A federal magistrate has denied bail to a New Zealand man who was arrested for allegedly operating a phony hedge fund by FBI agents acting with the help of a former stock swindler-turned-evangelical minister.
Derek Turner, the New Zealand man who lives in the Bahamas and has an office in Melville, was ordered permanently detained yesterday pending trial on fraud charges by U.S. Magistrate James Orenstein at the federal court in Central Islip.
Turner’s attorney, Joseph Conway, had argued that Turner could be released on conditions that: he post $3.7 million bail, backed by three properties he owns in the Bahamas; agree to waive extradition rights if he was caught after fleeing overseas, and live with a step-daughter in Seattle pending trial.
But Orenstein agreed with Assistant U.S. Attorney Lawrence Ferazani, who said Turner was too great a flight risk. Ferazani had said that the properties might have been bought with money from Turner’s illegal activities and subject to sale for forfeiture or restitution to victims, if he were convicted, and that even if Turner were caught in another country, it might take a lengthy legal process to return him to Long Island even with the waiver.
Turner was arrested last week through the undercover work of Barry Minkow, a convicted stock swindler who, since getting out of prison 10 years ago, has made a career of both leading an evangelical church in San Diego and working undercover to expose stock fraud.
Although Turner was originally charged last Monday with duping two victims out of a total of more than a $1 million, Ferazani said FBI agents have discovered that the amount allegedly swindled from victims might actually be closer to $5 million.
Turner, who was accused of collecting money by claiming his hedge fund earned 40 percent per year, has pleaded not guilty. If convicted, Turner faces 63 to 78 months in prison under federal sentencing guidelines, Ferazani said.
Before he moved to the Bahamas, Turner had a controversial career in Australia and New Zealand, according to press accounts and his attorney Conway.
Turner made a splash in Australia in 1998 when he made an unsuccessful bid for BHP, the country’s then-troubled oil, gas and metal giant, from his financial base, a chain of Sydney coffee shops and a bakery.
Four years before that in Australia, his company Foodcorp, which supposedly had a technology to purify seawater, was accused of of failure to pay taxes and eventually closed.
In November 2000 the Australian equivalent of the Securities and Exchange Commission got a court order barring Turner from any future dealings in securities for selling stock without a license.
When asked in 1998 how he had the audacity to try to takeover BHP, Turner told an Australian newspaper, “I’ve come from basically the … [bottom end] of the world, New Zealand … there’s only one way for me to go, that’s up, vertically.”
BY ROBERT E. KESSLER, Newsday Staff Writer
