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Four Star Financial Services LLC of Los Angeles has been accused of operating an elaborate Ponzi scheme that defrauded between 500 and 800 investors of approximately $250 million. According to legal complaints, many investors were told that Four Star was a highly "safe" and secure telecommunications limited partnership that paid a steady and high rate of return. Court documents filed in the case allege the perpetrators of the Four Star fraud characterized the investment as "risk-free" with a guaranteed return of the investors' principal.

Certain investors lost as much as $10 million dollars. Others have lost their retirement savings, their inheritances and their children's college funds.

In 2003, Four Star was placed in involuntary bankruptcy. A U.S. Trustee was appointed, and on March 17, 2004 the case was converted to a Chapter 7.

Four Star has triggered investigations by the FBI, the IRS, the SEC, and the Los Angeles Office of the United States Attorney.

Many civil lawsuits have been filed, including a class action spearheaded by the law firm of Boies, Schiller & Flexner. Defendants include the three Four Star principals, Mark Cohn, Ronald Anson and Jack Garrett. Cohn, formerly a San Francisco Bay Area attorney, is a convicted felon who is currently serving a federal prison sentence for telemarketing fraud. Four Star was also convicted in the telemarketing case.

According to court documents, defendants Anson and Garrett operated Four Star out of their Los Angeles accounting firm's offices (Anson & Garrett Accounting). Court records show many of Anson and Garrett's accounting clients were Four Star investors, including a number of prominent entertainment attorneys. The majority of the investors live in California, with a large concentration on the Westside of Los Angeles.

The Boies, Schiller & Flexner class action and other legal complaints have alleged the Ponzi scheme was aided by a number of business associates and partners of the Four Star executives, including Gail Cato, a convicted felon who resides in Georgia, and Robert Lipp of Georgina Asset Management, a Securities & Exchange Commission registered investment advisory firm.

According to court documents, Four Star operated its alleged Ponzi, in part, by using the trust accounts of attorneys around the country to funnel investor funds.

Legal complaints allege that the Ponzi included a highly sophisticated scam described as the "Argentina arbitrage transaction" which defrauded investors of more than $40 million. The South American "deal" purportedly involved the sale of long distance telephone arbitrage contracts in Argentina in exchange for CDs issued by an Argentinean bank.

Four Star began in 1991 as 900 Capital Services, a limited partnership with investments in phone sex enterprises. Later in 1996 when 900 Capital became Four Star, there were ventures into internet pornography, telemarketing and "accounts receivable" factoring. Many investors were unaware of these holdings and believed that Four Star was exclusively a telecommunications fund.

Court records show that Four Star executives partnered with a number of convicted fraudsters in business ventures. In 2000, a federal judge determined that 900 Capital/Four Star helped convicted swindler David Namer perpetrate an investment fraud involving the sale of bogus corporate securities to unsuspecting investors. In 2003, Four Star and Mark Cohn were found guilty of telemarketing fraud in a scheme with Joel Katz, a convicted felon.

The Boies class action complaint alleges that both 900 Capital and Four Star had questionable investments from their inception and that Four Star was a Ponzi scheme and was never a legitimate and profitable company.