, a convicted defendant would face imprisonment for not more than 5 years, a fine of not more than $250,000, or both, plus the mandatory $100 special assessment and a term of supervised release not to exceed three years.

The criminal case leading to the indictment is being investigated by the Federal Bureau of Investigation and the Federal Deposit Insurance Corporation. The case will be prosecuted by Assistant United States Attorneys Mel S. Johnson, Matthew D. Krueger, and Rebecca L. Taibleson.

An indictment is only a charge and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government must prove him guilty beyond a reasonable doubt.

#####
For Additional Information Contact: Public Information Officer Dean Puschnig 414-297-1700

[READ USDOJ INDICTMENT BELOW AFTER SEC COMPLAINT]

    

  • September 19, 2017 Complaint, U.S. District Court, Eastern District of Wisconsin, Case No. 17-CV-1261, U.S. Securities and Exchange Commission [SEC]  v.  Ronald Van Den Heuvel & Green Box NA Detroit LLC

COMPLAINT

The United States Securities and Exchange Commission alleges as follows:

Nature of the Action

1. This case involves misrepresentations and the misappropriation of millions of dollars of investor funds by defendant Ronald Van Den Heuvel. He took advantage of investors who believed that they were investing in a new way to recycle post-consumer waste.

2. Van Den Heuvel lured investors with promises that he would use their funds for an eco-friendly recycling process called the Green Box Process. He claimed that the Green Box Process would take food-contaminated waste and convert it into usable products, such as recycled paper. Van Den Heuvel represented that he would use investor funds to buy equipment, open a Green Box facility, and ultimately help to create a green solution for post-consumer waste.

3. In reality, Van Den Heuvel misappropriated a substantial percentage of the funds contributed by investors. Instead of using investor funds to implement the Green Box Process, Van Den Heuvel used a significant portion of their investments for improper purposes, such as a Cadillac Escalade, payments to his ex-wife, overdue taxes, Green Bay Packers tickets, and cash for himself.

4. Van Den Heuvel took advantage of foreign investors who put their trust in him. In particular, in 2012 and 2014, Van Den Heuvel raised over $3 million from a Canadian asset management firm named Cliffton Equities. Van Den Heuvel promised to use its investment to buy and operate specific pieces of equipment, but in reality, he spent the money as he pleased.

5. Van Den Heuvel also exploited investors from China. Between 2014 and 2015, Van Den Heuvel and his company (Green Box NA Detroit, LLC) raised approximately $4,475,000 in investment proceeds from at least nine investors from China. The investors made their investments through the EB-5 immigrant investor program, which is a U.S. government immigration program for foreign nationals seeking permanent U.S. residency.

6. Van Den Heuvel promised to use the funds from the EB-5 investors from China to develop a Green Box facility in Michigan. In reality, Van Den Heuvel misappropriated millions of dollars, using investor funds to pay unrelated business and personal expenses.

7. Van Den Heuvel made other misrepresentations about the Green Box Process in order to attract funds from investors. He touted a relationship with Cargill and the ability to use a key additive when, in reality, Cargill had terminated the relationship and sued his company. He claimed that tax-exempt bonds would provide approximately $95 million to $125 million in financing when, in reality, he knew that the State of Michigan had all but denied the application. He represented that his company held seven patents when, in reality, it held only one. He also told different investors that their funds had purchased the same pieces of equipment.

8. Based on Van Den Heuvel’s representations, the investors believed that they were investing in a new, environmentally-friendly project to recycle waste. In reality, they unwittingly provided the financing for Van Den Heuvel’s improper spending spree.

Jurisdiction and Venue

9. The Court has jurisdiction over this action pursuant to Sections 20 and 22 of the Securities Act of 1933 [15 U.S.C. §§ 77t and 77v], and Sections 21 and 27 of the Securities Exchange Act of 1934 [15 U.S.C. §§ 78u and 78aa]. Defendants have, directly or indirectly, made use of the means and instrumentalities of interstate commerce, of the mails, or of the facilities of a national securities exchange in connection with the acts, practices and courses of business alleged in this Complaint.

10. Venue is proper in this judicial district pursuant to Section 22 of the Securities Act [15 U.S.C. § 77v], and Section 27 of the Exchange Act [15 U.S.C. § 78aa] because the defendants are inhabitants within this district, transact business within this district, and many of the acts, transactions and courses of business constituting the violations alleged in this Complaint occurred within the jurisdiction of this district.

Defendants

11. This case involves fraud committed by Van Den Heuvel, who used entities that he controlled to help perpetrate his fraud. A number of his “Green Box” companies played a role, some of which have similar names. Defendant Green Box NA Detroit, LLC played a role in the investments by the EB-5 investors. At least three of his other companies – (1) Green Box NA Green Bay, LLC; (2) Environmental Advanced Reclamation Technology HQ, LLC; and (3) Green Box NA, LLC – played a role in the investments by Cliffton Equities. For the sake of clarity, the following table provides a high-level summary of the basic role played by the entities:

12. Defendant Ronald Van Den Heuvel, age 63, resides in De Pere, Wisconsin. During the relevant period, Van Den Heuvel was the Chairman of: (1) Green Box NA Green Bay, LLC; (2) Environmental Advanced Reclamation Technology HQ, LLC; (3) Green Box NA, LLC; and (4) Green Box NA Detroit, LLC.

13. Defendant Green Box NA Detroit, LLC (“Green Box Detroit”) is a Michigan limited liability company. Green Box Detroit was formed in 2014 and is headquartered in De Pere, Wisconsin. Van Den Heuvel was the Chairman and CEO of Green Box Detroit, and he owned and controlled Green Box Detroit during the relevant period.

Other Entities – the Cliffton Equities Offering

14. Green Box NA Green Bay, LLC (“Green Box Green Bay”) is a Wisconsin limited liability company. Green Box Green Bay was formed in 2011 and is headquartered in De Pere, Wisconsin. Van Den Heuvel owned and controlled Green Box Green Bay during the relevant period. Green Box Green Bay was a signatory on the Loan and Investment Agreement with Cliffton Equities dated September 20, 2012, as well as an amended agreement in 2014 and related notes in 2012 and 2014. In April 2016, Green Box Green Bay filed for Chapter 11 bankruptcy protection in the United States District Court for the Eastern District of Wisconsin.

15. Environmental Advanced Reclamation Technology HQ, LLC (“EARTH”) (n/k/a Reclamation Technology Systems, LLC) is a Wisconsin limited liability company. EARTH was formed by Van Den Heuvel in 2008 and is headquartered in De Pere, Wisconsin. Van Den Heuvel owned and controlled EARTH during the relevant period. EARTH was the purported parent company of: (1) Green Box Green Bay, (2) Green Box Detroit, and (3) Green Box NA. EARTH was a signatory on the Loan and Investment Agreement with Cliffton Equities dated September 20, 2012, as well as an amended agreement in 2014 and related notes in 2012 and 2014.

16. Green Box NA, LLC (“Green Box NA”) is a Wisconsin limited liability company. Green Box NA was formed by Van Den Heuvel in 2010 and is headquartered in De Pere, Wisconsin. Van Den Heuvel owned and controlled Green Box NA during the relevant period. Green Box NA is the entity that received most of the funds invested by Cliffton Equities in 2014.

The Facts

17. This case involves fraudulent offerings by Van Den Heuvel. First, Van Den Heuvel defrauded Cliffton Equities. Second, Van Den Heuvel and his company (Green Box Detroit) defrauded EB-5 investors from China and a domestic company that promoted the investments. The two offerings share a common thread: Van Den Heuvel lied about what he would do with their money.

18. Van Den Heuvel enticed investors with promises that he would use their funds to invest in an eco-friendly recycling process called the Green Box Process. He pitched Green Box as an environmentally-responsible way to deal with solid waste, and make money for investors along the way. He claimed that he had created the Green Box Process over a period of years.

19. Van Den Heuvel touted the Green Box Process as a world-changing technology that allowed 100% reclamation of food-contaminated waste. The Green Box facilities allegedly would recycle food-contaminated waste, such as garbage from fast-food restaurants, cafeterias, concession stands, stadiums, and theme parks. The Green Box Process allegedly would transform post-consumer waste into usable products such as recycled paper napkins, facial tissue, and brown and white paper pulp, as well as fuel pellets that could be used to create synthetic gas, electricity, and biodiesel fuel. He claimed that the Green Box Process would result in total solid waste reclamation with zero wastewater discharge and zero landfill deposits.

20. In reality, the Green Box Process largely became a vehicle for Van Den Heuvel to attract money from investors, and then spend it as he pleased.

The Cliffton Equities Offering

21. Cliffton Equities, Inc. is a Canadian company based in Montreal, Canada. Cliffton Equities manages assets for its principals. Cliffton Equities invested with Van Den Heuvel in 2012 and 2014, and is the victim of his fraud. Cliffton Equities was a signatory on the Loan and Investment Agreement dated September 20, 2012, as well as an amended agreement in 2014.

22. Van Den Heuvel defrauded Cliffton Equities in connection with its investments in 2012 and 2014. He made promises to Cliffton Equities about what he would do with its money. Van Den Heuvel represented that he would use the funds from Cliffton Equities to purchase equipment for the Green Box Process, and to pay expenses related to that equipment.

23. In reality, Van Den Heuvel misappropriated a significant portion of the money that Cliffton Equities invested. Instead of using the funds as he had promised, Van Den Heuvel spent its money by paying unrelated business and personal expenses.

Misappropriation of the 2012 Investment

24. In 2012, Van Den Heuvel began communicating with Cliffton Equities about a possible investment in the Green Box Process for his facility in De Pere, Wisconsin. The principals of Cliffton Equities learned about the opportunity by reading a post that Van Den Heuvel had made on an investment website available to the general public. In the post, Van Den Heuvel sought funding for the Green Box Process.

25. Van Den Heuvel told Cliffton’s principals that a certain piece of equipment, known as a pyrolysis or liquefaction unit, was the missing link in the Green Box Process to convert food and plastic waste from the paper pulping process into oil, gas and other useful products.

26. Van Den Heuvel told the principals of Cliffton Equities that he would use its money to purchase and install sorting equipment and a pyrolysis unit made by a particular manufacturer. The principals of Cliffton Equities were attracted by the promises of Van Den Heuvel that he would use their funds to purchase equipment for an eco-friendly manufacturing process.

27. Based on Van Den Heuvel’s representations, Cliffton Equities agreed to invest $2 million in 2012.

28. On or about September 20, 2012, Cliffton Equities entered into a Loan and Investment Agreement (the “Loan and Investment Agreement”) with Green Box Green Bay and EARTH, two entities controlled by Van Den Heuvel. Van Den Heuvel executed the agreement on behalf of Green Box Green Bay and EARTH in his capacity as Chairman.

29. The Loan and Investment Agreement provided that Cliffton Equities would loan $2 million to Green Box Green Bay and EARTH.

30. The Loan and Investment Agreement specified what Van Den Heuvel, through Green Box Green Bay and EARTH, could do with the money invested by Cliffton Equities.

31. The Loan and Investment Agreement provided that “Green Box intends to purchase a pellet processing liquefaction pyrolysis unit (the ‘Equipment’) with funds provided by Lender [defined as Cliffton Equities, Inc.] pursuant to this Agreement.” The Loan and Investment Agreement also provided that Cliffton Equities “agreed to provide,” and Green Box Green Bay and EARTH “agreed to accept,” financing “for purchase of the Equipment.”

32. The Loan and Investment Agreement included a provision about “Use of Loan Proceeds.” The Loan and Investment Agreement provided: “Borrowers [defined as EARTH and Green Box Green Bay] will use the proceeds of the Loan solely for the purposes of purchasing and installing the sorting and liquefaction Equipment, which shall include the purchase price of the equipment, taxes, shipping, installation, and any accessories or improvements necessary to operate the Equipment at Green Box’s facility and working capital to operate sorting, liquefaction and pulping equipment.”

33. Cliffton Equities, Green Box Green Bay, and EARTH also entered into a related agreement that reiterated that the $2 million would be used to purchase a specific piece of equipment. The Security Agreement dated September 20, 2012 stated that Cliffton Equities was providing $2 million “for the purpose of purchasing the Collateral,” and the “Collateral” was defined as a particular “pellet processing liquification pyrolysis unit.” The Security Agreement even identified the equipment by serial number.

34. The Loan and Investment Agreement provided that, upon the occurrence of certain conditions, the outstanding principal would be converted into an equity interest in EARTH in the form of membership units. The conversion into an equity interest would take place if EARTH or certain of its affiliates received $40 million of new debt financing or new equity, or upon the one-year anniversary of the notes, whichever came first.

35. The Loan and Investment Agreement entitled Cliffton Equities to a share of future profits. The Loan and Investment Agreement provided that Cliffton Equities would receive “one-half of the future income generated from pellet processing liquification pyrolysis units (‘LPPUs’) installed at each of the first four (4) geographic locations constructed in the United States after the date of this Agreement.”

36. Green Box Green Bay and EARTH also executed two Promissory Notes (the “2012 Notes”) in favor of Cliffton Equities in connection with the Loan and Investment Agreement. Each of the two 2012 Notes provided that Green Box Green Bay and EARTH would pay $1 million to Cliffton Equities (for a total of $2 million). The 2012 Notes were payable upon the first to occur of (1) EARTH or certain of its affiliates receiving $40 million of new debt financing or new equity; or (2) the one-year anniversary of the notes. Each of the 2012 Notes provided that it would accrue interest at a rate of 8% per year. The 2012 Notes also provided for the monthly payment of interest.

37. Van Den Heuvel executed the 2012 Notes on behalf of Green Box Green Bay and EARTH in his capacity as Chairman of each entity.

38. Cliffton Equities represented in the Loan and Investment Agreement that it was an accredited investor under the Securities Act of 1933. The 2012 Notes also stated that they could not be transferred or resold except as permitted under the Securities Act of 1933.

39. Cliffton Equities invested $2 million in 2012, including $1 million on September 21, 2012 and $1 million on September 28, 2012. Cliffton Equities sent the funds to EARTH.

40. Van Den Heuvel misused the money invested by Cliffton Equities in 2012. In fact, Van Den Heuvel began misappropriating the money within a few days of receipt. Van Den Heuvel misappropriated at least approximately $874,000 of the $2 million that Cliffton Equities invested in 2012.

41. Van Den Heuvel used money invested by Cliffton Equities in 2012 to make unauthorized payments, including at least approximately:

(a) $89,000 to purchase a Cadillac Escalade;

(b) $88,600 for rent for facilities unrelated to the Cliffton Equities investment;

(c) $78,900 for cash withdrawals;

(d) $70,000 to repay investors in other Van Den Heuvel companies;

(e) $65,500 to pay overdue taxes to the State of Wisconsin and the IRS;

(f) $52,200 to pay taxes on Van Den Heuvel’s personal residence;

(g) $44,500 to pay his ex-wife;

(h) $13,300 to pay for a residence in Georgia for his ex-wife;

(i) $40,100 for personal and other charges unrelated to the investment by Cliffton Equities, including credit card payments for stores and restaurants, and dental bills;

(j) $31,700 to pay an accounting firm;

(k) $25,000 to pay his mother-in-law; and

(l) $25,000 for tickets for the Green Bay Packers.

42. In addition, approximately $250,700 of the funds invested by Cliffton Equities in 2012 were garnished to pay an outstanding judgment. Van Den Heuvel never disclosed to Cliffton Equities that its funds could be subject to garnishment.

43. Van Den Heuvel sent interest payments to Cliffton Equities for only a few months. He made the interest payments in part with the principal contributed by Cliffton Equities.

Misappropriation of the 2014 Investment

44. In 2014, Van Den Heuvel raised more money from Cliffton Equities. Once again, Van Den Heuvel claimed a need for more equipment. And once again, Van Den Heuvel misappropriated much of the money that Cliffton Equities had invested.

45. In or about early 2014, Van Den Heuvel told Cliffton Equities that he needed more money for more equipment. He represented that he had used its 2012 investment to purchase a pyrolysis unit, but claimed that the unit was not working properly. Van Den Heuvel asked Cliffton Equities for more capital, and said that it could recoup its 2012 investment by financing the purchase of new equipment. He promised to use the next investment to purchase a different type of pyrolysis unit, called a “Kool unit,” from a different manufacturer. He claimed that the new unit could process old tires in addition to food and plastic waste, and thus was superior to the unit purchased in 2012.  

46. In emails and phone calls, Van Den Heuvel told Cliffton Equities that he would use a future investment by Cliffton Equities to purchase two Kool units from the other manufacturer, and that they would cost approximately $650,000 each.

47. Based on Van Den Heuvel’s representations, Cliffton Equities agreed to invest more money in 2014. As before, they entered into an agreement that memorialized Van Den Heuvel’s representations about what he would do with the investment.

48. On or about June 19, 2014, Cliffton Equities entered into an Amended Loan and Investment Agreement (the “Amended Loan and Investment Agreement”) with Green Box Green Bay and EARTH. Van Den Heuvel executed the agreement on behalf of Green Box Green Bay and EARTH in his capacity as Chairman of each entity.

49. The Amended Loan and Investment Agreement provided that Cliffton Equities would loan up to $4,577,944.98 to Green Box Green Bay and EARTH. That figure included the original $2 million under the 2012 Notes and accrued interest, among other things.

50. As before, the Amended Loan and Investment Agreement specified what Green Box Green Bay and EARTH could do with the money from Cliffton Equities.

51. The Amended Loan and Investment Agreement provided that “Green Box intends to purchase baled tire and plastic pellet thermal degradation units, more specifically described in the Amended Restated Security Agreement (the ‘Equipment’) with funds provided by Lender [defined as Cliffton Equities] pursuant to this Agreement.” The Amended and Restated Security Agreement, in turn, identified specific pieces of equipment that Van Den Heuvel would purchase with the investor’s capital as “[a]ny tire or pellet liquefaction thermal degradation units purchased from Kool Manufacturing Company using Loan proceeds, together with all parts and accessories hereafter acquired or received by Grantor [defined as EARTH, Green Box Green Bay, and a third Van Den Heuvel-related entity].”

52. The Amended Loan and Investment Agreement included a provision about “Use of Additional Loan Proceeds.” The Amended Loan and Investment Agreement provided: “Borrowers will use the Additional Loan Proceeds solely for the purposes of (a) purchasing and installing the Equipment, which shall include the purchase price of such equipment, taxes, shipping, installation, and any accessories or improvements necessary to operate the Equipment at Green Box’s facility and working capital to operate the Equipment, and (b) providing funds to complete the Eco Fibre Capitalization, including restarting the Eco Fibre, Inc. facility and providing working capital funds for such facility’s operations.”

53. The Amended Loan and Investment Agreement provided that Cliffton Equities could convert its outstanding loan to membership units in Green Box Green Bay at any time.

54. Green Box Green Bay and EARTH also executed an Amended and Restated Promissory Note (the “2014 Note”) in favor of Cliffton Equities in connection with the Amended Loan and Investment Agreement. The 2014 Note provided that Cliffton Equities had agreed to loan up to $4,577,944.98 to Green Box Green Bay and EARTH. The 2014 Note was payable in 18 months. The 2014 Note provided that it would accrue interest at a rate of 12% per year. The 2014 Note also provided for the monthly payment of interest.

55. Van Den Heuvel executed the 2014 Note on behalf of Green Box Green Bay and EARTH in his capacity as Chairman of each entity.

56. Cliffton Equities represented in the Amended Loan and Investment Agreement that it was an accredited investor under the Securities Act of 1933.

57. Cliffton Equities invested approximately $1,149,940 from June to December, 2014, above and beyond the $2 million that it had invested in 2012. Cliffton Equities sent the funds to two entities controlled by Van Den Heuvel. Cliffton Equities sent most of the funds to Green Box NA, and sent the remaining funds (approximately $99,980) to Green Box Green Bay.

58. Van Den Heuvel misused the money that Cliffton Equities invested in 2014. He spent only a fraction of the funds to purchase one of the promised pyrolysis units. He used a significant portion of the funds to pay unrelated business and personal expenses.

59. In June 2014, Cliffton Equities sent approximately $300,000 to Green Box NA. Van Den Heuvel wired $295,000 of the $300,000 to the manufacturer as a down payment for the first unit. The next day, the manufacturer returned $75,000 as a rebate that Van Den Heuvel never disclosed to Cliffton Equities. Van Den Heuvel, in turn, commingled the funds from the rebate with an account with an existing balance of approximately $8,000. Van Den Heuvel then used the commingled funds to pay for equipment unrelated to the units ($54,451), to pay an intellectual property valuation firm ($7,500), and to pay cash to himself ($3,000).

60. In August 2014, Cliffton Equities sent approximately $99,980 to Green Box Green Bay. Van Den Heuvel, in turn, commingled the funds with approximately $19,000 of other funds. He then used approximately $71,500 to pay the mortgage on the facility operated by Patriot Tissue, a paper converting facility controlled by Van Den Heuvel. He also used approximately $30,000 to pay the former owner of the Patriot Tissue facility.

61. In November and December, 2014, Cliffton Equities sent approximately $750,000 to Green Box NA. Van Den Heuvel, in turn, commingled the funds with approximately $845,000 received from EB-5 investors from China. Van Den Heuvel then misappropriated at least $1 million of the commingled funds, including at least approximately:

(a) $325,000 to repay the individual who promoted the EB-5 investments in connection with the loans he extended to Green Box entities unrelated to the investment by Cliffton Equities;

(b) $233,000 for the benefit of Patriot Tissue, the other paper converting facility controlled by Van Den Heuvel;

(c) $160,000 to pay the former owner of Patriot Tissue;

(d) $170,000 for personal and other expenses unrelated to the investment by Cliffton Equities;

(e) $72,000 to purchase equipment unrelated to the new units, sorting or pulping operations, or Green Box Detroit;

(f) $3,050 for charitable contributions; and

(g) $40,300 for tickets for the Green Bay Packers.

62. Van Den Heuvel never disclosed to Cliffton Equities that its money would be commingled with funds from investors in Green Box Detroit, a separate project in another state.

63. Van Den Heuvel made false and misleading statements to Cliffton Equities about how he would spend its investment. Van Den Heuvel promised to spend its funds to purchase equipment and related expenses, but in reality, he used much of the money to make improper payments that Cliffton Equities never authorized.

64. Van Den Heuvel knew, or was reckless in not knowing, that his representations about how he would use the funds from Cliffton Equities were false and misleading. Van Den Heuvel repeatedly misappropriated the funds from Cliffton Equities. He spent a substantial portion of its money for unauthorized purposes, and often did so within days or weeks of receiving the funds. The misappropriation of investor funds was repeated, substantial, and almost immediate.

65. Van Den Heuvel’s misrepresentations about what he would do with the funds from Cliffton Equities were material. A reasonable investor would have wanted to know how Van Den Heuvel would spend his or her investment. The principals of Cliffton Equities would not have made the investments if they had known that Van Den Heuvel would spend, or already had spent, the money for unauthorized purposes.

The EB-5 Offering

66. Van Den Heuvel and Green Box Detroit defrauded investors from China in connection with the EB-5 program. They also defrauded a domestic company that promoted the investments. They represented that they would use investor funds to own and operate a Green Box facility in Detroit. In reality, Van Den Heuvel and Green Box Detroit misappropriated a significant portion of the investments.

Overview of the EB-5 Program

67. Congress created the EB-5 immigrant investor program in 1990 in an effort to boost the U.S. economy through job creation and capital investment by immigrant investors. The program provides an immigrant investor with the opportunity to become a permanent resident by investing in the United States.

68. The EB-5 program provides a path to permanent U.S. residency for immigrant investors who invest in a commercial enterprise that creates or preserves at least 10 permanent full-time jobs within a certain period of time for qualified U.S. workers, either through direct employment or indirect job stimulation. The United States Citizenship and Immigration Services (“USCIS”), which is part of the Department of Homeland Security, administers the EB-5 program.

69. In conjunction with making an investment in an EB-5 fund, an immigrant investor may submit a petition to USCIS to establish his or her eligibility for the EB-5 program through what is known as an “I-526” petition. If USCIS approves the I-526 petition, the immigrant investor may apply for a conditional green card, which provides temporary U.S.residency. A conditional green card is valid for two years.

70. If the EB-5 investment created or preserved at least 10 permanent full-time jobs for qualified U.S. workers at the end of the two-year conditional period, the immigrant investor may petition USCIS through what is known as an “I-829” petition to have the conditions removed from his or her green card, resulting in legal permanent U.S. residency.

71. Using EB-5 funds to create jobs is a key part of the EB-5 program. Without creating jobs, an EB-5 investor cannot obtain legal permanent U.S. residency. The use of funds is critical to EB-5 investors because job creation is an essential part of the program.

72. In 1992, Congress enacted a program that set aside a certain number of EB-5 visas for investments affiliated with an economic unit known as a “regional center.” A regional center is an economic unit that is involved with the promotion of economic growth, improved regional productivity, job creation, and increased domestic capital investment. Regional centers are designated by USCIS to administer EB-5 investment projects. EB-5 investors who participate in a project sponsored by a regional center are not required to run the business they invest in or directly manage their investment. The EB-5 investors in this case played no role in managing the Green Box Detroit project.

[Click chart to see how the EB-5 Visa program works]

The Flow of Information, and the Flow of Funds

73. In 2010, a natural person with the initials “S.A.” [Simon Ahn] submitted an application for Green Detroit Regional Center, LLC to become a regional center under the EB-5 program to sponsor environmentally-friendly projects in the Detroit area. [Simon Ahn] is the principal of Green Detroit Regional Center, LLC.

74. The United States Citizen and Immigration Services (“USCIS”) approved Green Detroit Regional Center, LLC as an EB-5 regional center in 2010.

75. [Simon Ahn] met Van Den Heuvel in approximately 2011. Van Den Heuvel told [Simon Ahn] about the Green Box Process, and claimed that he was raising money to build a Green Box facility in Detroit. Van Den Heuvel claimed that he had developed a breakthrough recycling process that could turn post-consumer waste into usable products. He represented that the Green Box Process would be both environmentally friendly and profitable, and would allow Green Box Detroit to repay EB-5 investors. [Simon Ahn] traveled to De Pere, Wisconsin several times to meet with Van Den Heuvel and learn more about the investment opportunity.

76. Based on Van Den Heuvel’s representations, [Simon Ahn] decided that Green Detroit Regional Center would sponsor the Green Box Detroit project. Green Detroit Regional Center promoted the EB-5 investments in Green Box Detroit based on Van Den Heuvel’s representations.

77. [Simon Ahn] formed a new entity, SMS Investment Group VI, LLC (“SMS 6”), to facilitate the investment in Green Box Detroit by EB-5 investors. [Simon Ahn] created SMS 6 as a special purpose entity. SMS 6 received the funds from the EB-5 investors and, in turn, invested the funds with Green Box Detroit.

78. [Simon Ahn] marketed the Green Box project to prospective EB-5 investors through immigration consultants in China. The immigration consultants served as intermediaries between [Simon Ahn], Green Detroit Regional Center, SMS 6, Van Den Heuvel, and the investors.

 

 

79. [Simon Ahn] provided information about the Green Box Process and Green Box Detroit to to the immigration consultants by phone, email, and in-person meetings. [Simon Ahn] distributed written materials, including brochures, newsletters, and business plans or SMS 6 in 2014 and 2015. [Simon Ahn] also distributed other offering materials, including a Private Placement Memorandum (“PPM”) dated March 27, 2013 and related agenda.

81. [Simon Ahn] also shared information about Green Box to prospective investors directly. [Simon Ahn] and EARTH’s then-CEO [Lee Reisinger] traveled to China and gave a presentation to prospective investors about the Green Box Detroit project in September 2014. [Simon Ahn] also participated in tours that Van Den Heuvel gave to the immigration consultants and prospective investors in Wisconsin and Michigan.

82. [Simon Ahn] relied on information from Van Den Heuvel for his information about Green Box. Van Den Heuvel was the source for the information that [Simon Ahn] shared with the immigration consultants and prospective investors about the Green Box Process and Green Box Detroit. Van Den Heuvel knew that [Simon Ahn], in turn, would share that information with immigration consultants and the prospective EB-5 investors.

83. Van Den Heuvel approved the statements that [Simon Ahn] made in the promotional materials about the Green Box Process and Green Box Detroit. In particular, Van Den Heuvel reviewed, revised, and approved the 2014 and 2015 business plans. Van Den Heuvel also provided periodic updates to [Simon Ahn] on the supposed progress of Green Box Detroit.

84. The offering materials contemplated that Green Box Detroit was seeking 70 EB-5 investors to invest $500,000 each, for a total of $35 million.

85. Between September 2014 and August 2015, Van Den Heuvel and Green Box Detroit raised approximately $4,475,000 in EB-5 funds from nine investors in China. Each of the nine investors contributed $500,000 (but $25,000 from one investor was held in escrow, for a total of $4,475,000).

86. The funds flowed from the EB-5 investors to SMS 6, and then from SMS 6 to Green Box Detroit. The EB-5 investors purchased membership units in SMS 6 for $500,000, and paid a processing fee of $50,000. SMS 6, in turn, loaned the $500,000 contributed by each EB-5 investor to Green Box Detroit. The funds from the EB-5 investors were pooled in the same Green Box Detroit account.

87. The offering documents contemplated the payment of interest from Green Box Detroit to SMS 6, and the payment of interest from SMS 6 to the EB-5 investors. Each EB-5 investment was documented by a promissory note to SMS 6 signed by Van Den Heuvel on behalf of Green Box Detroit. The notes had a five-year term, and had an interest rate of 4% per year (with one exception). The PPM provided that SMS 6, in turn, may make interest payments to each EB-5 investor up to 2% per year, depending on the gain or loss of SMS 6.

The Misappropriation of EB-5 Funds

88. Van Den Heuvel, on behalf of Green Box Detroit, made representations to [Simon Ahn], SMS 6, and EARTH’s then-CEO [Lee Reisinger] about what Green Box Detroit would do with the funds from EB-5 investors. Van Den Heuvel told them that he would use funds from EB-5 investors to own and operate the Green Box Detroit facility, and turn waste into usable products. He represented that Green Box Detroit would use the funds to create jobs as required by the EB-5 program.

89. [Simon Ahn], SMS 6, and EARTH’S then-CEO [Lee Reisinger] relied on information provided by Van Den Heuvel about the use of funds from investors, and shared that information with the immigration consultants and prospective EB-5 investors. Van Den Heuvel knew that they would pass along the information about the use of funds to the investors.

90. [Simon Ahn], SMS 6, and EARTH’S then-CEO [Lee Reisinger] made statements to the immigration consultants and prospective EB-5 investors about the use of investor funds. The statements appeared in the offering documents and in other presentations to investors. For example:

(a) The SMS 6 business plans in 2014 and 2015 stated that SMS 6 would loan funds to Green Box Detroit, and that Green Box Detroit would own and operate a recycling facility in Detroit and thus create jobs as required by the EB-5 program. Each business plan stated: “Under no circumstances will any of the $500,000 EB-5 investor capital go for anything but job creation.”

(b) The PPM stated that SMS 6 would loan funds to Green Box Detroit, and that Green Box Detroit would process “large quantities of organic solid waste streams” and “produc[e] commercially marketable green energy and tissue products.”

(c) EARTH’s then-CEO [Lee Reisinger] gave a presentation to prospective EB-5 investors in China in September 2014 about how Green Box Detroit would convert food-contaminated waste into usable products.

91. Van Den Heuvel was the source for all of the statements by [Simon Ahn], SMS 6, and EARTH’s then-CEO about the use of funds. Van Den Heuvel provided the information to [Simon Ahn], SMS 6, and EARTH’s then-CEO [Lee Reisinger] about the use of funds knowing that they, in turn, would share that information with prospective investors.

92. Van Den Heuvel’s statements about the use of funds were false and misleading. He misappropriated the investors’ funds, and some of the misappropriation began on the day of receipt. At other times, Van Den Heuvel misspent the funds within a few days or weeks of the investors entrusting it to him.

93. As described above, Van Den Heuvel commingled approximately $845,000 of the EB-5 funds with approximately $750,000 of funds from Cliffton Equities. He then misappropriated at least $1 million of the commingled funds for personal or other improper uses.

94. Van Den Heuvel misappropriated at least approximately $2 million of the remaining $3,630,000 of EB-5 funds, including at least approximately:

(a) $630,000 to repay [Simon Ahn] for loans to Green Box entities;

(b) $418,000 for the benefit of Patriot Tissue;

(c) $60,000 to pay the former owner of Patriot Tissue;

(d) $390,000 to pay personal expenses, including payments to his ex-wife;

(e) $240,000 to pay for the personal residence of his ex-wife;

(f) $161,000 to pay legal fees unrelated to Green Box Detroit;

(g) $76,000 to repay investors in an unrelated Van Den Heuvel company;

(h) $50,000 as a loan to an individual for purposes unrelated to Green Box Detroit; and

(i) $30,000 to pay an accounting firm.

Some of the misappropriated EB-5 funds were commingled with other funds.

Additional Misrepresentations

95. Van Den Heuvel, on behalf of Green Box Detroit, made additional false and misleading statements about the Green Box Process in connection with the EB-5 offering, including statements about (1) the ability to use a key product from Cargill; (2) the availability of funds from tax-exempt bonds; (3) the right to use patents; and (4) the purchase of equipment.

96. The misrepresentations were material. A reasonable investor would want to know the feasibility of the project – including the availability of technology and financing – before making his or her investment. Van Den Heuvel knew, or was reckless in not knowing, that each of his statements was false and misleading.

Additional Misrepresentations – Cargill

97. Van Den Heuvel represented to [Simon Ahn], SMS 6, and EARTH’s then-CEO [Lee Reisinger] that the Green Box entities had an important relationship with Cargill Inc., a multi-national agricultural company. Van Den Heuvel represented that Green Box Detroit had the right to use a Cargill- developed paper strength-enhancing product called Enhanced Fiber Additive. Van Den Heuvel claimed that Cargill’s additive was essential for the success of the Green Box Process.

98. [Simon Ahn], SMS 6, and EARTH’S then-CEO [Lee Reisinger] relied on information provided by Van Den Heuvel about the relationship with Cargill, and shared that information with the immigration consultants and prospective EB-5 investors. Van Den Heuvel knew that they would pass along the information about Cargill to the investors.

99. [Simon Ahn], SMS 6, and EARTH’S then-CEO [Lee Reisinger] made statements to the immigration consultants and prospective EB-5 investors about the relationship between the Green Box entities and Cargill, including the importance of the additive to the Green Box Process. The statements appeared in the offering documents and in other presentations to investors. For example:

(a) In 2013 or 2014, Van Den Heuvel approved the posting of a brochure on Green Detroit Regional Center’s website. The brochure stated that “Cargill’s Patented Additive” was “The Key to Green Box’s Success.”

(b) The 2014 business plan for SMS 6 included a copy of a License Agreement between Cargill and Green Box Green Bay.

(c) The 2015 business plan for SMS 6 stated that “Green Box has secured the required Enhanced Fiber Additive Cargill Intellectual Property usage rights,” and that “Cargill is now associated with Green Box’s efforts in cleaning up the food contaminated waste streams.” The 2015 business plan for SMS 6 also included a letter from Cargill dated November 26, 2012, stating that “Cargill has formalized a licensing agreement with Green Box for Green Box to produce and market EFA [Enhanced Fiber Additive],” and that “Cargill is excited to work with Green Box” as the two companies “will continue our collaboration on marketing efforts to deliver this innovative sustainability solution.”

(d) In a presentation to potential EB-5 investors in China in September 2014, the then-CEO [Lee Reisinger] of EARTH touted the “Worldwide Exclusivity for [EFA product Name] Developed with Cargill for Strong Tissue,” adding that Cargill’s enhanced fiber additives provided a “valuable tool” and gave Green Box a “manufacturing advantage.” (emphasis in original).

100. Van Den Heuvel was the source for all of the statements by [Simon Ahn], SMS 6, and EARTH’s then-CEO [Lee Reisinger]  about the relationship with Cargill. Van Den Heuvel provided the information to [Simon Ahn], SMS 6, and EARTH’s then-CEO [Lee Reisinger] about the relationship with Cargill knowing that they, in turn, would share that information with prospective investors.

101. Van Den Heuvel’s statements about the relationship with Cargill were false and misleading. The relationship with Cargill effectively ended on or about October 15, 2013.

102. Green Box NA entered into an Equipment Purchase Agreement with Cargill dated July 18, 2012. The agreement provided for the sale of machinery for Enhanced Fiber Additives. Green Box Green Bay also entered into a License Agreement with Cargill dated October 17, 2012. The License Agreement permitted Van Den Heuvel to use Cargill’s patented technology to make and use the Enhanced Fiber Additive, in exchange for annual royalty payments. Van Den Heuvel executed both agreements on behalf of the Green Box entities.

103. Between July 2012 and October 2013, Green Box NA did not make any payments to Cargill under the Equipment Purchase Agreement, and did not take possession of the machinery.

104. On or about October 15, 2013, Cargill sent a letter to Van Den Heuvel and Green Box Green Bay, terminating the License Agreement. As of the date of termination, Green Box Green Bay had not made any payments to Cargill under the License Agreement.

105. In June 2014, Cargill filed a lawsuit against Green Box NA for breach of the Equipment Purchase Agreement, alleging a failure to pay. Cargill obtained a default judgment for $8 million against Green Box NA in July 2014.

106. Van Den Heuvel never disclosed to [Simon Ahn], SMS 6, EARTH’s then-CEO [Lee Reisinger], the immigration consultants, or prospective EB-5 investors that Cargill had terminated the License Agreement, or that Cargill had sued Green Box NA and obtained a default judgment for breach of the Equipment Purchase Agreement. Van Den Heuvel never disclosed to [Simon Ahn], SMS 6, EARTH’s then-CEO [Lee Reisinger], the immigration consultants, or prospective EB-5 investors that Cargill had ended its relationship with the Green Box entities, or that the Green Box entities no longer had the right to use Cargill’s technology. Instead, he continued to tout the special relationship with Cargill and the ability of the Green Box entities to manufacture Cargill’s additive and use its technology.

Additional Misrepresentations – Tax-Exempt Bonds

107. Van Den Heuvel made misrepresentations about the status of potential financing through tax-exempt bonds.

108. Van Den Heuvel told [Simon Ahn], SMS 6, and EARTH’s then-CEO [Lee Reisinger] that a substantial portion of the financing for the Green Box Detroit project would come from tax-exempt bonds. He claimed that bonds would produce $95 million to $125 million of the $200 million necessary for the Green Box Detroit project. Van Den Heuvel made favorable statements about the likelihood of obtaining bond financing, claiming that the application process was proceeding well.

109. [Simon Ahn], SMS 6, and EARTH’S then-CEO [Lee Reisinger] relied on information provided by Van Den Heuvel about the tax-exempt bonds, and shared that information with the immigration consultants and prospective EB-5 investors. Van Den Heuvel knew that they would pass along the information about the tax-exempt bonds to the investors.

110. [Simon Ahn], SMS 6, and EARTH’S then-CEO [Lee Reisinger] old the immigration consultants and prospective EB-5 investors that Green Box Detroit would be financed largely by tax-exempt bonds. The statements appeared in the offering documents and in other presentations to investors. For example:

(a) The 2014 business plan for SMS 6 stated that “Green Box Detroit will be financed with $95MM-$125MM of solid waste disposal state and federal tax-exempt bonds,” and thus provide most of the “total project cost” of “$200,000,000.”

(b) The 2015 business plan for SMS 6 stated that “Green Box NA Michigan, LLC, owner of Green Box NA Detroit, LLC, will be financed with $95MM-$125MM of solid waste disposal state and federal tax-exempt bonds.” The 2015 business plan added that “Tax exempt bonds allocation has been increased by Michigan Economic Development Corporation to a range from $95,000,000 to $125,000,000.” The 2015 business plan also added that tax-exempt bonds would supply $125 million of the $200 million of total project financing. The 2015 business plan also claimed that the “Michigan Economic Development Corporation (MEDC) has approved TEB [i.e., Tax Exempt Bond] up to $125,000,000.”

(c) The PPM provided that Green Box Detroit expected to receive $95 million from “Tax Exempt Solid Waste Bond Financing or Loan.”

(d) In a presentation to potential EB-5 investors in China in September 2014, the then-CEO of EARTH [Lee Reisinger] showed a slide stating that $125 million of the $200 million in financing for Green Box Detroit would come from Michigan tax-exempt bonds.

111. Van Den Heuvel was the source for all of the statements by [Simon Ahn], SMS 6, and EARTH’s then-CEO [Lee Reisinger] about the tax-exempt bonds. Van Den Heuvel provided the information to [Simon Ahn], SMS 6, and EARTH’s then-CEO [Lee Reisinger] about the tax-exempt bonds knowing that they, in turn, would share that information with prospective investors.

112. Van Den Heuvel’s statements about the tax-exempt bonds were false and misleading. By July 2014, Van Den Heuvel knew that the application for tax-exempt bonds was in serious jeopardy, at best, if not effectively rejected.

113. Van Den Heuvel and his company, Green Box NA Michigan, LLC, sought the ability to issue $125 million in tax-exempt bonds through the Michigan Economic Development Corporation (“MEDC”) and the Michigan Strategic Fund. In May 2014, the Michigan Strategic Fund approved a bond inducement resolution for $125 million. But a bond inducement resolution is only the first step toward receiving final approval to offer bonds for sale. Before Van Den Heuvel’s company could issue tax-exempt bonds, he needed to take multiple additional steps, including receiving approval of a second resolution from the Michigan Strategic Fund authorizing the sale of the bonds. Without the second resolution, no bond sales could occur.

Watch Ron Van Den Heuvel make his pyrolysis fraud pitch in his ‘home town’ at the April 15, 2014 City of De Pere Common Council Meeting asking for the City to issue Green Box NA Green Bay LLC $125,000,0000 in tax-exempt industrial development revenue bonds, as was also under consideration by Green Box NA Michigan LLC by Gov. Rick Snyder’s Michigan Strategic Fund:

114. In July 2014, the MEDC informed Van Den Heuvel that there were significant problems with his application for tax-exempt bonds, and that final approval was very unlikely. Among other things, Van Den Heuvel failed to provide financial information that the MEDC had requested. Van Den Heuvel also failed to provide a satisfactory explanation about issues that the MEDC had raised after a background check.

115. On July 3, 2014, the MEDC notified Van Den Heuvel by email that a background check had raised 15 potential issues, including (1) five tax liens; (2) one construction lien; (3) two state tax warrants; (4) four judgments; and (5) three civil lawsuits. The MEDC informed Van Den Heuvel that authorization of the bonds may not advance without a satisfactory resolution of the issues.

116. During a contemporaneous phone call, the MEDC informed Van Den Heuvel that it had significant concerns about the application for tax-exempt bonds. The MEDC reiterated that Van Den Heuvel would need to provide a satisfactory explanation for all of the outstanding issues for the application to have any chance of going forward. The MEDC informed Van Den Heuvel that the problems appeared unresolvable, and that it did not see any way that the application could obtain final approval.

117. Van Den Heuvel did not satisfy MEDC’s concerns. He did not provide additional information to the MEDC, and did not provide a satisfactory explanation for the issues that it had raised.

118. Van Den Heuvel never disclosed to [Simon Ahn], SMS 6, EARTH’s then-CEO [Lee Reisinger], the immigration consultants, or prospective EB-5 investors that the MEDC had raised significant issues about the application. Instead of telling them the truth, Van Den Heuvel said that the bond financing was on-track and was expected to close in a few months.

Additional Misrepresentations – Patents

119. Van Den Heuvel made misrepresentations about the patent rights of Green Box Detroit.

120. Van Den Heuvel told [Simon Ahn] and SMS 6 that the Green Box Process was patented, and that Green Box Detroit had the rights to seven patents. For example, Van Den Heuvel gave [Simon Ahn] a chart that identified seven specific patents that Green Box Detroit allegedly had the right to use. As a second example, Van Den Heuvel provided a document to [Simon Ahn] on or about October 29, 2013 stating that “[e]ach Green Box holds seven patents.” Van Den Heuvel represented that these intellectual property rights were important to the eventual success of the Green Box Process.

121. [Simon Ahn] and SMS 6 relied on information provided by Van Den Heuvel about the patents, and shared that information with the immigration consultants and prospective EB-5 investors. Van Den Heuvel knew that they would pass along the information about patents to the investors.

122. [Simon Ahn] and SMS 6 told the immigration consultants and prospective EB-5 investors about the intellectual property rights of Green Box Detroit, including the right to use patents. The statements appeared in the offering documents and in other presentations to investors. For example:

(a) The 2014 business plan for SMS 6 stated that Green Box “holds seven patents on its technologies.”

(b) The 2015 business plan for SMS 6 stated that Green Box “holds seven patents on its technologies.”

(c) The PPM stated that Green Box Detroit would use its rights in patents to recycle waste into commercially-marketable products.

123. Van Den Heuvel’s statements about the patents were false and misleading. Three of the seven patents expired in 2012. Two of the patents were owned by Cargill, and Van Den Heuvel lost the ability to use those patents when Cargill terminated the license agreement in October 2013. Another one of the alleged patents was only an application, and the U.S. Patent and Trademark Office issued a final rejection of this application in August 2014.

Additional Misrepresentations – the Purchase of Equipment

124. Van Den Heuvel misled the investors about the purchase of equipment. Van Den Heuvel suggested to two different groups of investors that he had used their funds to purchase the same pieces of equipment.

125. Van Den Heuvel purchased only two Kool units. But he led two different groups of investors to believe that he had used their funds to pay for the Kool units. Van Den Heuvel told Cliffton Equities that he had purchased two Kool Units. Van Den Heuvel also told [Simon Ahn] and SMS 6 that he had purchased two Kool Units.

126. Van Den Heuvel’s representations misled the investors about the use of their funds. The investors were led to believe that Van Den Heuvel had used their funds to purchase specific pieces of equipment. In reality, each group of investors provided only some of the capital. Van Den Heuvel concealed his misappropriation by providing inaccurate information about the use of funds.

Post-Investment Misrepresentations

127. Van Den Heuvel continued to make false and misleading statements about Green Box Detroit after the investments, in order to lull [Simon Ahn], SMS 6, and the other investors into believing that the project was on track and that their funds were safe.

128. Van Den Heuvel told [Simon Ahn] that he had purchased a sugar-to-ethanol unit and a pelletizer on behalf of Green Box Detroit, and that he was keeping the equipment in De Pere, Wisconsin, pending the closing on the purchase of a facility in Detroit. In reality, neither Green Box Detroit nor any other entity controlled by Van Den Heuvel purchased the specific sugar-to- ethanol unit or the pelletizer.

129. In August 2015, Van Den Heuvel sent documents to [Simon Ahn] that purported to be compilation reports for Green Box Detroit from an independent accountant as of March 31, 2015 and June 30, 2015. In reality, the reports were forgeries. The accounting firm did not prepare the reports, and never provided services to Green Box Detroit. The asset valuations were fictitious.

The Fifth Amendment

130. During the SEC’s investigation, Van Den Heuvel refused to answer the SEC’s questions during testimony. Instead, he asserted the right against self-incrimination under the Fifth Amendment.

Claims for Relief

Count I

Against Defendants Van Den Heuvel and Green Box Detroit
for Violations of Sections 10(b) and 20(b) of the Exchange Act and Rule 10b-5 Thereunder

131. The Commission realleges and incorporates by reference paragraphs 1 through 130 as if fully set forth herein.

132. Defendants Van Den Heuvel and Green Box Detroit, in connection with the purchase or sale of securities, by the use of the means or instrumentalities of interstate commerce or of the mails, directly or indirectly: (a) used or employed devices, schemes, or artifices to defraud; (b) made untrue statements of material fact or omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and (c) engaged in acts, practices, or courses of business which operated or would operate as a fraud and deceit upon other persons, including current and prospective investors.

133. Van Den Heuvel and Green Box Detroit acted with scienter by knowingly or recklessly engaging in the fraudulent conduct described above.

134. By engaging in the conduct described above, Van Den Heuvel and Green Box Detroit violated Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].

135. Van Den Heuvel violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder directly or indirectly through or by means of other persons, as prohibited by Section 20(b) of the Exchange Act [15 U.S.C. § 78t(b)].

Count II

Against Defendants Van Den Heuvel and Green Box Detroit
for Violations of Section 17(a) of the Securities Act

136. The Commission realleges and incorporates by reference paragraphs 1 through 130 as if fully set forth herein.

137. By engaging in the conduct described above, Van Den Heuvel and Green Box Detroit, in the offer or sale of securities, by the use of the means and instruments of transportation or communication in interstate commerce or by use of the mails, directly or indirectly: (i) employed devices, schemes or artifices to defraud; (ii) obtained money or property by means of untrue statements of material fact or omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, and (iii) engaged in transactions, practices, or courses of business which operated or would operate as a fraud or deceit upon purchasers of securities.

138. Van Den Heuvel and Green Box Detroit acted with scienter by knowingly or recklessly engaging in the fraudulent conduct described above.

139. By engaging in the conduct described above, Van Den Heuvel and Green Box Detroit violated Sections 17(a)(1), 17(a)(2) and 17(a)(3) of the Securities Act [15 U.S.C. § 77q(a)].

Prayer for Relief

WHEREFORE, the Commission respectfully requests that the Court:

I.

Permanently enjoin defendant Van Den Heuvel from violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], including directly or indirectly through or by means of any other person in violation of Section 20(b) of the Exchange Act [15 U.S.C. § 78t(b)], pursuant to Section 20(b) of the Securities Act [15 U.S.C. § 77t(b)] and Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)];

II.

Permanently enjoin defendant Green Box Detroit from violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], pursuant to Section 20(b) of the Securities Act [15 U.S.C. § 77t(b)] and Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)];

III.

Order Defendant Van Den Heuvel to disgorge the ill-gotten gains that he received from the violations relating to the Cliffton Equities offering alleged herein, including prejudgment interest thereon;

IV.

Order Defendants Van Den Heuvel and Green Box Detroit, jointly and severally, to disgorge the ill-gotten gains that they received from the violations relating to the EB-5 offering alleged herein, including prejudgment interest thereon;

V.

Order Defendants Van Den Heuvel and Green Box Detroit to pay civil penalties pursuant to Section 20 of the Securities Act [15 U.S.C. § 77t] and Section 21 of the Exchange Act [15 U.S.C. § 78u]; VI. Retain jurisdiction over this action to enforce the terms of all orders and decrees that this Court may enter; and

VII.

Grant such other relief as the Court deems appropriate.

Jury Demand

Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, Plaintiff demands that this case be tried to a jury on all issues so triable.

Dated: September 19, 2017

Respectfully submitted,

s/ Steven C. Seeger
Steven C. Seeger (seegers@sec.gov)
Steven L. Klawans (klawanss@sec.gov)
BeLinda I. Mathie (mathieb@sec.gov)
James G. O’Keefe (okeefej@sec.gov)
175 West Jackson Boulevard, Suite 1450
Chicago, IL 60604-2615

Attorneys for Plaintiff
U.S. Securities and Exchange Commission

  

  • September 19, 2017 Indictment,  U.S. District Court, Eastern District of Wisconsin, Case No. 17-CR-160,  United States of America  v.  Ronald H. Van Den Heuvel

INDICTMENT

THE GRAND JURY CHARGES:

1.  Beginning at by March 8, 2011, and continuing at least through August 2015 in the State and Eastern District of Wisconsin and elsewhere,

RONALD H. VAN DEN HEUVEL

knowingly devised and participated in a scheme to defraud lenders and investors, and to obtain money from lenders and investors by means of materially false and fraudulent pretenses, representations, and promises related to his “Green Box” business plan, which scheme is more fully described below.

2.  As a result of his scheme, Van Den Heuvel fraudulently obtained more than $9,000,000 from a range of lenders and investors, including individual acquaintances, the Wisconsin Economic Development Corporation (“WEDC”), a Canadian institutional investor, and Chinese investors who participated in the EB-5 immigrant investor program.

Background

3.  At all times material to this indictment:

a.  Defendant Ronald H. Van Den Heuvel purported to be a businessman in De Pere, Wisconsin. Earlier in his career, Van Den Heuvel had some success in the recycling and paper-making industry. By the end of 2010, however, Van Den Heuvel did not own or control any facilities that generated any significant revenue. Around then, Van Den Heuvel began promoting his “Green Box” business plan to obtain funds in the scheme.

b.  As represented by Van Den Heuvel, the Green Box business plan was to purchase the equipment and facilities necessary to employ proprietary processes that could convert solid waste into consumer products and energy, without any wastewater discharge or landfilling of byproducts.

c.  As part of his scheme, Van Den Heuvel formed and controlled numerous business entities, including ones identified below, that he used interchangeably for business and personal purposes.

d.  Environmental Advanced Reclamation Technology HQ, LLC (“EARTH”) was the operating name of Everett Advanced Reclamation Technology HQ, LLC, which Van Den Heuvel formed as a Wisconsin limited liability corporation. Van Den Heuvel represented EARTH as the holding company for his other entities.

e.  Green Box NA, LLC (“Green Box NA”) is a Wisconsin limited liability corporation that Van Den Heuvel formed and controlled.

f.  Green Box NA Green Bay, LLC (“Green Box-Green Bay”) was a Wisconsin limited liability corporation that Van Den Heuvel formed and represented as pursuing the Green Box business plan in De Pere, Wisconsin.

g.  Green Box NA Detroit, LLC (“Green Box-Detroit”) was a Michigan limited liability corporation that Van Den Heuvel formed and represented as pursuing a Green Box operation in Detroit, Michigan, that would sort waste and create fuel products.

The Scheme

Van Den Heuvel’s scheme was essentially as follows:

4.  Beginning by at least March 8, 2011, and continuing through at least August 2015, Van Den Heuvel obtained funds from lenders and investors under materially false pretenses, representations, and promises, including the following:

a.  Van Den Heuvel represented and promised that he would use, and had used, the lenders’ and investors’ funds to advance the Green Box operations. In many instances, Van Den Heuvel entered into agreements with lenders and investors that dictated specific uses for the funds, such as the purchase of particular equipment.

b.  Van Den Heuvel produced false financial statements that grossly inflated his personal wealth and his companies’ assets, including its intellectual property.

c.  Van Den Heuvel promised potential investors or lenders that their funding would allow him to acquire critical equipment and begin full-time Green Box operations quickly.

d.  Van Den Heuvel falsely claimed to have entered into agreements with major companies when, in truth, Van Den Heuvel never had such agreements or they had been terminated.

e.  Van Den Heuvel falsely represented that particular business entities had title and control of property where Green Box operations would occur when, in fact, those entities lacked title and control of the property.

f.  Van Den Heuvel provided security interests in the same equipment to multiple investors and lenders, misleading them about the existence and value of their security interests.

5.  Soon after receiving funds from lenders or investors, Van Den Heuvel diverted significant portions of the funds to purposes that did not advance the Green Box business plan, let alone the specific uses dictated in funding agreements. In the course of diverting the funding, and to conceal the diversion:

a.  Van Den Heuvel opened numerous bank accounts at different financial institutions and in different business entities’ names.

b.  Van Den Heuvel made multiple transfers of the funds between the bank accounts.

c.  Van Den Heuvel converted large amounts of investors’ and lenders’ funds to cash.

d.  Van Den Heuvel used significant amounts of the lenders and investors’ funds to pay personal expenses, creditors, and legal obligations that were unrelated to the Green Box business plan.

e.  Van Den Heuvel also used substantial amounts of the lenders’ and investors’ funds to further promote the scheme. For example, Van Den Heuvel paid employees and consultants to prepare Green Box promotional materials, valuations, and financial statements that were based upon misleading assumptions Van Den Heuvel provided. Van Den Heuvel used those materials to obtain additional loans and investments.

6.  As part of the scheme, Van Den Heuvel took steps to conceal how he had misused lenders’ and investors’ funds, lull lenders and investors into a false sense of security, and deter them from taking action to recoup their funds. Such steps included the following:

a.  Van Den Heuvel claimed that new investments of tens and hundreds of millions of dollars were imminent, and that he would use those new investments to pay earlier lenders and investors.

b.  Van Den Heuvel falsely represented to lenders and investors that their funds had been used for the intended purposes.

c.  When lenders or investors questioned why the Green Box operations were not proceeding, Van Den Heuvel provided false excuses and did not reveal that he had diverted much of the funding.

[See also:

Investor M.A. [Marco Araujo]

7.  As part of his scheme, Van Den Heuvel defrauded investor [Marco Araujo]:

a.  In early 2011, Van Den Heuvel  made false representations to induce [Marco Araujo], an acquaintance in the Green Bay area, to invest $600,000 in Green Box-Green Bay. Van Den Heuvel assured M.A. that he would use the funds to pursue the Green Box-Green Bay business plan.

b.  Relying on Van Den Heuvel’s assurances, M.A. executed an Agreement to Issue Stock and Provide Collateral (the “Agreement”) on or about April 4, 2011. M.A. sent the $600,000 to Green Box-Green Bay by wire transfer on or about the same day. Under the Agreement, M.A. received 600,000 “membership units” in Green Box-Green Bay, a guaranteed annual return of 10% to be paid in quarterly installments, and certain security interests.

c.  Van Den Heuvel quickly spent the majority of M.A.’s investment on purposes unrelated to Green Box-Green Bay, including paying over $19,000 for Packers tickets in club seats and over $57,000 in court-ordered support to his ex-wife.

d.  Van Den Heuvel failed to pay M.A. quarterly interest payments required by the Agreement. Throughout 2011 and 2012, Van Den Heuvel assured M.A that significant funding for Green Box-Green Bay was imminent and that M.A. would receive payments.

e.  To deter M.A. from filing a civil lawsuit, Van Den Heuvel agreed to refund M.A.’s investment as soon as Green Box-Green Bay received significant funding that Van Den Heuvel promised was imminent. On September 25, 2012, Van Den Heuvel emailed M.A. to say he “should have the $600,000 within 10 days,” and forwarded an email from what appeared to be a potential investor. On October 31, 2012, Van Den Heuvel emailed M.A. again, saying that a “hurricane hitting the East Coast and specifically New York has slowed the process.” Van Den Heuvel’s emails delayed M.A. from filing suit by holding out the potential of repayment.

WEDC

8.  As part of his scheme, Van Den Heuvel defrauded the WEDC:

a. On or about March 8, 2011, Van Den Heuvel submitted a proposal to the Wisconsin Department of Commerce, the predecessor to the WEDC [Wisconisn Economic Development Corporation], seeking funding. The proposal and subsequent submissions included false representations and inflated financial statements that portrayed Van Den Heuvel and his business entities as creditworthy. Van Den Heuvel represented that WEDC’s funding would allow the company to start full-time operaions and create 116 new jobs at the EcoFibre facility at 500 Fortune Ave., De Pere, Wisconsin.

b.  On or about September 14, 2011, Van Den Heuvel executed a loan agreement with WEDC to obtain a loan of $1,116,000. The loan agreement provided that Green Box-Green Bay would use the WEDC funds to purchase and install equipment that would produce marektable pulp, fuel pellets, synthetic fuel, and tissue and cup products. The loan agreement further stated that, prior to the disbursement of any funds, Green Box-Green Bay had to deliver to WEDC: (i) documentation that Green Box-Green Bay had acquired the EcoFibre facility; (ii) a mortgage on the EcoFibre facility; (iii) documentation that Green Box-Green Bay would purchase all the equipment necessary to produce marketable pulp, baled and sorted waste paper, fuel pellets, and synthetic fuel; and (iv) documentation that VHC, Inc. (a company controlled by Van Den Heuvel’s brothers) had contributed $5,500,000 of equity to the project.

c.  On or about September 30, 2011, Van Den Heuvel submitted a request to the WEDC for the full loan of $1,116,000. In the draw request, Van Den Heuvel submitted documentation that gave the false impression that VHC, Inc. had contributed $5.5 million to assist Green Box-Green Bay in acquiring the EcoFibre facility. The documentation included a mortgage that Van Den Heuvel executed in the name of Green Box-Green Bay in favor of the WEDC. In truth, VHC, Inc. contributed funds to refinance a mortgage on the EcoFibre facility for its own benefit, not for the benefit of Green Box-Green Bay. Green Box-Green Bay never acquired the EcoFibre facility, and the mortgage that Van Den Heuvel gave the WEDC was worthless.

d.  In the draw request, Van Den Heuvel represented that he planned to expend the funds to purchase specific pulping, sorting, liquefaction, shredding, and pellet-making equipment from particular vendors.

e.  Based upon those representations, the WEDC disbursed the $1,116,000 to Green Box-Green Bay on or about October 21, 2011.

f.  Although Van Den Heuvel used WEDC funds to make some partial payments for equipment identified in the draw request, Van Den Heuvel diverted most of the funds to purposes not permitted by the loan agreement.

g.  Thereafter, Van Den Heuvel concealed his misuse of WEDC funds in communciations with the WEDC. For example, on or about March 31, 2014 and April 14, 2015, Van Den Heuvel submitted Schedules of Expenditures to the WEDC in which he falsely certified that Green Box-Green Bay had expended all loan funds in accordance with the loan agreement’s terms.

h.  On or about January 4, 2012, the WEDC also awarded Green Box-Green Bay a grant of up to $95,500 to reimburse the costs of training employees in waste sorting, fuel pellet production, and liquefaction manufacturing.

i.  To draw the grant funds, on or about December 9, 2013, March 5, 2014, and November 20, 2014, Van Den Heuvel submitted requests for payment to the WEDC. The requests included fraudulent records that represented particular individuals had received training during particular periods. As Van Den Heuvel knew, that training never occurred. These false records caused the WEDC to disburse the full grant amount of $95,500.

[See also:

Compare & contrast:

  • November 16, 2011 Contract #SEP FY10-20265, $2 Million State Energy Program Loan Agreement between the Wisconsin Economic Development Corp. / WEDC and Oneida Seven Generations Corp. / OSGC-subsidiary Oneida Energy Inc.

Related:

Investor D.W. [David Williquette]

9.  As part of his scheme, in September 2012 and December 2012, Van Den Heuvel induced [David Williquette] to invest a total of $40,000 in Green Box-Green Bay in exchange for 200,000 “membership units’ in Green Box-Green Bay and a promise of repayment. Van Den Heuvel falsely represented to [David Williquette] that he would use much of the funds for patent and legal fees. Van Den Heuvel converted [David Williquette’s] investment to cash and never repaid him.

Cliffton Equities

10.  As part of his scheme, Van Den Heuvel defrauded Cliffton Equities:

a.   Van Den Heuvel made material false representations to Cliffton Equities, a private investment firm located in Montreal, Canada, that caused it to invest funds in Green Box-Green Bay.

b.  On or about September 21, 2012, Cliffton Equities entered into a Loan and Investment Agreement (the “Agreement”) with Green Box-Green Bay and EARTH to provide $2 million in funds. According to the Agreement, as well as oral assurances Van Den Heuvel gave to Cliffton Equities, Green Box-Green Bay would use the funds “solely for the purposes of purchasing and installing the sorting and liquefaction Equipment . . . at Green Box’s facility” and for “working capital to operate sorting, liquefaction and pulping equipment.” Van Den Heuvel further represented to Cliffton Equities that its funds would be used to purchase a liquefaction unit from RGEN Systems, and that the unit would be suitable for the Green Box-Green Bay business plan.

c.  Relying on Van Den Heuvel’s and the Agreement’s representations, Cliffton Equities wired $1 million to EARTH on or about September 21, 2012. Cliffton Equities wired an additional $1 million to EARTH on or about September 28, 2012.

d.  After receiving Cliffton Equities’ funds, Van Den Heuvel paid RGEN Systems only part of the price for the liquefaction unit, which was never completed.

e.  Van Den Heuvel instead diverted much of Cliffton Equities’ funds to purposes not permitted by the Agreement. For example, Van Den Heuvel used the funds to pay $25,000 to an acquaintance as reimbursement for Green Bay Packers tickets; $33,000 for his spouse [Kelly Van Den Heuvel]’s dental work; $89,000 towards the purchase of a new Cadillac Escalade; and $16,570 to the Wisconsin International School where his children attended.

f.  Van Den Heuvel concealed his misuse of Cliffton Equities’ funds by falsely represented to Cliffton Equities that its funds were being used to purchase and install the needed equipment.

g.  Sometime in 2013, Van Den Heuvel falsely represented to Cliffton Equities that the RGEN liquefaction equipment could not be completed because of design problems. Van Den Heuvel persuaded Cliffton Equities to provide additional funds to purchase two pyrolysis units from a different manufacturer, Kool Manufacturing Company.

h.  On June 19, 2014, Cliffton Equities entered into an Amended Loan and Investment Agreement with Green Box-Green Bay and EARTH. This Agreement provided that Cliffton Equities would provide additional funds solely for the purposes of “purchasing and installing” the two Kool Units and for “restarting the EcoFibre, Inc. facility and providing working capital funds for such facility’s operation.”

i.  Van Den Heuvel thereafter requested payments from Cliffton Equities, representing that the payments were needed to purchase and install the two Kool Units. Based upon Van Den Heuvel’s representations, Cliffton Equities sent to Green Box-Green Bay and Green Box NA the following amounts totaling approximately $1,149,000: (i) $300,000 on or about June 19, 2014; (ii) $99,980 on or about August 29, 2014; (iii) $379,980 on or about November 6, 2014; (iv) $299,980 on or about Novemer 13, 2014; and (v) $70,000 on or about December 2, 2014.

j.  Van Den Heuvel again diverted large amounts of Cliffton Equities’ additional funds to purposes not permitted by the Amended Loan and Investment Agreement, including personal expenditures and business expenses unrelated to purchasing the Kool Units or restarting the EcoFibre facility.

k.  Van Den Heuvel used only part of Cliffton Equities’ funds to make payments for Kool Units. Van Den Heuvel induced other entities to provide funds based upon representations that their funds were also being used to purchase Kool Units without disclosing that he had also pledged to use other entities’ funds for Kool Units.

EB-5 Investments

11.  As part of his scheme, Van Den Heuvel defrauded foreign investors who made investments through the EB-5 program as follows:

a.  The EB-5 program is administered by the United States Citizenship and Immigration Services (USCIS). The program provides a route for immigrant investors to become lawful permanent residents by investing at least $500,000 in a project sponsored by an USCIS-approved regional center. The program requires that the entire $500,000 investment be expended on job-creating activities.

b.  Green Detroit Regional Center, LLC (GDRC) is an USCIS-approved regional center managed and controlled by S.A. [Simon Ahn], an attorney in Georgia. GDRC sponsors individual projects that aim to direct EB-5 investments to environmentally friendly, job-creating entities in the Detroit, Michigan area.

c.  Van Den Heuvel persuaded GDRC to sponsor a project called SMS Investment Group IV (“SMS 6”) to direct EB-5 investments to Green Box-Detroit, which Van Den Heuvel promised would pursue the Green Box business plan in Detroit, Michigan.

d.  On or about December 21, 2017, Van Den Heuvel entered into a Master Loan Agreement on behalf of EARTH and Green Box-Detroit with GDRC and SMS 6. Pursuant to the agreement, [GDRC] would raise up to $35 million from up to 70 different EB-5 investors and direct the funds to SMS 6. SMS 6 would then lend the EB-5 investment funds to Green Box-Detroit.

e.  Van Den Heuvel represented to [GDRC] and SMS 6 that he would use the EB-5 investment funds solely to pursue the Green Box-Detroit project. As represented by Van Den Heuvel, the Green Box-Detroit project would purchase and operate a facility and the equipment necessary to sort waste streams, bale recovered paper, and produce gas to operate the facility and synthetic fuel to sell.

f.  Van Den Heuvel made materially false representations regarding the Green Box-Detroit project to SMS 6, knowing that it would be used to promote the project to potential EB-5 investors. These materially false representations included (i) that the funds would be used for the Green Box-Detroit project; (ii) that EARTH and Green Box-Detroit had agreements with Cargill, Inc. when, in truth, Cargill, Inc. had terminated the agreements; (iii) that the Michigan Economic Development Corporation (MEDC) had approved Green Box NA Michigan, LLC, an entity Van Den Heuvel had formed, for a tax-exempt bond offering even after MEDC notified Van Den Heuvel that it had discovered multiple liens, tax warrants, judgments, and civil lawsuits against Van Den Heuvel’s companies; and (iv) that Green Box-Detroit had acquired certain equipment that it had not acquired.

g.  Based upon Van Den Heuvel’s misrepresentations, approximately nine EB-5 investors from China invested approximately $4,475,000 in SMS 6 from September 2014 through August 2015. Pursuant to the Master Loan Agreement, SMS 6, in turn, wired those funds to Green Box-Detroit.

h.  Van Den Heuvel diverted large amounts of the EB-5 investments to purposes other than the Green Box-Detroit business plan. Van Den Heuvel never actually acquired the Green Box-Detroit facility nor located any equipment there, let alone began any operations there. To date, none of the EB-5 investors has obtained USCIS approval for their investments.

12.  As part of his scheme, Van Den Heuvel similarly induced other individuals and entities to invest and loan funds based upon the false pretense that their funds would be used to advance the Green Box business plan, when in reality, Van Den Heuvel used their funds for other purposes.

13.  As a result of his scheme, Van Den Heuvel fraudulently obtained more than $5 million from lenders and investors for a Green Box operation in De Pere, Wisconsin. As a further result of his scheme, Van Den Heuvel fraudulently obtained approximately $4,475,000 million from EB-5 investors for a Green Box operation in Michigan.

COUNTS 1 THROUGH 10
(Wire Fraud)

THE GRAND JURY FURTHER CHARGES:

14.  Paragraphs 1 through 13 of this Indictment are realleged and incoporation here as constitution the scheme to defraud and to obtain by means of materially false and fraudulent pretenses, representations, and promises, and the following is further alleged.

15.  On or about the dates listed below, in the State and Eastern District of Wisconsin,

RONALD H. VAN DEN HEUVEL,

for the purpose of executing and carrying out the above scheme and attempting to do so, caused wire communications and electronic fund transferes to be transmitted in interstate commerce, as follows.

[NOTE: The following is adapted from a Table with columns ‘Count,’ ‘Date,’ and ‘Description’]

Ct. 1.  Sept. 21, 2012:  $1,000,000 wire transfer by Cliffton Equities from Toronto, Canada, through JPMorgan Chase Bank in New York, New York, to U.S. Bank account no. -9590 in Manitowoc, Wisconsin.

Ct. 2.  Sept. 25, 2012:  Email from Van Den Heuvel (ron.vdh@tissuetechnology.net) to investor [Marco Araujo] (XX@hotmail.com) regarding repayments.

Ct. 3.  Sept. 28, 2012:  $1,000,000 wire transfer by Cliffton Equities from Toronto, Canada, through JPMorgan Chase Bank in New York, New York, to U.S. Bank account no. -9590 in Manitowoc, Wisconsin.

Ct. 4.  Oct. 31, 2012:  Email from Van Den Heuvel (ron.vdh@tissuetechnology.net) to investor [Marco Araujo] (XX@hotmail.com) regarding repayments.

Ct. 5.  Dec. 9, 2013:  Email from Van Den Heuvel (ron.vdh@tissuetechnology.net) to WEDC employee B.L (XX@wedc.org) submitting request for payment of training grant.

Ct. 6.  Mar. 17, 2017:  Email from employee P.R. [Phil Reinhart] (XX@greenboxna.com) to WEDC employee J.B. (XX@wedc.org) submitting request for payment of training grant.

Ct. 7.  Mar. 31, 2014:  Email from employee [Phil Reinhart] (XX@greenboxna.com) to WEDC Reporting (reporting@wedc.org) transmitting Schedule of Expenditures.

Ct. 8.  Aug. 29, 2014:  $99,980 wire transfer by investor Cliffton Equities through JPMorgan Chase bank in New York, New York, to Baylake Bank account no. -8881 in Sturgeon Bay, Wisconsin.

Ct. 9.  Nov. 21, 2014:  Email from employee [Phil Reinhart] (XX@greenboxna.com) to WEDC Reporting (reporting@wedc.org) transmitting Schedule of Expenditures.

Each in violations of Title 18, United States Code, Sections 1342, 1349, and 2.

[See also: April 8, 2015 Supplemental Examination of Philip J. Reinhart by Atty. Jonathan Smies (Godfrey & Kahn) before James P. O’Neil, Court Commissioner, w/ Atty. John Petitjean (Hinkfuss, Sickel, Petitjean & Wieting) serving as counsel for Mr. Reinhart (68 pages, missing pg. 5-8) and related Exhibits]

COUNTS 11 THROUGH 14
(Unlawful Financial Transactions)

16.  Paragraphs 1 through 15 of the Indictment are realleged and incorporated here as constituting the scheme to defraud and to obain money by means of materially false and fraudulent pretenses, representations, and promises, and the following is futher alleged.

17. On or about the listed dates, in the State and Eastern District of Wisconsin,

RONALD H. VAN DEN HEUVEL

did knowingly engage in the below-listed monetary transactions, in or affecting interstate or foreign commerce, in criminally derived property of a value greater than $10,000.

18.  Van Den Heuvel knew that each transaction  involved criminally derived property.

19.  The funds used in the below-listed monetary transactions were derived from the specified unlawful activity of wire fraud in violation of Title 18, United States Code, Section 1343, as previously desribed.

[NOTE: The following is adapted from a Table with columns ‘Count,’ ‘Date,’ and ‘Description’]

Ct. 11.   Sept. 24, 2012:  Withdrawl of $25,000 from U.S. Bank account no. –7932, by check paid to the order of “OSGB” as reimbursement for Green Bay Packers tickets.

Ct. 12. Sept. 28, 2012:  Withdrawl of $33,000 from U.S. Bank account –7999, deposited into U.S. Bank account no. –3065 for the benefit of Petrungaro Periodontics and Aesthetic Implantology LLC.

Ct. 13.  Oct. 1, 2012:  Withdrawl of $84,000 from U.S. Bank account no. –7999, by cashier’s check paid to the order of “Bergstrom [Cadillac].”

Ct. 14.  Oct. 10, 2012:  Withdrawl of $16,750 from U.S. Bank account no. –7999 by check paid to the order of “WIS” [Wisconsin International School].

Each in violation of Title 18, United States Code, Sections 1957 and 2.

[NOTE: “OSGB” in Count 11 would seem to be ‘Orthodontic Specialists of Green Bay’ / OSGB.com.

Edward Y. Lin, DDS, MS is a dentist at OSGB and was duped by Ron Van Den Heuvel’s Green Box fraud.

The Indictment’s paragraph numbering skips from 19 to 24, but the error seems to have occured due to the conversion of what had been numbered paragraphs into a separate Table.]

FORFEITURE NOTICE

24.  Upon conviction of one or more of the wire fraud offences, in violation of Title 18, United States Code, Section 1342 and 1349, set forth in Counts One through Ten of this Indictment, the defndant  shall forfeit to the United States of American, pursuant to Title 18, United States Code, Section 981(a)(1)(C) and Title 28, United States Code, Section 2461(c), any property, real or personal, which constitutes or is derived from protocols traceable to the wire fraud offense or offenses of convition. The property to be forfeited includes, but is not limited to, a sum of money equal to the proceeds derived from the wire fraud offense or offenses of conviction.

25.  If any of the property described above, as a result of any act or omission by a defendant: cannot be located upon the exercise of due diligence; has been transferred or sold to or deposited with, a third person; has been placed beyond the jurisdiction of the Court, has been substantially diminished in value; or has been commingled with other property which cannot be subdivided without difficulty, the United Staes of America shall be entitled to forfeiture of substitute property, pursuant to Title 21, United States Code, Section 853(p), as incorporation by Title 28, United States Code, Section 2461(c).

A TRUE BILL:
[SIGNATURE REDACTED]
FOREPERSON
Dated : 9-19-17

Gregory J. Haanstad
United States Attorney

    

      

 

  

See also:

 

 

report released in February by Congress’s U.S.-China Economic and Security Review Commission agreed, singling out EB-5 as especially vulnerable to fraud and laying the blame in part on USCIS [United States Citizenship & Immigration Services]. “Given that USCIS is tasked primarily with customs and immigration matters, it is questionable whether this federal agency has the capability to properly oversee the economic dimension of the EB-5 application process at the local level,” the report says.

This is what allowed Luca International Group, a California oil company, to fleece Chinese investors out of $8 million dollars, as the SEC charged this month. The investors thought their money was going toward oil rigs in Texas and Louisiana when in fact, the SEC charged, it was simply being used to prop up a huge Ponzi scheme and fund the lavish lifestyles of the company’s owners. Luca also paid former president George W. Bush $200,000 to speak at a conference designed to encourage Chinese investors to put their money in American oil.  …

By the time the SEC began to suspect that Luca was a pyramid scheme, the company had already obtained approval from USCIS to solicit funds and netted $8 million from Chinese investors. The company trumpeted this approval on one of its websites, calling itself “USCIS approved” and boasting that it “can get you a green card with a $500,000 investment.” 

To get USCIS approval for projects and so-called regional centers — corporate middlemen set up to facilitate the investments — companies have to submit detailed business plans and documentation attesting to the financial health of the businesses involved. Often, as in Luca’s case, both the regional centers and the projects themselves are set up by the same people. According to the SEC, Luca’s entire operation was a pyramid targeting Chinese and Chinese-American investors, which evidently went unnoticed by USCIS. …

Several people in the EB-5 industry interviewed by BuzzFeed News welcome [reform] proposals, but many are also skeptical that they will fully resolve the program’s structural flaws. Beyond USCIS’s competency, Gibson, the financial advisor, said that most EB-5 listings do not have to be publicly registered, meaning they receive less scrutiny from the SEC than other securities. “So the doorway is open to people who want to misrepresent the safety of their projects, and that invites fraud,” Gibson said. Neena Dutta, a New York immigration attorney specializing in EB-5, also said there is a common practice among lawyers of charging unethical “finder’s fees” from projects seeking investors while also representing the investors themselves. 

The result, according to industry insiders, is that the EB-5 program tends to attract people with less-than-honest intentions. As Dutta put it: “There are a lot of shady people in this world.”

  

  

Previously on Oneida Eye:

       

  



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