Fbi Arrests Local Man On Federal Charges

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Bernadine Gilles was just about to fix breakfast the morning of May 10, when she noticed a caravan of cars heading up West Chatham Drive in front of her house.


By the time the caravan cleared, the occupants had seized the contents of John Wayne Zidar's Payson West home.


Zidar is one of three defendants in a federal case involving more than $40 million that the FBI thinks was bilked from investors in an alleged international scam. Charges were filed against Zidar and his partners, John Matthews of Chandler and Elizabeth Phillips of Seattle, by the Securities and Exchange Commission.


"The front of our house is all windows," Gilles said, "and shortly after the cars showed up, we saw men sneaking around our house."


Zidar's next door neighbor said she poked her head out of her patio door to see what was happening, and an FBI agent told her to go back inside.


"They were hollering (at Zidar's house) and had their guns drawn," she said. "I couldn't quite catch what they were yelling, but it must have been something like 'Come out with your hands up.'"


The SEC in its case alleges that Zidar and his partners were operating a "Ponzi scheme" --an investment scam in which returns are paid to earlier investors out of money paid into the scheme by newer investors.


The SEC contends that through Zidar's World Community Educational Society, he and his partners obtained millions of dollars in investments from their society members. In exchange, members are promised annual returns of up to 120 percent.


The World Community Educational Society also provides for its members online classes on alternative investment methods, estate planning, asset protection and tax laws.


Harold Malkin, Assistant U.S. Attorney in Seattle, said Friday that Zidar and Matthews have agreed to a preliminary injunction, prohibiting their firm from taking any more investments until the SEC case is settled.


Meanwhile, Zidar's Web site posts a response to the Wednesday Payson raid, claiming abuse at the hands of federal authorities.


"Who are these enemies of the State? Were these hardened criminals, drug dealers, or members of some Mafia we have not heard of?" the statement reads. "Hardly. These two, who are such an apparent threat to our government that they were drawn down at gunpoint, are teachers."

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