WASHINGTON -- With the tax deadline less than a week away, a tax-free haven in the Caribbean may sound alluring. But would you believe a country called New Utopia, built on concrete platforms on an underwater land mass?
Unfortunately, investors fell for it on the Internet and sank money into a phony $350 million bond offering, federal securities regulators say.And a federal judge in Tulsa, Okla., on Friday granted the Securities and Exchange Commission's request for an emergency restraining order against Lazarus R. Long, who calls himself Prince Lazarus, and his New Utopia company.
The order by Judge Michael Burrage freezes all money raised by Long through the alleged fraudulent scheme, estimated at around $100,000. Burrage scheduled a hearing for Tuesday.
Long called the SEC's case a "witch-hunt" but said he has complied with the commission's request to stop selling the bonds and will return the investors' money. He said he wants people to be able to continue donating money to the New Utopia government.
"They are trying to make a big-name case of this because we've had so much publicity. We haven't done anything wrong," he told the Tulsa World.
SEC officials, however, viewed Long's venture as the latest twist in what they said is a growing list of fraudulent investment schemes using the Internet -- including share offerings in eel farms, coconut plantations, movie ventures and exploration of a near-Earth asteroid.
"People are making investment decisions based on what they read on a Web site -- and that is insane," Harold Degenhardt, the SEC's district administrator in Fort Worth, Texas, said in a telephone interview.
According to New Utopia's Web site, which is more than 100 pages long, the new tax-free country will rise from the Caribbean about 115 miles west of the Cayman Islands. Long pitched New Utopia government five-year bonds at 9.5 percent, inviting investors to become charter citizens of the island nation. He also claimed that currency investments in New Utopia would yield a return of as much as 200 percent, according to the SEC.
The Web site received more than 100,000 visits, the SEC said.
Degenhardt said Long, as prince of the new country, put his face on pictures of its currency. He said Long, whose given name is Howard Turney, has lived in Houston and Tulsa.