Bellevue man charged in $65M pyramid scheme

A Bellevue businessman who allegedly ran a $65 million pyramid scheme involving investments in Southeast Asian oil development has been ordered held in federal custody by a U.S. magistrate judge after his arrest Thursday morning.

Prosecutors allege Robert Miracle, 48, and two Malaysian men used money they took from some investors to pay others, all the while claiming they were helping develop vast tracks of oil-rich land overseas.

The 23-count indictment unsealed Thursday alleges they lied to investors, created fake financial statements and ginned-up false news releases to boast of success, when in fact Miracle and his alleged co-conspirators were living a "lavish lifestyle" and using investor funds in risky oil and gas development projects.

Miracle was arrested at his Eastside home Thursday morning. He appeared in a gray T-shirt beside his court-appointed lawyer later in the day to hear that he faces a 23-count indictment that could land him in federal prison for decades. He's charged with conspiracy, mail fraud, wire fraud, money-laundering and tax evasion. Nineteen of the charges carry 20-year prison sentences and fines of $500,000 each.

Miracle did not enter a plea to the charges. Arraignment is set for Monday, when U.S. Magistrate Judge James Donohue ordered him to appear for a detention hearing.

Two other men, both from Malaysia — Mukhtar Kechik and Fahimi Fisal — are also charged. Both are fugitives, and warrants have been issued for their arrests, according to Assistant U.S. Attorney Andrew Friedman.

Friedman said the case is one of the largest federal fraud prosecutions in the state's history, alongside the $91 million Znetix scheme and the $78 million offshore investment-club fraud run by John Wayne Zidar. Znetix founder Kevin Lawrence went to prison for 20 years. Zidar received a 30-year term.

The indictment alleges that Miracle operated a number of companies involved in oil development in Malaysia and Indonesia. The companies included Laramie Petroleum, whose offices were the target of a search warrant executed by criminal investigators from the Internal Revenue Service and the FBI in 2007.

The affidavit for that warrant says Miracle was convicted of felony theft in Oregon in 1994, for stealing textbooks at Umpqua Community College in Winchester, Ore. It also states that Miracle has, over the years, represented himself as having worked for the Disney Co. and for NASA, neither of which the government says is true.

Court documents say the state Department of Financial Services opened an investigation into MCube, one of Miracle's oil development companies, in 2006. The following year, the state ordered that the companies "cease and desist" from violating state securities laws. They were issued fines and penalties amounting to nearly $200,000.

The charges allege Miracle and others represented to investors that they were making money from oil fields in Malaysia and Indonesia, when in fact they were using money from one investor to pay another.

Agents seized Miracle's computers in the 2007 search and retrieved e-mails prosecutors say showed that he and the others went to great lengths to hide from employees of the various companies that the oil fields in Malaysia were dry. The indictment alleges they forged financial and production statements.

The charges allege that, of the $65 million reported taken in, about $36 million was paid back out to investors to maintain an appearance that the companies were successful.

Prosecutors allege Miracle took the remainder, more than $28 million, and used it to invest in failed oil and gas developments and to support a lifestyle that included the purchase of a $38,000 two-carat diamond ring, a $27,000 painting and a $77,000 weeklong cruise for 10 members of his family.

Mike Carter: 206-464-3706 or mcarter@seattletimes.com