Kathy Bazoian Phelps
Senior Counsel in Ponzi Scheme Litigation
and Bankruptcy Matters

Kathy is a senior business trial attorney with more than 28 years experience prosecuting and defending claims for high net worth clients involved in Ponzi scheme matters and in bankruptcy proceedings. Kathy’s practice includes recovering assets for clients in complex fraud cases under standard fee and alternative fee arrangements. Kathy also serves as a mediator in bankruptcy matters, in complex business disputes, and in matters requiring detailed knowledge about fraud or Ponzi schemes.

Kathy’s Clients in Ponzi Scheme Cases and Bankruptcy Matters
Equity Receivers
Bankruptcy Trustees
High Net Worth Investors
Debtors in Bankruptcy
Secured and Unsecured Creditors

Saturday, October 31, 2020

October 2020 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for October 2020. The reported stories reflect at least 9 new Ponzi schemes worldwide, 6 guilty pleas, 202 years of prison sentences, and an average age of approximately 51 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed.   

Steven F. Brown, 52, an accountant in California, agreed to plead guilty to charges that he ran a $3.3 million Ponzi scheme that promised investors returns from foreign exchange currency. Brown ran the scheme through Alpha Trade Analytics Inc. and promised investors monthly returns of around 10%.

Christopher W. Burns, 37, and his company Matson Money, Inc., were sued in a class-action suit alleging that he defrauded 100 investors in a Ponzi scheme. 

Jason T. Castenir was sentenced to 53 months in prison for his role in a $2.4 million Ponzi scheme run through Maverick Asset Management LLC. Castenir ran the scheme with Rodney Scott Phelps, who was found guilty last year and sentenced to 108 months in prison. 

Garrison Courtney was sentenced to 7 years on prison in connection with a Ponzi scheme in which he posed as a covert CIA operative. His false identity defrauded investors to pay for either a special operations forces program operating covertly in Africa or a separate program aimed at enhancing the United States’ intelligence collection abilities.

Edison Denizard, 40, pleaded guilty to a $7 million investment fraud that mispresented that investors were investing in specific music concerts through companies owned by Denizard and Andres Fernandez. The companies, Kadaae, LLC and Kadaae Entertainment Corp. raised $20.7 million from at least 56 investors. Denizard and his company, Ahead of the Game, LLC, raised approximately $10.4 million from at least 78 investors through an unregistered offering of securities. 

Thomas J. Gity was sued by the SEC for allegedly operating a $6.8 million cryptocurrency Ponzi scheme. Gity was previously convicted for operating fraudulent fund-raising campaigns with his son. Gity set up a digital asset trading firm even though he had no industry experience and raised funds from at least 18 investors. Only $970,000 of the $68 million raised was used in trading accounts. Gity provided investors fake account statements that misrepresented that he managed as much as $100 million in assets and generated returns greater than 46% in a week.

Suzette Hart, 54, of New Jersey, was charged with running an alleged Ponzi scheme that defrauded investors out of $300,000. Hart is a high school teacher who defrauded friends and co-workers. She had promised returns to investors in “high-yield, well-known” investment opportunities, knowing the investments were fraudulent.

Benny Judah, 61, was denied his request to reduce his 25-year prison sentence. 

Rand Heckler, 55, was charged in connection with an alleged Ponzi scheme that he ran through a hedge fund of stocks and securities that he managed. Heckler allegedly defrauded at least 4 friends out of about $1 million through his corporation, Rand Heckler, Inc. Heckler pleaded not guilty.

Marc Lawrence, 66, of New York, pleaded guilty charges that he was operating as a Ponzi-like scheme through a venture capital firm called Downing. Lawrence’s co-defendant, David Wagner, pleaded guilty in September. The two defrauded employee-investors of their purported venture capital firm out of $8 million. After some employees filed lawsuits, Lawrence recruited investors in a new company called Cliniflow Technologies, LLC.

Gary Pryor, of Arizona, and his companies, ZipRemit, Inc. and Lendaily Inc., were charged by the SEC and accused of running an alleged $2.9 million Ponzi scheme. Pryor claimed to offer merchant branded consumer credit at the point of sale and misrepresented that he had developed proprietary software. Pryor diverted $1.4 million of the investor funds for his personal use.

Keith Raniere was sentenced to 120 years in prison in connection with a Ponzi scheme that he ran through NXIVM. Raniere was convicted in 2019 on conspiracy and sex trafficking charges and the self-help organization he created was exposed as a Ponzi scheme. 

Paul Rinfret, 71, pleaded guilty to charges in connection with his role in a $19 million Ponzi scheme run through Plandome Partners L.P. Rinfret failed to invest investors’ funds as promised but instead diverted the majority of investor funds to his personal use or to make Ponzi-like payments to investors. He falsely represented that he would use investment funds to trade future contracts tied to the S&P 500 index using a purportedly proprietary trading algorithm and took a fee of 25%. Rinfret was sentenced to more 63 months in prison for participating in the scheme.

Ken Rossman and Phil Wasserman were charged in connection with an alleged Ponzi scheme that defrauded investors out of at least $6.3 million. The two have pleaded not guilty.

Alexander S. Rowland, 29, of Pennsylvania, was accused of running a $2 million scam through his firm, Roaring Investments LLC. An estimated 122 victims were defrauded through promises of a minimum return of 25% on investments in stock and cryptocurrencies.

David Smith was released from prison in Turks and Caicos where he served 6½ years of his 10- year prison sentence. However, the U.S. is trying to have him extradited to the U.S. to serve a 20-year prison imposed in the U.S. Shortly after his release for good behavior, he was arrested and taken into custody to face extradition to the U.S. in connection with a $220 million scheme that was first launched in Jamaica. 

Paul Horton Smith Sr., 56, of California, and his companies, Northstar Communications LLC, Planning Services Inc., and eGate LLC were ordered to pay $8.9 million in connection with a Ponzi scheme. Smith, a financial planner, duped mostly senior citizens into investing in fake securities and defrauded at least 35 investors.

Leo Vaccarelli, 43, was sentenced to 7½ years in prison following his conviction in connection with a Ponzi scheme that defrauded investors out of more than $1 million. 

Giuseppe Valentino, 52, was captured while he was on federal probation on charges that he defrauded investors through his company Rhineau LLC. Valentino alleged defrauded investors out of $500,000 by representing that he had developed a proprietary algorithm for the execution of binary options. 

Lewis Wallach, 64, of California, was charged in connection with an alleged $330 million Ponzi scheme run through Professional Financial Investors Inc. and its associated fund, Professional Investors Security Fund Inc. PFI owns about 70 properties and Wallach helped manage the firm with the late Kenneth Casey. Wallach allegedly misappropriated more than $26 million from 1,300 investors for his own benefit and knew that the revenue from the properties was insufficient to pay investors. Wallach is expected to plead guilty to criminal charges and has already plead in response to SEC civil charges. 

Howard L. Young, 75, of Nashville, was charged in an alleged Ponzi scheme that defrauded investors out of $700,000. Young founded Integrative Medical Services, purportedly a holistic wellness business. He solicited cancer patients, investors and employees and claimed he had been awarded a grant to study cancer.

Craig Zabala, 68, the CEO of Concorde Group Holdings Inc., pleaded guilty to charges that he defrauded 17 investors out of at least $4.38 million. Zabala misrepresented that Concorde was a merchant banking firm that was investing in and buying other financial service companies. Zabala also ran the scheme through the following other financial service companies: Concorde Group, Inc., Blackhawk Capital Group BDC, Inc., DBL Holdings, LLC, d/b/a Drexel Burnham Lambert, Concorde Investment Managers, LLC, and Concorde Europe, Ltd.

INTERNATIONAL PONZI SCHEME NEWS 

Australia

Matthew Alan Beresford was arrested, and the websites and bank accounts of Maxwell Financial Services and Asset Capital Holdings were frozen by authorities.

Harpreet Singh Sahni, 45, confessed to running a $50 million cryptocurrency scheme. Sahni claimed his program promoting the Plus Gold Union Coin was “the safest investment on Earth right now.”

Canada

Jason Gaurana, 37, was arrested and charged in connection with an alleged multi-million Ponzi scheme known as Project Cosmo that targeted the Filipino community in Toronto. Authorities are also looking into Infy Trading Inc., D-Con Design and Construct Solutions Inc. and the church, The Vessels of Hope International Community Church, as allegedly being involved in the scheme.  The scheme alleged defrauded investors out of more than $3.5 million. Glenda Estevez, 45, and Teddy Lee Estevs, 44, have previously been charged in connection with the scheme.

China

Gao Yudong, Li Qibing, Wang Xiaoying, and Tian Bo were sentenced in connection with a $1 billion Ponzi scheme run through WoToken. The scheme is believed to have defrauded over 715,000 investors. 

England

Joseph Lewis was sentenced to over 5 years in prison for his role in a $26.7 million fraudulent scheme. Lewis solicited clients into a foreign exchange trading scheme that he ran through Joe Lewis Trading.

Stephen Allen was criminally charged in connection with an alleged scheme run by Renwick Haddow through Bar Works. The scheme had 800 victims who invested more than $50 million in the scheme. Allen is accused of conspiring with Haddow to prevent an Haddow’s interest in a London property from being available as an asset to satisfy an order.

India

Authorities convicted 8 people and sentenced them to life imprisonment in connection with the Pincon Group Ponzi scheme. Manoranjan Roy is the head of the scheme and is currently hospitalized with health issues. His wife, Mousumi Roy, has absconded. 

Nishad K., 36, was arrested in connection with a three-pronged cryptocurrency Ponzi scheme. The alleged scheme was run through Long Reach Global, Long Reach Technologies, and Morris Trading Solutions. Nishad offered “Morris Coins” and promised returns of about $3.70 per day, or about 1.85% of the minimum investment. The scheme also offered a 10% to 40% commission to investors for bringing in new investors. 

Sachin Bhati, 35, Pawan Bhati, 33, and Ganga Nagar, 50, were arrested in connection with the Bike Bot Ponzi scheme. The arrest brings the total to 14 for people arrested in connection with the app-based motorcycle taxi company. Pawin and Sachin were directors of Garvit Innovative Promoters Limited which first floated the Bike Bot scheme. 

Anugrah Stock and Broking Pvt was accused of running a Ponzi scheme that defrauded about 40,000 investors. Investors were promised returns up to 20% from stock trading.

Nigeria

Umanah Umanah, 62, was arraigned on charges that he defrauded investors through his company, No Burn Global Limited, through false promises of returns of 50% weekly. Umanah pleaded not guilty.

Philippines

The SEC ordered Forsage and Forsage Philippines to stop soliciting investments through a crowdfunding platform based on Ethereum blockchain technology. The order also covers Forsage’s operators, agents, and sales people, including Rich Alex Apuntar, Vhellpoe Forlares Garves, Yuka   Kuroyanagi, Christopher Doroliat, Iam Kim, Jairra Fab Teoxon, Mark Nicole Escabarte Valeria, Myra Cris Sapar, Romnick MelaƱez, and Vel Cabalza.

John Garcia was arrested on charges that he masterminded a Ponzi scheme through Rigen Marketing that took in P8 billion from victims. Rigen offered 400% returns on investors. Paul Auditor was arrested last year in connection with the scheme.

South Africa

Authorities raided the homes of two principal members, Clynton and Cheri Marks, of Mirror Trading International, an alleged bitcoin Ponzi scheme. 

Spain

Santiago Fuentes, the founder and CEO of Arbicorp, was arrested on charges that he was operating a Ponzi scheme through Arbicorp that developed Abistar 2.0, a bitcoin trading platform. Authorities began investing allegations that about $1 billion of investor funds were missing. The firm froze all accounts last month, citing a trading bot malfunction that caused the system to pay excess profits. Fuentes has denied the claims. About 32,000 investors were allegedly defrauded.

Wednesday, September 30, 2020

September 2020 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for September 2020. The reported stories reflect at least 11 new Ponzi schemes worldwide, 4 guilty pleas, 31 years of prison sentences, and an average age of approximately 59 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed.   

Joseph Frank Abel, 50, of California, pleaded guilty to charges in connection with a cryptocurrency mining fraud that involved at least $722 million. Abel admitted that he sold unregistered securities for BitClub Network. Matthew Brent Goettsche, Russ Albert Medlin, Jobadiah Sinclair Weeks were also charged in connection with the scheme. 

Jose Angel Aman, 51, of Florida was charged with operating a Ponzi scheme that brought in over $25 million through Natural Diamonds Investment Co. and Eagle Financial Diamond Group. Aman claimed to be developing a diamond-backed token and promised investors their fund would be used to purchase diamonds that Aman would clean, cut, and resell for profit. Aman started a new business that he ran through Argyle Coin, LLC, which planned to develop a crypto token backed by diamonds. 

Syed Arham Arbab, 23, was sentenced to 5 years in prison and ordered to pay about $500,000 in restitution in connection with a Ponzi scheme that he ran from his fraternity house while a student at the University of Georgia. Arbab defrauded more than 100 people out of about $1 million. Arbab previously pleaded guilty to running the scheme through his companies, Artis Proficio Capital Management and Artis Proficio Capital Investments.

Steven Fitzgerald Brown, 52, or California, was charged by the SEC with operating a Ponzi-like scheme through Alpha Trade Analytics Inc. The scheme raised approximately $7.5 million from more than 75 investors claiming that the fund would invest in the financial markets in foreign exchange, but the SEC alleges that less than 3% of the funds were invested. Investors were promised safe and risk-free investments and were promised returns of 8% to 12%. Brown agreed to plead guilty.

Natalie Cochran pleaded guilty to charges related to an investment fraud she ran with her late husband, Michael Cochran. The scheme was run through Tactical Solutions Group and Technology Management Systems, which were government contractors. Cochran filed bankruptcy following the fraud charges. 

Milton J. Dosal, Jr. of Colorado settled charges brought by the SEC that he ran an alleged Ponzi scheme that targeted U.S. military service members. The scheme raised $100,000 from about 41 investors and promised the investors weekly returns of 10%. Dosal did not admit or deny the allegations. 

Raymond Erker, Kevin Krantz, and Tara Brunst, of Ohio, were indicted in connection with an investment scheme that brought in more than $9.3 million from 54 investors. Investors were told that their funds would be used to buy annuities and secured notes but instead the money was either misappropriated or placed in high-risk start up companies. 

Zvi Feiner, 50, and Erez Bayer, 50, of Chicago were arrested in connection with an alleged scheme that involved a nursing residence chain through FNR Healthcare LLC. Feiner is a rabi who owned the chain with Bayer. The scheme defrauded 75 members of the Orthodox Jewish community out of more than $22 million. The SEC had filed an action against Feiner and Bayer last year.

Scott Allen Fries, of Ohio, was charged by the SEC with defrauding clients in an alleged Ponzi-like scheme. Fries recommended that his brokerage clients invest with him outside of his brokerage firm.

Golden Genesis Inc. was ordered to cease and desist by the Missouri Secretary of State. The company sold more than $9 million in unregistered, non-exempt securities in the form of promissory notes through a Las Vegas-based unregistered broker-dealer, Retire Happy LLC. The scheme defrauded more than 240 investors. Thomas Casey, Dennis Di Ricco, Cynthia Wade, were ordered to show cause why they should not be ordered to pay restitution plus interest, civil penalties and investigation costs totaling more than $1 million.

Denni M. Jali, Arley Ray Johnson and John Erasmus Frimpong, of Maryland, were indicted for running what is alleged to be a $28 million Ponzi scheme. They are accused of passing themselves off as pastors to defraud churchgoers and others through their investment scheme involving cryptocurrency and foreign-exchange trading that promised 35% returns. They ran the scheme through their company, The Smart Partners, LLC aka 1st Million, which they ran as a wealth management and financial literacy firm. They defrauded approximately 1,200 investors. The SEC and the CFTC have also filed complaints against them.

Donnie Laing, Jr., 40, was sentenced to 3 years in prison in connection with a $1 million Ponzi scheme run through Capital Energy Investments LLC. Investors were led to believe that their funds were invested in oil and gas equipment that would be leased to companies engaged in oil and gas exploration.

Andrew Dale Ledbetter, 78, was charged in connection with the 1 Global Capital LLC alleged scheme. The SEC alleged that Ledbetter, a Florida attorney, raised more than $100 million from investors in connection with the scheme.

Jose Anibal Linares, 42, of Texas, pleaded guilty to charges relating to a Ponzi scheme run through JC Loans Finance and Inversiones JC Dallas. The scheme promised monthly returns based on investments in commercial and residential real estate, including a water resort and shopping centers in Honduras.

Paul A. Rinfret, of New York, was sentenced to 63 months in prison in connection with a $19 million Ponzi scheme he ran through Plandome Partners LLC. Investors were promised returns from the supposed trading of futures contracts, but only a small amount of their money was actually invested. Rinfret had pleaded guilty to the scheme last year and was ordered to pay back $12.3 million to the six victims.

Pablo Rodriguez, Gutemberg Dos Santos, Scott Hughes, Cecilia Milan, and Jackie Aguilar were charged in connection with an alleged Ponzi scheme run through AirBit Club. The scheme is allegedly a multilevel marketing club involving cryptocurrency. 

Denise Gunderson Rust, 61, was sentenced to 18 months in prison in connection with her husband’s Ponzi scheme run through Rust Rare Coin. Rust claims that she did not know that her husband, Gaylen Rust, was running a scheme, but she did not tell anyone when she learned that her husband was not doing what he told investors he was doing. Criminal cases against Gaylen Rust and their son, Joshua Rust, are pending. 

Mark Scott was the subject of a forfeiture action brought by the Department of justice seeking to confiscate about $400 million to Scott. Scott was the attorney who helped accused OneCoin launder hundreds of millions of dollars.

Steven M. Sexton and his firm, Sexton Advisory Group Inc., settled charges brought by the SEC that they were acting as unregistered brokers when raising $4.6 million as part of the Woodbridge Group of Companies LLC Ponzi scheme.

Avinash Singh was charged by the CFTC in connection with the commodity pool known as Highrise Advantage LLC. Daniel Cologero and Randy Rosseau were also charged with fraudulently soliciting investors into the scheme through commodity pools, Green Knight Investments LLC, Bull Run Advantage, LLC, and King Royalty, LLC. The complaint also charges Suruipaul Sahdeo and SR&B Enterprises with unlawfully soliciting funds to Highrise. The scheme brought in $4.75 million.

TMTE, Inc., d/b/a Metals.com, Chase Metals, LLC, Chase Metals, Inc., Barrick Capital, Inc. and its principals, Lucas Asher a/k/a Lucas Thomas Erb a/k/a Luke Asher, and Simon Batashvili were charged by the CFTC in collaboration with 30 state securities regulators with running a nationwide fraud that brought in $185 million. Tower Equity LLC is also charged as a relief defendant. All are located in California. The scheme targeted elderly victims and defrauded 1,600 investors. The defendants allegedly defrauded customers into purchasing precious metals bullion at grossly inflated prices. The overcharges averaged from 100% to more than 300% over the prevailing market price.

David Wagner, 55, the head of Downing Partners LLC, pleaded guilty to charges that he ran a Ponzi-like scheme. He solicited more than $8 million from investors and represented that Downing Partners was a venture capital firm that would invest in health care startups, in addition to providing sales, operations and management expertise to those companies.

Lewis I. Wallach was charged by the SEC with stealing $26 million in an alleged Ponzi scheme. Wallach and the deceased founder of Professional Financial Investors Inc. raised approximately $330 million from more than 1,300 investors. Criminal charges were also filed against Wallach.

David Wade Watson, 62, and Rajshree Patel, 45, of Florida, were arrested on allegations that they were running a $2.5 million Ponzi scheme. Watson told him victims that he was awaiting billions of dollars in settlements from the government and that he would pay them millions or billions of dollars for every $1,000 they invested.  

INTERNATIONAL PONZI SCHEME NEWS 

Australia

John Louis Anthony Bigatton was banned for 7 years from the securities industry due to his involvement in the BitConnect Lending Platform alleged Ponzi scheme. Bigatton was accused of being engaged in misleading or deceptive conduct in promoting Bitconnect.

China

Chen Shaofeng, Luu Jianghua, Lu Jianghua, Lu Qinghai, Jin Xinghai, Wang Yin, and Zhang Qin were charged in connection with the PlusToken Ponzi scheme. The scheme is a $5.8 billion cryptocurrency scheme.

Dominican Republic

Charles Paul Vincent Debono, 62, was arrested and deported to Canada where he faces charges relating to an alleged Ponzi scheme. The scheme laundered money through investments in hotels and fast food centers as well as in the purchase of luxury vehicles and real estate. Debono’s wife, Sol Esperanza Acosta Gonzalez, was also arrested. The scheme was run through a company called Debit Direct.

England

Joseph Lewis pleaded guilty to charges that he defrauded investors worldwide in an international investment scam. Lewis ran the scam from Turkey and told investors he was engaged in foreign exchange trading. The scheme took in about $27 million. 

Guyana

Yuri Garcia Dominguez, 34, a Cuban national and his wife, Ateeka Ishmael, 32, were charged on 10 additional charges relating to an alleged Ponzi scheme run through Accelerated Capital Firm Inc.

India

Popular Finance was exposed as a Ponzi scheme when investors started withdrawing their money due to the pandemic and related financial stress. Thomas Daniel Roy and his wife Prabba surrendered and their daughter, Rinu Mariam Thomas, was arrested.

Taluk LC Nagaraj and Manjunath N were charged in connection with the I-Monetary Advisory Ponzi scheme case, headed by Mansoor Khan.  

Philippines

Authorities identified Mining City as a Ponzi scheme and identified Gregory Rogowski, Anthony Aguilar and Jhon Rey Grey as key personnel involved in the scheme. The scheme is a bitcoin cloud mining company.

Spain

Arbicorp froze accounts of more than 120,000 investors after discovery of an error that caused one of its cryptocurrency bots to overpay. It claims that its trading bot called Community Bot paid 28% more in profits than were due.