Friday, October 31, 2014

October 2014 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

    Below is a summary of the activity reported for October 2014. The reported stories reflect: 8 guilty pleas or convictions in pending cases; over 158 years of newly imposed sentences for people involved in Ponzi schemes; at least 10 newly discovered schemes involving more $500 million in the aggregate; and an average age of approximately 55 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it.

    Ron Battistella was sentenced to 5 years in prison in connection with a Ponzi scheme that he ran through a car dealership known as Steven’s Creek Auto Mall. Funds from investors were solicited to supposedly purchase vehicles for the showroom, and investors received pink slips for the vehicles as collateral for their investments. The scheme involved more than $1.3 million.

    David Boden, 53, an attorney who worked at Scott Rothstein’s law firm, Rothstein, Rosenfeldt Adler, pleaded guilty to charges in connection with that scheme. Boden admitted that he worked with a broker, Richard L. Pearson, on some of the fictitious settlements that Rothstein was selling to investors and that the broker made false statements to one group of investors that lost about $2.4 million. Both Boden and Pearson received commissions on these sales. Pearson has also pleaded guilty to charges relating to his role as a broker in connection with the Scott Rothstein Ponzi scheme. Boden was named in a $37.8 million lawsuit filed by Rothstein investors and filed a personal Chapter 7 bankruptcy petition in 2012.

    Marie Maksche Bontiago, 43, was accused of running a $2 million Ponzi scheme through her franchise of EXIT Realty, Tri-State Group, and Tri-State Investment Holdings, Inc. Bontiago solicited funds for investments in real estate but instead used the money for business expenses. Bontiago promised investors interest of 10% to 40%.

    John C. Boschert, 43, pleaded guilty to charges that he ran a Ponzi scheme under the name Assured Capital Consultants. Boschert, along with Jennifer E. Hoffman and Bryan Zuzga, were accused of running the scheme that defrauded about 100 victims.

    John Bravata, 46, has asked to appeal the $8.2 million judgment obtained against him by the SEC. Bravata had been accused of collecting $53 million from more than 500 investors in a real estate investment scheme. Bravata is serving 20 years in prison and was ordered to pay $44.5 million in criminal restitution. His son, Antonio Bravata, was sentenced to 5 years in prison, and the company’s CEO, Richard Trabulsy, was sentenced to 45 months in prison in connection with the scheme.

    Paul Burks, 67, was indicted in connection with charges that he masterminded the $850 million ZeekRewards Ponzi scheme. The indictment alleges that Burks diverted more than $10 million to himself. Burks is the third person charged in connection with the scheme. Dawn Wright Olivares and Daniel Olivares pleaded guilty and are awaiting sentencing.

    Brian Caisse, 54, was sentenced to 1½ to 4½ years in prison in connection with a $1 million Ponzi scheme run through Huxley Capital Management. Caisse, who had fled to Colombia after police searched his apartment in 2013, pleaded guilty in August. Caisse had graduated from the U.S. Naval Academy in 1985 and the academy's Nuclear Power School in 1986. He later served as weapons officer on the nuclear submarine, USS John Marshall.

    Angela Dawn Campbell, 42, pleaded guilty to operating a Ponzi scheme in which she took $1.6 million from 27 people. Campbell guaranteed investors that they could double or triple their savings in the stock market through her day-trading business.

    Francis Cinelli Sr., 88, was charged with helping his son, Francis Cinelli Jr., file a false federal tax return. The father and son have also been sued in connection with an alleged Ponzi scheme run through Blue Mountain Consumer Discount. Victims allege in the suit that Walter “Buddy” Lambert, the company’s former CEO, defrauded them out of about $5 million and that the Cinellis either knew or should have known. Lambert pleaded guilty last month and Nicholas Sabatine pleaded guilty to related charges as well.

    James Ronald Donahoo II, 36, was sentenced to 4 years in prison and ordered to pay $2.7 million in restitution following his guilty plea in his Ponzi scheme case. Donahoo was known as “The Bamboo Cyclist” and sought funds to supposedly benefit storm-ravaged communities. Donahoo ran his scheme through Paradigm Investing, Inc. and promised monthly returns of 1% to 3%.

    EmGoldex MLM program was charged by the Massachusetts Securities Division with securities fraud in connection with a scheme that promised guaranteed returns of up to 1,105% for recruiting more individuals. Others named in the action are EmGoldEx Team USA Inc., Matthew Michael D’Agati, Joseph Zingales, James Vincent Piemonte, and Jonathan Herman Seigler. The Massachusetts entity was a recruiting arm for EMGX FS Ltd. EmGoldex raised about $500,000 from hundreds of investors.

    Armand Franquelin, 57, was sentenced to 57 months in prison and ordered to pay $5,560,000 in restitution in connection with a Ponzi scheme in which investors were promised 8% to 20% returns for investments in a real estate project called Haven Estates. Franquelin worked with Martin Pool who was previously sentenced to 78 months in prison.

    Edwin Fujinaga and MRI International Inc. were found liable for operating an $800 million Ponzi scheme. Fujinaga had operated a fraudulent investment scheme, promising mostly Japanese investors that their investment was guaranteed. The scheme defrauded more than 8,000 people.

    Ian Campbell Gent had his 8 year prison sentence vacated. Gent had been sentenced in connection with a $6 million Ponzi scheme run through Watermark Financial Services Group Inc. and M-One Financial Services LLC. The Second Circuit rejected James Lagona’s appeal that the sentence was procedurally and substantively unreasonable and upheld his 11 year sentence.

    Barry J. Graham, 59, was charged in connection with the Cay Clubs Resort and Marinas $300 million scheme. Graham is the third officer to be charged in connection with the program that stated that investors could “Retire Rich and Young in Paradise.” Cay Clubs founder Fred Davis Clark, 56, and his wife, Cristal Coleman Clark, 41, were previously charged in connection with the scheme that is believed to have defrauded 1,400 investors.

    Susanne Helbig, 50, pleaded guilty to charges relating to a Ponzi scheme that she ran through her construction company, Genesis Mansions. Helbig borrowed more than $17 million from financial institutions based on falsified loan applications.

    Charles Huggins, 68, was convicted on charges relating to a Ponzi scheme in which he solicited millions of dollars from investors and promised high returns from mining in Sierra Leone and Liberia. Huggins ran his scheme through his companies JYork Industries Inc. and Urogo Inc. The scheme raised more than $4 million from investors, but the funds were not used for mining in Africa. Instead, Huggins spent the money on personal expenditures including $7,200 monthly rent for an apartment and Mercedes car payments. Christopher Butchko and Ann Thomas were named as co-conspirators.

    IFreeX is the subject of an announcement in Massachusetts that the company is a fraudulent scheme like TelexFree but for mobile phones. The scheme is being promoted by Sanderley de Vasconcelos aka Sann Rodrigues, who was formerly a TelexFree promoter. The scheme targeted investors in Brazilian and other minority communities.

    Kevin James, 57, was sentenced to 10 years in prison and ordered to pay $1.3 million in restitution in connection with a $1.4 million Ponzi scheme. James defrauded victims into investment annuities into a fictitious fund called the Financial Security Program.

    Thomas Kimmel, 68, was sentenced to 22 years in prison and ordered to pay $16.5 million in restitution in connection with his Ponzi scheme that defrauded more than 300 investors out of at about $16 million. Kimmel held himself out as a financial adviser in the name of Jesus Christ and built a reputation on kindness and by hosting conferences such as “God’s Plan for His Money” conferences. He used his companies Sure Line Acceptance Corp. and Faithful Stewards to lure in investors, promising some of them returns of 1% per month. Three other officers of the company, James Willis Kirk Jr., Glen E. Smith Jr., and Carol April Graff, pleaded guilty earlier in the year and each received up to 5 years in prison.

    Robert E. Lee Jr., 50, was indicted for allegedly operating a Ponzi scheme. Lee was employed as a broker and financial advisor for various financial investment firms and defrauded clients by claiming that he was investing their funds when he was instead holding their funds in his personal bank account.

    Kevin Loux, 63, pleaded guilty to charges that he ran a Ponzi scheme that netted more than $450,000. Loux was a licensed life insurance and annuity broker in Hawaii and California and failed to invest money that he took from his clients.

    Bernard Madoff offered to put in a good word for five of his former employees who have been convicted and are awaiting sentencing on charges relating to the Madoff Ponzi scheme. The employees are Joann Crupi, George Perez, Jerome O’Hara, Annette Bongiorno, and Daniel Bonventre. Madoff sent a series of emails to the lawyers for the ex-Madoff employees offering to discredit the testimony of Frank DiPascali, the government’s star witness, who was also convicted in connection with the scheme.

    Sean F. Mescall, 35, was sentenced to 16 years in prison in connection with a Ponzi scheme that he ran through Capitalstreet Financial. The scheme defrauded 119 victims and promised them 60% to 80% returns on their investments.

    Frank Mete, 57, was sentenced to 41 months in prison for running a $1.2 million Ponzi scheme, and has also previously been charged with robbing and raping a prostitute while impersonating an officer.

    Roger Miller, 62, was sentenced to 20 years in prison in connection with a Ponzi scheme that defrauded more than 40 victims. Miller sought investments for a pre-construction condo project in Thailand.

    Nationwide Automated Systems, Inc. had its assets frozen after the SEC filed civil charges against the company and its principals, Joel Barry Gillis and Edward Wishner. The court also approved the appointment of a temporary receiver. The alleged Ponzi scheme involved phantom ATM machines and it is believed that the scheme involved $123 million and a few thousand investors. The SEC complaint states that the company records show that it was leasing back more than 31,000 ATMs, but the ATM servicers show that only 253 ATMS were being serviced. A website has been established at An involuntary bankruptcy petition was also filed against the company but was then dismissed by stipulation between the receiver and the debtor.

    James Nicholson, 48, had his request to shorten his 40 year prison sentence turned down. Nicholson is serving time for running a $140 million Ponzi scheme.

    Luis Felipe Perez, 42, had his 10 year sentence cut in half for assisting in the prosecution of former Hialeah Mayor Julio Robaina. Perez had been convicted in connection with a $40 million jewelry investment scheme. Robaina and his wife were acquitted on tax evasion charges.

    David Prenatt rejected a plea deal to which he had previously agreed, admitting that he had engaged in a fraudulent securities scheme that involved about $13 million. Prenatt now states that he received “ineffective assistance of counsel.” Prenatt was then sentenced to 10 years in prison.

    Aubrey Lee Price, 48, was sentenced to 30 years in prison and ordered to forfeit $51 million in connection with a $46 million Ponzi scheme. Price ran his scheme through PFG, LLC and Montgomery Asset Management LLC fka PFG Asset Management LLC. Price used investor funds to acquire Montgomery Bank & Trust and transferred at least $10 million from the bank.

    Stuart Rosenfeldt, 59, was sentenced to nearly 3 years in prison after pleading guilty to charges for conspiracy that included campaign finance violations. Rosenfeldt had previously pleaded guilty in connection with charges stemming from conduct relating to the Scott Rothstein Ponzi scheme, although it was never alleged that Rosenfeldt was aware of or involved in the Ponzi scheme itself.

    Vincent Singh 
was sentenced to 15 years and 8 months in prison following a guilty plea in connection with a scheme that defrauded hundreds of victims. In sentencing Singh, the court said that Singh’s crimes were “the worst of their kind that I’ve seen in 12 years as a federal judge.”

    Frank Spinosa, 53, was charged with criminal conduct in his role as a former TD Bank officer in the Scott Rothstein Ponzi scheme case. Spinosa is accused of preparing false “lock letters” to give to investors to show that their investments were safe, among other things. The SEC also filed civil charges against Spinosa last year alleging that Spinosa made oral assurances to at least two investors that their money was held in trust accounts holding hundreds of millions of dollars when in reality those accounts held less than $100.

    R. Allen Stanford filed a 299-page appeal to try to reduce or reverse his 110 year sentence.  Stanford argues, among other things, that the U.S. lacked jurisdiction to bring charges against him because his bank, Stanford International Bank, was located in Antigua.

    James Staz and William Staz were charged on allegations that they stole $11 million from clients in a scheme run through Employee-Services.Net, Inc. The company supposedly processed payroll for companies, but the father and son kept the money for themselves.

    Joel Wilson, 32, will stand trial for charges arising from an alleged Ponzi scheme run in Michigan through the company, Diversified Group Advisory Fund LLC. Wilson was extradited from Germany after he was in Europe for over a year. It is alleged that he kept about $600,000 of investors funds after promising them returns supposedly generated from refurbishing and flipping distressed homes for a profit.

    Ron Wilson, 67, pleaded guilty to another charge relating to his $57 million Ponzi scheme run through Atlantic Bullion and Coin that defrauded about 800 victims. Wilson is currently serving a 19 year prison term after pleading guilty to other charges relating to the scheme. Wilson has not, however, pleaded guilty to conspiring to hide money from the federal government when it was alleged that he gave his wife and brother money after his initial arrest; they have been indicted for conspiring to obstruct justice.

    Carl David Wright, 54, was sentenced to 4 years in prison and ordered to pay $817,975 in restitution in connection with a scheme that defrauded victims out of more than $1 million. Wright promised investors returns of 20% to 30%, telling investors that he was putting the money into hedge funds, commodities, and Quick Trip service stores.

    Dennis Wright, 68, was accused by the SEC of running a $1.5 million Ponzi scheme through his company, Axa Advisors. Wright allegedly defrauded 28 customers by persuading them to withdraw funds from Axa variable annuity accounts to transfer to mutual funds with higher interest rates. Instead, Wright deposited the funds into his personal account to pay his expenses.

    Bryan Zuzga was arrested in connection with an alleged $25 million Ponzi scheme that defrauded 100 victims. The scheme was run through Assured Capital Consultants along with Jennifer E. Hoffman and John C. Boschert.



    Additional raids took place in Brazil to seize assets related to the TelexFree Ponzi scheme. Telexfree is known as Ympactus in Brazil


    Garth Bailey, 61, was sentenced to 9 years in prison for his role in assisting two others to run a Ponzi scheme by acting as their lawyer. Bailey participated in the scheme run by Robert Fyn and Harold Murray Stark through HMS Financial, which promised investors that their money was safe because it was backed by up to $40 million in bonds. Fyn and Stark had pleaded guilty and were sentenced to 8 and 6 year terms, respectively.

     Banners Broker and its masterminds, Christopher George Smith and Rajiv Dixit, were the subject of accusations that Banners Broker is a Ponzi scheme and an asset freeze. It was alleged that they were operating a pyramid scheme with 12,000 investors that evolved into a Ponzi scheme.


    Patrick Coppeard, 49, was sentenced to 6 years in connection with a £5.3 million Ponzi scheme that defrauded 61 victims.


    Finland’s Supreme Court ruled that 5 investors in the WinCapital Investment scheme must forfeit the proceeds that they earned from the scheme. The court ruled that financial gain from criminal activity must be forfeited not only by the criminals, but also by those who benefited from the criminal activity. The WinCapital scheme had raised more than 100 million euros from over 10,000 investors.


    The director of Green Ray International, Avub Shah, was arrested in connection with a scheme that is believed to have defrauded over Rs crore from about 1.5 lakh investors. Other insiders, Mir Sairuddin aka Gora and Abdul Khaliq have also been ordered to appear before the Security Exchange Board of India in connection with the matter.


    Breifne O’Brien, 53, was sentenced to 7 years in jail in connection with a $10.8 million Ponzi scheme that involved fake shipping and insurance businesses.


    Manuel Amalilio aka Mohammad Kamal Said, the mastermind of a P12 billion Ponzi scheme run through Aman Futures Group Philippines Inc. in the Philippines, was freed after a Malaysian court declined to extradite Amalilio to the Philippines.

New Zealand

    John David Milne, 79, admitted to running a $2.8 million Ponzi scheme in which he defrauded 29 clients. Milne was a lawyer who had promised to invest his clients’ funds and pay them a return.

South Africa

    Prinasen Dhaver, 29, was accused of running a Ponzi scheme through his profit sharing company, Innovatech International Solutions.

South Korea

    Two men with surnames Kwon, 39, and Lee, 38, were arrested on charges that they defrauded 614 people of $6.4 million in connection with a scheme relating to the 2018 Winter Olympics. They promised investors high returns for investing in a land lot near the skating and hockey venue for the Olympics.


    Song Migui aka Zhang Jiam, 37, a Chinese man, was arrested in Bangkok on charges that he engaged in a $277 million scheme. Geng Lian Bao and Wang Wen Fang were also arrested in connection with the scheme.

    Chong Mee Chew aka Supachai Rujathorn, Keng Lean Pao aka Surin Sophonsukson, and Wang Wen Fan were arrested in connection with a scheme run through Yun Shu Mao Co. Before the group arrived in Thailand, they allegedly defrauded Chinese people of 1.3 billion Yuan, and thereafter persuaded another 80,000 in Malaysia to invest.

    Skye Bonow filed lawsuits against Bitcoin Savings & Trust and Project Investors Inc. dba Cryptsy for the handing of his Bitcoin accounts at those companies. Cryptsy is the subject of allegations that it violated Florida’s Deceptive and Unfair Trade Practices Act by failing to provide critical information regarding security risks and customer fund management protocols and that the plaintiff was deceived into transferring Bitcoin to the defendants.

    A settlement was reached in the Dreier LLP bankruptcy case for Westford Asset Management LLC to pay $32.2 million to settle claims that it received $137 million of Ponzi scheme proceeds. Marc Dreier is currently serving his prison sentence and will now not need to be called to court testify in connection with the matter. Dreier had been ordered to testify in person in connection with the proceeding, and Dreier had asked to appear by telephone or video, but the court had denied his request.

    The Madoff Victim Fund being run by Richard Breeden as special master reported that 63,553 claims have been asserted against the Fund in connection with the Bernard Madoff Ponzi scheme. The Fund further reported that the losses reported in those claims total $76.654 billion. However, those numbers have not yet been fully reviewed for duplicative, ineligible or overstated claims.

    Edward Blumenfeld, a real estate developer who invested with Madoff, settled with the Trustee and agreed to pay back $32.75 million and to surrender $29.35 million in claims.

    The Eleventh Circuit found that former officers of Quest Energy Management Group Inc. did not have standing to appeal a decision that gave the receiver of Arthur Nadel authority over the company. Nadel, now deceased, was sentenced to 14 years in prison in 2010 in connection with his Ponzi scheme. Nadel invested $5.1 million of his victim’s money in Quest Energy.

    The Backstreet Boys settled their claims against their creator, Lou Pearlman. The trustee in Pearlman’s bankruptcy case settled the Backstreet Boys’ claims for $3.5 million by agreeing to pay them $99,000 and giving them possession of recordings of their music.

    Two hedge funds that invested in the Thomas Petters scheme – the Westford and Epsilon funds - have agreed to a settlement that finds them liable for $322 million received as false profits. The settlement is subject to court approval, and the trustee is permitted to withdraw from the settlement if there are material changes in the financial condition of the defendants. The trustee had sought recovery of as much as $3.2 billion, which was the total amount of funds transferred between the funds and Petters.

    George Levin, an investment manager in the Banyon 1030-32 LLC, a feeder fund in the Scott Rothstein Ponzi scheme, agreed to settle claims against it on the eve of trial. Levin has entered into a tentative settlement with the SEC in connection with charges that Levin, along with investment manager Frank Preve, raised $157 million from 173 investors by selling the fictitious Rothstein settlements.

    Chadbourne & Park LLP filed a motion to dismiss a lawsuit brought by Stanford Financial’s receiver in which the receiver alleged that the firm aided and abetted the Ponzi scheme through its representation of Stanford.

    The Allen Stanford receiver was permitted to proceed with his fraudulent transfer lawsuit seeking to recover $500,000 from the Tiger Woods Foundation. The court denied the charity’s motion seeking to dismiss the complaint on statute of limitations grounds. The court found that the receiver should be afforded more time under the discovery rule, which gives the receiver an extra year to sue after he discovers or could have discovered the transfer. The court stated that it was “perfectly reasonable to surmise that the generally complex and obfuscated nature of the Stanford financial records made these particular transfers difficult to discover.”

    Mary Margaret Butler, wife of accused Ponzi schemer Steven Wessel, 56, filed a lawsuit against Wessel alleging that he defrauded her out of her money and property she had acquired before marriage. Wessel’s criminal indictment states that Wessel used his company, Steeplechase USA, LLC, to defraud victims.

    The Zeek Rewards receiver mailed checks to more than 90,000 claimants that equal about 40% of the allowed claims. The first interim distribution totals about $134.2 million. A law firm representing victims who filed claims, Patrick Miller LLC, filed a Notice of Attorney’s Charging Liens asserting a lien in the amount of about $134,000 for fees it says is owed to the firm as a contingency fee for assisting the claimants in filing their claims. The receiver is also hearing complaints that he should not have withheld taxes from the payments. The receiver’s website states that “For those claimants to whom checks were mailed that did not provide an IRS Form W-9 (for US residents) as requested on the claims portal, we withheld a certain percentage for tax purposes. For non-US claimants, a percentage was withheld whether or not an IRS Form W-9 was provided." The receiver could not get a definitive opinion from the IRS about whether withholdings were required so he aired on the side of caution and made the withholding.

Tuesday, September 30, 2014

September 2014 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

    Below is a summary of the activity reported for September 2014. The reported stories reflect: 4 guilty pleas or convictions in pending cases; over 239 years of newly imposed sentences for people involved in Ponzi schemes; at least 11 newly discovered schemes involving over 135,000 victims and more than $328 million; and an average age of approximately 51 for the alleged Ponzi schemers in the stories reported. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it.

    Eric Aronson, 46, pleaded guilty to defrauding investors of $30 million in a Ponzi scheme that he ran through Permapave Industries and Permapave USA Corp. The scheme defrauded more than 200 investors by promising returns as high as 400% for financing the importation of ecologically friendly paving stones from Australia.

    David Boden, 52, and Richard L. Pearson, 57, were both charged in connection with the Scott Rothstein Ponzi scheme. Boden was the general counsel for the Rothstein Rosenfeldt Adler law firm and was charged relating to his failure to disclose a second sales commission in several transactions. Pearson was a broker who worked in the same building and who sold legal settlements to investors. It is believed that both Boden and Pearson intend to plead guilty.

    John R. Bullar, 52, pleaded guilty to running an $8.7 million foreign exchange Ponzi scheme that defrauded 46 investors. The CFTC also charged Bullar with violations of commodities laws. Bullar ran his scheme through Executive Management Advisors and convinced investors that he had a computerized algorithm system that monitored the market for patterns and alerted him to potential losses. Bullar created an investment log for his clients to follow and put several computer monitors in his home office to give his business the appearance of legitimacy. He misappropriated approximately $6 million for his own use.

    Robin Kyo Cho, 50, was sentenced to 105 years in prison without the possibility of parole in connection with a triple homicide that was discovered because of his prior conviction in connection with a $2 million Ponzi scheme. Cho had pleaded guilty to a Ponzi scheme in 2008 and was required to submit a DNA sample as part of his sentence. His DNA was linked to the murder of a Korean woman, her 2 year old son, and a live-in nanny in 2003. Cho had admitted to defrauding at least 11 investors by promising them returns of 4% to 6% per year and that their principal was guaranteed. Cho had faced 60 years in prison in connection with the scheme but had negotiated just 5 years of probation as part of his plea agreement.

    Fred Davis Clark Jr., 56, and Cristal R. Clark aka Cristal R Coleman, 41, were the subject of a new indictment in connection with the investment scheme run through Cay Club Resorts and Marinas. It is alleged that they used Cay Club to sell vacation rentals with the promise of an upfront “leaseback” payment of 15% to 29% of the purchase price. Cay Club had raised more than $300 million from about 1,400 investors. An earlier civil enforcement action by the SEC was dismissed on statute of limitations grounds.

    John Williams Cranney, 73, was indicted on charges related to an alleged Ponzi scheme that defrauded at least 15 investors out of more than $6 million. Cranney solicited money from investors through his companies Cranney Capital I and Cranney Capital II.

    Tim Durham, 52, Jim Cochran, 58, and Rick Snow, 50, had all almost all of their 25 felony convictions upheld on appeal in connection with their $200 million Ponzi scheme run through Fair Finance Co. that defrauded 5,000 victims. U.S. v. Durham, 2014 U.S. App. LEXIS 17267 (7th Cir. Sept. 4, 2014). The three defendants are serving sentences of 50 years, 25 years, and 10 years, respectively, and will now be resentenced. All of the challenges to the conviction but one were rejected by the appellate court. As for the one, the court stated, “The government failed to enter into the trial record key documentary evidence supporting two counts of wire fraud against Durham. It was clearly an oversight, but the mistake leaves a crucial gap in the evidence on those counts.”

    eAdGear was the subject of an SEC action in which the SEC alleged that the eAdGear program is a $129 million Ponzi and pyramid scheme. The SEC identified the operators of the scheme as Charles S. Wang, 52, and Qian Cathy Zhang, 52, and Francis Y. Yuen, 53. eAdGear held itself out as a profitable Internet marketing company and targeted investors in Chinese communities. The program involved 66,000 accounts held by tens of thousands of investors. The company supposedly used search engine optimization to help clients increase their website rankings on search engines and then claimed to share 70% of the revenue generated with investors. Investors were also promised 5% to 15% commissions for the recruitment of new investors.

    Derek Elliot, 43, pleaded guilty to charges that he had masterminded a $91.3 million Ponzi scheme along with James Catledge. The two defrauded hundreds of investors in connection with a scheme to renovate a luxury hotel in the Dominican Republic. Catledge has denied wrongdoing and a trial is pending.

    Glen Galemmo, 48, is the subject of a new complaint brought by the CFTC alleging that Galemmo’s Ponzi scheme involved about $116 million. Galemmo previously pleaded guilty and was sentenced to 15 years and 8 months in prison. The complaint alleges that Galemmo falsely promised investors returns ranging from 17% to 40% and that his firm, QFC LLC, suffered trading losses of $1.2 million.

    Jennifer E. Hoffman, 37, John C. Boschert, 43, and Brian Zuzga, 37, were charged with running a $25 million Ponzi scheme. The scheme allegedly defrauded 100 investors by promising them returns of up to 50% per week through their company, Assured Capital Consultants. Zuzga was charged with impersonating a lawyer and assuring investors that their money was safe in an escrow account.

    Christopher Jackson, 46, Michael Bolden, 60, and Victor Alvarado, 53, were sentenced to 30 years, 20 years, and 10 years, respectively, in prison in connection with a Ponzi scheme involving more than $20 million and as many as 250 investors. The scheme was run through Diversified Management Consultants, which ran investment clubs in which people purportedly invested in the purchase and development of land. Bolden and Alvardo pleaded guilty, and Jackson went to trial and was found guilty.

    James Jackson Jr., 48, was sentenced to 90 years in prison in connection with a $2.7 million Ponzi scheme in which Jackson held investment seminars to lure investors into his company, AFG. Jackson was sentenced to three consecutive 30 year terms, which is believed to be the third longest prison sentence in a Ponzi scheme case, coming after only Bernard Madoff and Allen Stanford. Jackson used his companies, American Senior Advisory Group and Covenant Planning Group, to solicit elderly investors to invest in AFG. About 33 victims were defrauded.

    Walter P. Lambert, 73, pleaded guilty to charges that he ran a $10 million Ponzi scheme through Blue Mountain Consumer Discount Company. Lambert promised returns around 9% or 10% and he told investors that he would use their funds to issue high-interest loans to consumers at rates of 23% to 26%.

    Joseph Laurer aka Dr. Josef V. Laurer, now deceased, is the subject of a civil complaint in which his widow, Brenda M. Davis, is named as a relief defendant. The complaint alleges that Laurer ran a $4.6 million Ponzi scheme that defrauded 50 investors through his company, Abatement Corp. Holding Co. Laurer told investors he would put their money into AAA-rated corporate and government bonds with guaranteed returns and no risk to the principal balance.

    Andrew Madoff, the son of Bernard Madoff, died after a battle with cancer. Andrew Madoff’s brother, Mark Madoff, had committed suicide in 2008. The two brothers had turned their father in to criminal authorities in 2008. Both have been sued by the trustee of the Madoff scheme who is seeking the return of tens of millions of dollars that was transferred to them. Neither was charged with any criminal wrongdoing.

    Bernie Madoff’s penthouse sold for $14.5 million to Lawrence Benenson who runs a real estate investment and development firm.

    Erik Laszlo Mathe and Ashif Jiwa were indicted in connection with alleged securities fraud relating to their start up television company, Vision Broadcast Network. The SEC also filed a civil lawsuit alleging that they raised $5.7 million from approximately 100 investors but spent most of the money themselves. The SEC complaint alleges that Mathe and Jiwa misled investors into believes that Vision Broadcast owned TV stations and 70 broadcast licenses. The SEC complaint also names a company affiliated with Jiwa, Bluemark Asset Management LLC, as a relief defendant.

    William Charlton Mays IV was sentenced to 30 years in prison in connection with a $225,000 Ponzi scheme. Mays promised investors 6% to 18% per year from gold, silver and commodities investments.

    Sean Michael Meadows, 41, was charged with a new count for scheming a landlord and a renter. Meanwhile, charges remaining pending against Meadows for running a $10 million Ponzi scheme through Meadows Financial Group that defrauded 50 investors. In the latest charges, Meadows sought to have a renter circumvent the owner of a property and pay rents directly to Meadows even after Meadows had failed to fulfill a contract to purchase the property.

    James Ashby Moncure, 41, was charged with an alleged Ponzi scheme in which he promised investors returns of 10% to 25% in a program to acquire and develop the Quantico Corporate Center in Virginia. The scheme allegedly involved at least $35 million in investor deposits.

    James Nicholson, 48, was unsuccessful in his attempt to shorten his 40 year prison sentence for running a $140 million Ponzi scheme through his hedge fund firm, Westgate Capital Management LLC. The court rejected Nicholson’s claims of ineffective counsel. Nicholson v. U.S., 2014 U.S. Dist. LEXIS 132695 (S.D.N.Y. Sept. 22, 2014).

    Gina Palasini, 52, was charged with running a massive Ponzi scheme that defrauded seniors by promising them assistance in obtaining Medicaid or veterans benefits.

    Lananh Thi Phan, 54, and Diane H. Do Bui, 49, were charged with running an $8 million Ponzi scheme that targeted the Vietnamese-American community. At least 18 victims were involved, but there may be more. Phan, a licensed realtor, worked with Bui, who was a notary public, to persuade investors to invest in different investments, including a “secret” venture. The scheme effectively promised investors returns of 70% per year and that their money was safe.

    Marlon M. Quan and his companies, Acorn Capital Group LLC, Stewardship Investment Advisors LLC and ACG II LLC, were the subject of an $80 million sanction award and permanent injunctions for their role in the Tom Petters Ponzi scheme. SEC v. Quan, 2014 U.S. Dist. LEXIS 131618 (D. Minn. Sept. 19, 2014). The SEC had alleged that Quan helped facilitate the Petters fraud by funneling several hundred million dollars of investor money into the scheme and assuring investors that their money was protected by various safeguards.

    Stuart Rosenfeldt, 59, pleaded for mercy in connection with his sentencing on charges relating to the Scott Rothstein, 52, Ponzi scheme. Rosenfeldt, one of Rothstein’s former law partners in their firm Rothstein Rosenfeldt Adler, had pleaded guilty to charges in connection with the Ponzi scheme. Rosenfeldt contends that his drug-addicted son would suffer “irreparable damage” if his father is sent to prison. Rothstein is serving a 50 year sentence, and Russell Adler, 52, surrendered this month to serve his 2½ year sentence for illegally funneling campaign donations on Rothstein’s behalf.

    Trenton T. Shavers, 31, the founder of Bitcoin Savings and Trust, was found liable for securities violations and ordered to pay a $40.7 million fine in an action commenced by the SEC. Bitcoin Savings and Trust was accused of running a Ponzi scheme that promised investors returns of 7% interest weekly based on the purported Bitcoin market arbitrage activity.

    T. LeMont Silver, one of the promoters of the ZeekRewards scheme, is now promoting a new program called “BitClub Network.” Silver has also been linked to a program called Gold Crowdfunding. Silver has been sued by the receiver of ZeekRewards for gains received in the scheme. BitClub Network purportedly pays out a daily dividend for 1,000 days and has three “mining pools” with tiered buy-in rates: $500, $1,000 and $2,000. Early birds — described as “Leaders” — are being encouraged to send in $3,599 to qualify for a “Founder’s” position.

    Jason Snelling, 50, had his 11 year prison sentence vacated when the court found that the loss amount used in calculating sentence guidelines had not accounted for money returned to victims in the form of fictitious interest payments. See U.S. v. Snelling, 2014 U.S. App. LEXIS 19857 (6th Cir. Sept. 22, 2014 ). Snelling still must deal with two other prison sentences however, including a 40 year prison sentence, relating to his Ponzi scheme run through Dunhill Investment Advisers and CityFund Advisory. Snelling operated out of Cincinnati and promised rates of return of 10% to 15%.

    Joel Steinger, 64, was sentenced to 20 years in prison for masterminding an $800 million Ponzi scheme through Mutual Benefits Corp. that defrauded more than 30,000 investors. The company bought life insurance policies from people with AIDS, cancer and other chronic illnesses and sold them to investors. Safe and high returns were promised to investors. The company was shut down by the SEC in 2004.

    Jeffrey M. Toft, 51, Chad A. Sloat, 36, and Michael J. Murphy, 54, were sentenced to 66 months, 70 months, and 48 months in prison, respectively, in North Carolina in connection with the Black Diamond Capital Solutions Ponzi scheme. The three defendants had operated a $40 million hedge fund Ponzi scheme that defrauded hundreds of elderly victims by promising returns of up to 137% from a foreign currency trading program. The mastermind of the scheme, Keith Simmons, was sentenced in 2012 to 50 years in prison and ordered to pay $35 million in restitution. Simmons promised investors that no more than 20% of their funds would be at risk at any time, and he quoted Bible verses to convince about 240 investors to invest. Another defendant, Jonathan Davey, 50, is awaiting sentencing.

    Gary Richard Vibbard, 59, was sentenced to 63 months in prison in connection with a $3 million Ponzi-like scheme that defrauded dozens of investors. Vibbard had told investors that he was a proven financial manager, but he had actually filed bankruptcy in 2000, owed more than $1.5 million in back taxes, and had lost more than $1 million in investor funds in a prior failed company. Vibbard used investor funds to pay personal expenses such as his gym membership and an internet dating service, and he had instructed his bookkeeper to purchase cashier’s checks with the funds in the corporate bank accounts so as to prevent creditors from seizing his accounts.

    Oscar Villarreal, 27, was indicted in connection with a $9.6 million Ponzi-like scheme that is believed to have defrauded about 46 investors. Villareal was selling limited partnership interests and promising returns of as much as 45%.

    Eliyahu Weinstein, 39, pleaded guilty to charges that he defrauded investors out of $8 million by promising them high returns because he supposedly had the inside track on Facebook shares in advance of the company’s public offering. Weinstein is already serving 22 years in prison for masterminding a $200 million Ponzi scheme in New Jersey.

    Zhunrize was the subject of an SEC action filed to shut down a fraudulent program that was allegedly operating across state and national borders. It is alleged that the Zhunrize program, run by Jeff Pan, 52, involved $105 million and defrauded 77,000 investors.



    The trial of Gary Sorenson and Milowe Brost began in Calgary. The two defendants face charges in what is being called the largest Ponzi-type scheme in Canadian history. At least 2,000 investors around the world allegedly lost about $400 million. The scheme involved the companies Syndicated Gold Depository SA, Base Metals Corporation LLC, Bahama Resource Alliance Ltd., Merendon Mining Corporation Ltd., and Strategic Metals Corp

    Garth Bailey, 61, sat through his sentencing hearing where prosecutors argued that Bailey’s role in a multi-million Ponzi scheme warranted between 8 and 9 years. Bailey was convicted in May on charges for his role in the HMS Financial Ponzi scheme that collected about $37 million from investors. Bailey was the lawyer for HMS Financial, which was established by Harold Murray Stark and Robert (Colonel) Fyn. The scheme offered investors 8% to 12% returns per month and claimed that their money was protected by a $30 million bond that could cover any losses. Stark was previously sentenced to 6 years and Fyn was sentenced to 8 years after they had pleaded guilty. Bailey’s services added a “veneer” of credibility to the company as its lawyer.


    Eleven women were convicted for their roles in a cash-gifting pyramid scheme known as “Give and Take” and “Key to a Fortune.” The scheme targeted brides and young couples, encouraging them to get a great start to wedded life by putting their cash in a gifting scheme that would supposedly turn £3,000 into more than £20,000. The scheme involved £21 million.

    Geoffrey Langdale, 63, was sentenced to 6 years in prison for running a £2.3 million Ponzi scheme that defrauded 28 victims. Langdale ran his scheme through Langdale Accountants.

    David Gerald Dixon, 49, was arraigned on charges that he ran a multi-million Ponzi scheme through Arboretum Sports (U.K.) Ltd., which was a sports betting company.


    A fine of Ft 1.25 billion was levied against Zsolt Szabo-Forrai and his companies, Fortress Holding, Flow Money and Flow Money Int. The companies promised 9% returns to investors.


    Bikash Swain, the proprietor of Suryaprava, and Ranjan Das, former chief of Swastik India Multi-Purpose Credit Cooperative Society, were arrested.

    Debasis Mohanta, the director of Happy Life Realty India, was sentenced to 5 years in jail. Two other agents, Pranab Behera and Jiban Das, were sentenced to 4 years each.

    Sadananda Gogoi was arrested in connection with the Saradha Ponzi scheme.

    Half-burnt documents were recovered from the riverbank in connection with the Ponzi scheme of SLB Invest India Ltd. Local fisherman observed two people setting papers on fire near the riverbank. The men fled after they were spotted, and the documents reflect records of SLB’s business and the names and addresses of investors.

    The Calcutta high court admitted a petition seeking investigations into the activities of Progress Cultivation Ltd. It is alleged that Progress Cultivation was a Ponzi scheme in which funds from investors were used to purchase property.

    Cases were filed against MPS Greenery Developers Ltd. and Akash Deep Projects LtdPramatha Nth Manna, the founder and managing director of MPS Greenery, and another director, PK Chanda, were also arrested.


    The liquidator of Fairfield Sentry Ltd., an offshore Bernard L. Madoff feeder fund, was permitted by the Second Circuit to try to undo an imprudent sale of its $230 million claim against Madoff’s firm. Krys v. Farnum Place LLC (In re Fairfield Sentry Ltd.), 2014 U.S. App. LEXIS 18427 (2d Cir. Sept. 26, 2014).

    Investor Brad Markowitz filed an appeal asking to revive his lawsuit against LPL Financial LLC relating to an $8 million Ponzi scheme run by Michael E. McCready, 46. McCready had worked at LPL while running his scheme that targeted entertainment industry professionals. Markowitz alleges that LPL should have detected suspicious activity.

    Cal Poly San Luis Obispo filed a motion in the bankruptcy case of Al Moriarty, 81, seeking to cover up Moriarty’s name from its stadium scoreboard. Moriarty was convicted last month in connection with a $22 million Ponzi scheme. Moriarty had paid $625,000 in 2009 for naming rights to the video scoreboard.

    Some claims in the class action lawsuit relating to the $800 million Ponzi scheme of MRI International were dismissed and some were allowed to proceed. The complaint alleged that MRI misrepresented that its business was legitimate and that the company purchased and collected medical accounts receivable. The lawsuit named MRI, along with Edwin J. Fujinaga, 67, Junzo Suzuki and Paul Musashi Suzuki as defendants. Fujinaga owned and operated the company in Las Vegas, and Junzo Suzuki handled the marketing and investment solicitations in Japan. The lawsuit also named LVT aka Sterling Escrow, which handled MRI’s bookkeeping.

    Palm Beach Finance Partners and Palm Beach Finance II sued BMO Harris Bank for $23.6 billion for the alleged actions of M&I Marshall & Ilsley Bank which BMO acquired. The lawsuit alleges that M&I was complicit in the Thomas Petters scheme, that they knew no retailers were making payments into the Petters’ accounts, and that they knew Petters’ accounts only had a few million dollars at a time, rather than the billions of dollars in collateral that lenders granted him. M&I never filed a suspicious activity report with regulators.

    The court in the Scott Rothstein Ponzi scheme case approved a settlement between the victims of the Ponzi scheme and the creditors of Rothstein’s law firm, Rothstein Rosenfeldt Adler. The settlement resolves competing claims to about $50 million of assets that will be divided between the government seeking forfeiture of those assets and the trustee of the law firm.

    Investors in the Martin Sigillito Ponzi scheme have filed a new lawsuit against the former chief executive of Enterprise Trust Co., Paul Vogel, and Argos Partners LLC. The plaintiffs allege that they lost more than $4.8 million in the scheme in which investments were sought for loans to Distinctive Properties of London, England, known as The British Loan Program. The lawsuit accuses Vogel of participating in the scheme and referring investors to it in exchange for a $150,000 finder’s fee. A previous lawsuit against Vogel was settled for a confidential sum. The lawsuit alleges that Vogel created two companies, Brad-Green Development LLC and Cranmer Associates LLC, to divert investor money to himself.

    The SEC decided not to appeal the recent decision by the appeals court in Washington that held that the Stanford Financial victims are not “customers” under the terms of SIPA. The appellate court agreed with the lower court that an estimated 7,800 former customers of Stanford Group Co. did not qualify for reimbursement from SIPC because they did not fit the statutory definition of a “customer.”

    The Fifth Circuit affirmed the lower court’s ruling in favor of the Stanford Financial receiver against net winners in the Ponzi scheme. The court agreed with the lower court that investors had provided reasonably equivalent value to the extent they received back their principal investments, but that the receiver could recover amounts paid back in excess of their principal investment. See Janvey v. Brown, 2014 U.S. App. LEXIS 17580 (5th Cir. Sept. 11, 2014).

    The Department of Justice sought a stay of civil discovery in the SEC’s action against Telexfree. The government argued that the administration of its parallel criminal case might be impaired by the defendants’ use of the civil discovery process in the SEC case.

    The lawyers and turnaround advisors for TelexFree who were involved in TelexFree’s bankruptcy case before the trustee was appointed have agreed to cut their fee requests significantly. The company’s lawyers, Greenberg Traurig, agreed to cut its fee request from $969,999 to $320,000. The turnaround advisers, Alvarez & Marsal, agreed to reduce their fees from $876,000 to $435,000.

    The Massachusetts Securities Division has reached a settlement with Fidelity Co-operative Bank for $3.5 million to resolve claims in the TelexFree Ponzi scheme. The president of Fidelity is John Merrill, the brother of alleged Ponzi schemer James Merrill. The bank will establish a $35 million relief fund for individuals defrauded in the $1.1 billion TelexFree Ponzi scheme. TelexFree made three deposits into the bank totaling $10.1 million. James Merrill and Carlos Wanzeler each also had personal accounts at the bank, and Wanzeler moved $3.5 million from his personal account to an overseas bank account in Singapore.

    Morgan Stanley was fined $280,000 for ignoring “numerous red flags” in connection with the $35 million Ponzi scheme run by Benjamin Wilson through his company, SureInvestment. Morgan Stanley ignored warning signs such as documents that showed that SureInvestment had returns of 2,850% and 45 consecutive profitable months. The CFTC had alleged that the firm failed to supervise its officers and employees in the handling of the company’s accounts.

    The ZeekRewards receiver requested authority to sue at least 23 Canadian residents to recover a total of about $2.91 million.