United States Attorney
Northern District of Texas

1100 Commerce St., 3rd Fl.
Dallas, Texas 75242-1699

Telephone (214) 659-8600
Fax (214) 767-0978

PONZI SCHEME OPERATOR REMANDED TO FEDERAL CUSTODY
AFTER VIOLATING TERMS OF PRETRIAL RELEASE

James Ray Phipps Ran “Life Without Debt” Ponzi Scheme
from Colleyville, Texas

United States Richard B. Roper announced today that the pre-trial release of defendant James Ray Phipps was revoked by United States Magistrate Judge Irma Ramirez. Judge Ramirez ordered Phipps taken into custody until his April 16, 2006, trial date when he will go on trial in U.S. District Court in Dallas on mail fraud, wire fraud, money laundering and income tax offenses. If convicted, Phipps faces a maximum statutory sentence of hundreds of years imprisonment, millions of dollars in fines and restitution to the victims of his crimes

Phipps ran a pyramid scheme known as “Life Without Debt,” from June 1996 through June 2006, according to the indictment. Phipps ran Life Without Debt from Colleyville, Texas, until approximately August 2001 when he moved to Alabama and continued to operate. In an order dated July 19, 2006, Judge Ramirez allowed Phipps to be released prior to trial. As conditions of his release, he was placed under house arrest at his mother’s residence in Arlington, Texas, and also placed under electronic monitoring. He was also ordered to not engage directly or indirectly, in any activity which is the subject of the pending indictment, including but not limited to, “Life Without Debt,” network marketing of educational or debt materials, collection of funds, or any similar related activities.

 Even after Phipps was indicted in April 2006, Life Without Debt continued to hold weekly conference calls to recruit new members and keep existing members informed about the plan. While monitoring these calls, it was discovered on September 26, 2006, that Phipps had designed a “new” plan for the members to use until the charges against him were settled. Members were invited to email Phipps requesting the instruction book. They were also asked to send Phipps $10 for the plan. The title of the publication was “The Easy Wealth Book.” It advised participants that they could “compound” $110.00 into over $200,000 “without a lot of work” by following Phipps’ instructions.

In defiance of the Court’s order’s, Phipps, on October 3, 2006, and October 10, 2006, participated in two Life Without Debt conference calls, in which he discussed the new plan (and once again solicited funds for the publication) and his dislike for the “moron jack booted thugs in government” who had charged him with these offenses. The email address used by Phipps was “phippsforgov@sbc.global.net.” Prior to his indictment and arrest this past April, Phipps had been running for governor of Alabama as an independent candidate. In another publication that was sent along with “The Easy Wealth Book,” Phipps stated he believed that powerful forces in Alabama had caused his indictment and incarceration in order to keep him name off the ballot.
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An indictment is an accusation by a federal grand jury and a defendant is entitled to the presumption of innocence unless proven guilty.

The case is being investigated by the Internal Revenue Service - Criminal Investigations, the U.S. Postal Inspection Service and the Department of Justice (DOJ) Tax Division and is being prosecuted by Assistant United States Attorney William McMurrey and Robert A. Kemins, Trial Attorney with DOJ Tax Division.

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