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

Kathy is a senior business trial attorney with more than 27 years experience prosecuting and defending claims for 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 an expert on 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, August 31, 2019

August 2019 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for August 2019. The reported stories reflect at least 9 new Ponzi schemes worldwide; at least 2 guilty pleas, over 97 years of newly imposed sentences for people involved in Ponzi schemes; and an average age of approximately 54 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed.

Deborah Ball, of Massachusetts, pleaded not guilty to charges that she ran a $100,000 scheme. Prosecutors allege that she used her position as a tax collector to embezzle real estate and excise taxes that were paid in cash. She then applied portions of check payments made by other taxpayers to try to cover the losses.

Dawn J. Bennett, 56, of Maryland, was sentenced to 20 years in prison for running a Ponzi scheme through her companies, DJB Holdings and DJBennett.com. Bennett was a financial advisor and radio personality on the show, Financial Myth Busting, who told investors that her company would become a sportswear empire that would rival Under Armour. More than $20 million was received from 46 investors. Bennett instead used the funds for her personal expenses and lavish lifestyle, including two penthouses in the wealthy suburb of Chevy Chase, a box suite at the Dallas Cowboys’ stadium worth about $500,000, and payment for priests in India to “perform religious ceremonies to ward off federal investigators.” Bennett has appealed the sentence.

Larry A. Carr, 84, of Florida, was sentenced to 4 years in prison and ordered to pay $8 million in restitution for orchestrating an $8.2 million Ponzi scheme. Carr ran the scheme through his companies, Cita Trust N.A. Inc., Cita Trust Company N.A., Cita Trust Company Ltd., and Cita Trust Company A.G., promising returns from the sale of securities.

Carl Chen, 75, of Delaware, was sentenced to 51 months in prison for his role in defrauding investors out of more than $3 million. Chen owned Chenmex Properties , Inc. and was a part owner of Re/Max Sunvest Realty Co. He solicited $6.6 million from investors and promised annual returns of 10% to 15%.

Thomas Dluca, Louis Gatto, Eric Pinkston, and Scott Chandler settled with the FTC in connection with the claims brought by the FTC in 2018 against the individuals, Bitcoin Funding Team and My7Network. They promoted cryptocurrency programs through websites, YouTube videos, social media and conference calls, promising investors as much as $80,000 per month on an initial investment of $100.

Shayeh Dov, 49, of Florida, was sentenced to 7 years, 3 months in prison and ordered to pay about $3 million in restitution in connection with a Ponzi scheme that targeted a South Florida Jewish community. More than 30 people invested with Dov. Dov sold investors fraudulent discounted real estate notes that he and his firms did not actually own.  The losses in the scheme were approximately $3 million. Dov used the funds on gambling, renting luxury cars and paying for trips to the Bahamas, Israel and New York. Dov pleaded guilty earlier this year.

David L. Downey, 50, of Indianapolis, pleaded guilty to charges stemming from an alleged $9.4 million Ponzi scheme. Downey ran a payroll service under the name Time Payroll and misdirected clients’ funds to his personal accounts. Downey misapplied about $20 million but returned about $11 million to the IRS for employment taxes.

Albert “Alex” Golant, of Wisconsin, was sentenced to 10 years and 6 months in prison for his role in a Ponzi scheme that obtained more than $30 million from at least 40 different victims. The scheme was run through Timeless Auto Group and involved the purchase of luxury vehicles in the U.S. and then selling them at a profit to foreign buyers overseas, usually in China. Golant sometimes did not purchase the vehicles and in other instances sold the same vehicle to multiple clients.

Khemraj Dave Hardat, 50, was sentenced to 7 years and 3 months for running a $7.5 million Ponzi scheme. Hardat held himself out as a successful investor and businessman in the performance beverage and water-bottling industries.

Tytus W. Harkins, 37, of Montana and his company, Hartman Wright Group LLC, were sued by the SEC in Colorado alleging that they were engaged in fraud. Harkins told investors that he would find distressed or undervalued mobile home parks, purchase them using investor money, make capital improvements, and then sell them for a profit. The scheme raised over $8 million and promised investors returns of 6 -8% per year. 

Tanmaya Kabra, 25, of New Jersey, was arrested on charges that he defrauded at least 4 investors out of more than $700,000 in an alleged Ponzi scheme. Kabra represented that he was an entrepreneur, venture capitalist and investor in start-up companies and he promised investors high rates of return through his companies, Vanguard Ventures Group and LaunchByte Ventures LLC. Kabra used the funds to pay his credit card debt and to buy a boat.

Terry Wayne Kelly Jr. of Mississippi, and Kelly Management LLC were charged by the SEC in connection with their role in selling promissory notes for the Madison Timber Properties LLC Ponzi scheme.

Thomas Lanzana, 51, of South Carolina, was indicted on allegations that he defrauded about 45 investors in a phony foreign currency Ponzi scheme involving $1.1 million. The scheme was run through Blackbox Purse (Unique Forex).  Lanzana allegedly posted bogus monthly account statements showing balances for forex trading accounts that didn’t exist. The CFTC had initiated a case against Lanzana in 2017.

Bradley Mascho, 53, was sentenced to 2½ years in prison for conspiracy related to the $20 million Ponzi scheme run by Dawn J. Bennett at Bennett Group Financial Services LLC. Bennett and Mascho solicited investors into a scheme run through DJB Holdings, offering them 15% returns.

Hector May, 78, of New York, was sentenced to 13 years in prison and ordered to pay $8.4 million in restitution in connection with a Ponzi scheme that defrauded 15 investors. May, the former president of Executive Compensation Planners, promised investors that he would use their money to purchase bonds and other investments on their behalf but instead used the money for personal and business expenses. May pleaded guilty last year to stealing $11.5 million from investors. May’s daughter, Vania May Bell, 54, has been named as a co-conspirator.

Robert Glen Mouritsen, 72, of Utah, had his hearing delayed in connection with an alleged $1.5 million Ponzi scheme. Mouritsen is a former stake president in The Church of Jesus Christ Latter-day Saints and is accused of cheating follow church members. 

Patrick O’Connor, 61, was sentenced to 7 years in prison in connection with a Ponzi scheme run through Madison Financial Services. O’Connor defrauded 6 investors out of about $10 million by represented he would put their funds into a TradeStation online brokerage account, promising average annual returns of 2% per month. O’Connor plead guilty to the scheme earlier in the year 

Robert Shapiro, 61, of California, pleaded guilty to charges that he orchestrated a $1.3 billion Ponzi scheme through Woodbridge Group of Companies, LLC. Woodbridge promised investors returns on investments in real estate loans. The scheme defrauded more than 9,000 victims, many of them senior citizens. Shapiro admitted that he misappropriated between $25 million and $95 million of investor funds. Shapiro had accumulated, and then lost to forfeiture, artworks by Pablo Picasso, Alberto Giacometti, Marc Chagall, and Pierre-August Renoir; 603 bottles of wine; numerous pieces of luxury jewelry; and a 1969 Mercury convertible. Two alleged co-conspirators, Dane Roseman and Ivan Acevedo, are scheduled for trial next year.

Brenda A. Smith, 59, was arrested and charged in connection with a $63 million Ponzi scheme. Smith ran a network of investment companies that included Broad Reach Capital, L.P., Broad Reach Partners, and Bristol Advisors, LLC. She solicited more than $105 million from high net worth individuals and promised 30% returns. The SEC also filed a lawsuit against Smith and her entities.

Troy Wragg, 37, of Philadelphia, was sentenced to 22 years in prison and order to pay $54 million in restitution in connection with the Ponzi scheme run through Mantria Corp. The scheme defrauded nearly 500 investors and promised returns of 50% or better from technology that would supposedly turn household waste into power – “trash for cash.” Investments came through Wragg’s co-defendant Wade McKelvy, who operated unlicensed investment clubs. McKelvey was convicted but has not yet been sentenced. Amanda Korr, 36, pleaded guilty to fraud in the green energy scheme and is serving a 30-month sentence.

INTERNATIONAL PONZI SCHEME NEWS 

China

The key suspects in the PlusToken scheme that solicited $3 billion from investors in a cryptocurrency scheme have been detained. The scheme allegedly defrauded 10 million investors. Reports state that the company might have been liquidating portions of the $3.5 billion in cryptocurrency via various crypto exchanges.

England

Richard Rufus, 44, was charged with running a Ponzi-style scheme that defrauded about 100 investors. Investors lost almost £9 million.

India

Dhavel Mavani was arrested for promoting a Ponzi scheme. Mavani developed Bitconnect’s website and was hired in 2017 by the head of Bitcoinnect in Asia to build a website for the $3.2 billion cryptocurrency scheme. 

Three additional directors, Harish Kumar, 43, Rajesh Singh, 39, Vishal Kumar, 35,  were arrested in connection with the Bike Bot taxi service scheme. So far 11 officials, including Sanjay Bhati, have been arrested. Bike Bot is a multi-level marketing scheme run by the Garvit Innovative Promoters Limited.

Indian police arrested Australian citizen, Harpreet Singh Sahni, in connection with an alleged crypto Ponzi scheme that defrauded about 1,500 investors out of $14 million. Sahni set up Plus Gold Union Coin through which the scheme was run. Three agents, Brijesh Raikwar, Seema Raikwar, and Rupesh Rai, were arrested earlier this year. 

Suraj Singh, 24, was arrested on allegations that he was running a Ponzi scheme related to renting cars. The scheme allegedly defrauded 50 investors involving more than 100 high end cars.

Israel

Ramon Kadri, a Mexican citizen residing in Israel, was indicted on charges that he ran a NIS 3 million Ponzi scheme.

Nigeria

Operators of the alleged Ponzi scheme run through Bluekey Investment Club have been arrested. The company was registered as a software development and general contracting firm but then started in engaging in an interest-yielding Ponzi scheme with promised returns of 10% weekly over 6 months.

South Africa

Authorities warned that Coin It Trading is “showing hallmarks of a Ponzi scheme.” Investors were promised as much as 200% on their investment in 3 years. It’s sister company, Commex Minerals, is also suspected to be operating a fraudulent scheme. Authorities have identified Michael Andrew Anthony de Beer as the director of Coin It and Patricia Ursula de Beer, who is allegedly Michael de Beer’s former wife, as a director of Commex Minerals.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

Investors in the MRI International Inc. Ponzi scheme reached a settlement for $441 million in connection with the $1.5 billion medical debt scheme.

Wednesday, July 31, 2019

July 2019 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for July 2019. The reported stories reflect at least 15 new Ponzi schemes worldwide; at least 2 guilty pleas, over 6 years of newly imposed sentences for people involved in Ponzi schemes; and an average age of approximately 52 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed.
 
Jose Angel Aman, Harold Seigel and his son Jonathan Seigel, were sued by a group of Venezuelan nationals alleging that they were lured into a $30 million Ponzi scheme with promises of returns on investments in diamond-backed cryptocurrency, Argyle Coin. The scheme was run through two diamond companies, Natural Diamonds and Eagle Financial, and an associated cryptocurrency business. Over 300 investors were defrauded. The Seigels deny any wrongdoing.

Monica Brady, 44, of Rhode Island, pleaded guilty to charges relating to a $10 million real estate Ponzi scheme that she ran through MNB. Brady claimed to be overseeing renovations on foreclosed properties and she promised investors returns from the profits from the sale of the properties. Investors were promised returns of 50% of the profits from the projects.

Joseph Bernard Charde, 72, and Allen Roy Duquet, 68, of Florida were arrested in connection with an alleged real estate Ponzi scheme that defrauded 26 victims out of $6 million. The scheme was run through Oneir Sales and Rentals LLC and an investment program called The Commission Resource Program. The dollar amount allegedly stolen is more than $6 million.

Natalie Cochran was accused of running an investment fraud with her late husband, Michael Cochran. The alleged scheme was run through Tactical Solutions Group and Technology Management Systems, which were government contractors. Cochran filed bankruptcy following the fraud charges.

Myles Hannigan, 48, was charged with federal tax crimes in connection with an alleged Ponzi scheme run through Payroll Professionals, Inc. The company is a third-party payroll processor that assists clients by issuing payroll checks and forwarding tax payments to taxing agencies.
 
Hunter Hanson, 22, of North Dakota, pleaded guilty to charges relating to his grain business that was alleged to be a Ponzi scheme. The plea deal calls for Hanson to forfeit his assets and pay $11.4 million in restitution.

David Kaplan, 52, and his companies, Synchronized Organizational Solutions International Ltd. (SOSI), Synchronized Organizational Solutions LLC (SOS), and Manna International Enterprises Ltd., were charged in connection with an alleged Ponzi scheme. Kaplan allegedly used his role as an attorney to defraud investors in a scheme that netted more than $12 million from investors. Investors were promised returns of 10% per month.

Bernard Madoff, 81, asked President Trump to reduce his 105-year prison sentence. Madoff asked that his sentence be commuted and that he be released – a request that the prosecutor called “the very definition of chutzpah.”

William J. Milles and Donald J. Lutzko, co-founders of Capital Energy Group LLC, were sued by the SEC on allegations that they were running a $3.9 million Ponzi scheme. The scheme allegedly offered high returns on oil and gas offerings, guaranteeing 237% or 363%. The scheme allegedly defrauded approximately 70 investors.

Clayton Morris, a former co-host on Fox News’ Fox & Friends, and his wife, Natalie Morris, were accused of defrauding investors through their company, Morris Invests. They have denied the claims and moved to Portugal. Morris was a part owner of Oceanpointe, a company that sold turnkey landlord services in Indianapolis to investors. Morris and his partner, Bert Whalen, have both been sued and accused of doing substandard repairs to properties.
 
Mark Nordlicht and David Levy were convicted of fraud in connection with the Platinum Partners scheme.  They had been accused of defrauding investors in Black Elk Energy, an oil company that was one of Platinum’s largest assets.

Paul Andrews Rinfret, 70, was arrested in connection with an alleged $19 million Ponzi scheme. Rinfret allegedly ran the scheme through his investment fund, Plandome Partners LLC.

Landon M. Smith, 29, of Utah was charged by the SEC was running a $2.4 million Ponzi scheme through J&L Real Estate. The scheme promised returns of up to 100% on investments that would be used as “earnest money” down payments for real estate that Smith would buy and then sell. The scheme defrauded 50 investors.

Henry Wieniewitz, III and his Tennessee company, Wieniewitz Financial, were charged by the SEC with unlawfully offering and selling securities of Woodbridge Group of Companies LLC and 1 Global Capital. Woodbridge was previously charged by the SEC with operating a $1.2 billion Ponzi scheme. Wieniewitz and his company are alleged to have sold securities to more than 630 investors.

INTERNATIONAL PONZI SCHEME NEWS
 
Australia

An alleged Ponzi scheme defrauded victims through a website called Coinexx.org. The scheme promised returns of up to 15% weekly.
 
Richard Philip Lambe was banned from providing financial services for 3 years following his involvement in a $120 million Ponzi scheme run by Veronica Macpherson that defrauded nearly 2,000 people. Lambe was found to have failed in his duty to supervise Macro Group Company 511 GTN and Macpherson as director of Anquan Securities and Investment.

Kelvin Clive Wood was sentenced to 6 years and 3 months in prison for a Ponzi scheme run through his foreign exchange brokerage. The scheme defrauded 18 investors and more than $7 million was lost in the scheme.

Canada

John James Illidge, 66, and Vincent Phillips, 74 were charged in connection with an alleged $1 million Ponzi scheme. Illidge represented that he was an investor for different companies.

China

Justin Sun, the CEO of Tron, aka Wave Field, is accused of running a Ponzi scheme that defrauded thousands of investors out of at least $30 million. The scheme was run through Wave Field Super Community, and victims invested in Tron cryptocurrency, TRX.

England

Authorities seized $4.24 million from Samuel Golding, 42, and Shantell Deacon, 40, in connection with a China trade investment Ponzi scheme. The scheme was run through Digital Wealth and Outsourcing Express and defrauded 1,000 investors.

India

Sandeep Singh Dua was arrested in connection with a cryptocurrency scam involving Kashhcoin.
 
Vijay Prajapati, Dhiraj Patel, Kamruddin Syed, and Ashiq Shaikh, the alleged creators of the cryptocurrency, KBC Coin, were arrested.

Rajesh Khantwal was arrested on charges that he was running a scheme through Maple Innovative Promoters and MIP Bikes. Over 5,000 investors put money into the motorcycle sharing aggregator alleged Ponzi scheme.

Malta

Authorities have issued a warning that Emirate Coin Tech is not licensed or registered and has no authority to provide any investment, crypto or another type of financial services.

Philippines

The SEC ordered Alabel Maasim Mining (ALMANICO) Corp. and Alabel-Maasim Credit Corp. (ALAMCCO) to stop operations without a license.  The SEC alleged that the companies were running a Ponzi scheme that promised returns of 35% per month.

South Africa

A bitcoin scheme allegedly defrauded thousands of investors through a company called Bitcoin Wallet. The scheme promised returns of 100% in 15 days. Investors set fire to the home of Sphelele “Sgumza” Mbatha following the collapse of the scheme.

South Korea

The crypto firm, PlusToken, was accused of running a Ponzi scheme that stole $3 billion from customers. PlusToken had 3 million users and expected to have 10 million users by the end of 2019. The scheme promised returns of 6% to 18% per month.

Authorities believe that about 2.7 trillion won ($2.3 billion) has been lost to crimes in cryptocurrency in the last two years.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

Deloitte, EisnerAmper, Sidley Austin, TD Ameritrade, Integrity Bank & Trust of Colorado, Duff & Phelps agreed to pay $234.6 million for allegedly enabling the Ponzi scheme run by Aequitas Capital Management.

Kingate Management Ltd. agreed to pay back $860 million to the Bernard Madoff estate.