A bail hearing was set for Tuesday for a high profile, Philadelphia-based hip hop promoter who is facing federal charges of operating a fraudulent $4 million investment scheme.
Tyrone L. Gilliams, who says he’s also a commodities broker and online minister, was arrested Wednesday, accused of operating a fraudulent U.S. Treasury Strips investment program, according to the charges filed in U.S. District Court for the Southern District of New York.
According to court documents, Gilliams is accused of soliciting $4 million “from an investor for the purpose of trading in the Strips,” but “misappropriated more than $2 million of the funds, including $1.3 million to sponsor a black-tie gala called the ‘Joy to the World Festival’ at the Ritz-Carlton Hotel on December 18, 2010.”
Sean “Diddy” Combs and Jamie Foxx were among the notable celebrities Gilliams persuaded or hired to appear at the event. Rep. Chaka Fattah (D-PA 02) and State Senator Anthony Williams also were among other influential elected officials. Tickets ranged from $250 to $1,200.
Gilliams sold the event as a vehicle to offer “food, health services, education and information to children and families across Greater Philadelphia that are facing hardship during this holiday season.”
Gilliams said the event would “include a celebrity bowling night, a day of free kids’ activities, a feeding initiative to reach 5,000 in need and an ‘inspirational concert.'”
To date, there has been no public accounting of how the funds were disbursed.
Gilliams is accused of using the money for trips to the Bahamas, lavish club-hopping, shopping sprees at Saks Fifth Avenue stores and a New Jersey Mercedes Benz dealership. Gilliams hosted another “Joy to the World” Festival in the Bahamas as well.
David Parlin, an Ohio businessman who gave the seed money to the promoter, said Gilliams promised that his investment would yield a weekly return of five percent.
According to a Reuters story about the case, such a return on that investment “would make even (convicted scam artist) Bernard Madoff, the Ponzi King, blush.” Ten-year U.S. Treasuries yield only 3.2 percent.
Parlin, in a lawsuit to recover the funds, alleged that Gilliams transferred $450,000 of the $4 million to a bank account held in the name of Fieldstone Value Partners Fund. In the suit, Parlin said the transfer “appears to have been part of a Ponzi scheme orchestrated by Gilliams.”
United States Attorney Preet Bharara said another $400,000 from the $4 million was used “to refund a deposit from a prior investor” and more than $200,000 went to a real estate title company. Gilliams also allegedly wired $1.6 million to an account in Ghana.
Warren Hamilton, Gilliams’ attorney, told BlackAmericaWeb.com that he didn’t “think they (prosecutors and the FBI), can prove it, that he did what they say he did, I don’t think so.”
Hamilton scoffed at the charges and said, “Tyrone never even met the victim of this supposed Ponzi scheme.”
Yet Hamilton, when pressed for evidence that would absolve Gilliams, said, “I’m not privy to details, I just got involved with the case last week and don’t know if I’m at liberty to say anything specific. I don’t know anything about any $1.6 million.”
Gilliams, according to news reports, owns TL Gilliams LLC Trading, with an address in a small office in center city Philadelphia.
