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

Kathy is a senior business trial attorney with more than 30 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, April 30, 2022

April 2022 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for April 2022. The reported stories reflect at least 8 new Ponzi schemes worldwide, 3 guilty pleas, more than 39 years of prison sentences, and an average age of approximately 49 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. 

Matthew Beasley, 49, was accused by the SEC of running an alleged $449,000 Ponzi scheme that operated in Nevada, Utah, and California that defrauded over 600 investors. Beasley confessed to running a Ponzi scheme after he was shot by an FBI agent who had come to his house to investigate and was shot at himself. Investors were told that their money would be used to make advance payments to plaintiffs who had settled tort claims and were willing to pay a premium to be paid on the settlements in advance. Investors were promised returns of 50% or more. Beasley admitted that he did not have relationships with settlement plaintiffs and that he used the investor funds to pay off gambling debts and for luxury items. Jeffrey Judd, the main promoter of the scheme, was also named in the SEC suit. The entities charged with fraud in this action are J&J Consulting Services, Inc. (Nevada), J&J Consulting Services Inc. (Alaska), J and J Purchasing LLC, Beasley Law Group PC, PAJ Consulting Inc, BJ Holdings LLC, Stirling Consulting L.L.C., CJ Investments, LLC, Rocking Horse Properties LLC, Triple Threat Basketball, LLC, ACAC LLC, Anthony Michael Alberto, Jr., and Monty Crew LLC. Other individuals charged with acting as unregistered brokers are Humphries, Shane Jager, Jason Jongeward, Denny Seybert, and Roland Tanner

Vania May Bell, 57, pleaded guilty to running a Ponzi scheme with her father, Hector May, through Executive Compensation Planners. Hector May was sentenced to 13 years in prison and ordered to pay $8 million in restitution. 

David Joseph Bunevacz, 53, Mary Hayca Bunevacz, of California, and CaesarBrutus LLC, Brutuz California Ventures Corp., and CB Holding Group Corp., were charged by the SEC with running a cannabidiol oil vape Ponzi scheme. The SEC alleges that the scheme raised over $35 million from at least 40 investors who were promised returns from the production and sale of cannabis products, including vape pens. 

Shawn E. Good, 55, of North Carolina, was charged by the SEC on allegations that he ran a $4.8 million Ponzi scheme defrauding clients in his position as a Morgan Stanley financial advisor. Good is no longer employed with the firm. Good allegedly had his clients transfer money to his personal bank account so he could make investments in real estate development projects and government bonds on their behalf and promised them returns of 6% to 10%. 

Marlin Hershey, 52, and Dana Bradley, 52, were charged on allegations that they were running a $4 million Ponzi scheme through Performance Holdings. 

David Hu, 64, of New Jersey, was sentenced to 12 years in prison in connection with a Ponzi-like scheme run through International Investment Group that involved more than $120 million. Hu had previously pleaded guilty to the scheme that involved the selling of over-valued and fake loans and falsified documents to deceive auditors and investors. Hu ran the scheme with co-conspirator, Martin Silver, who also previously pleaded guilty. They operated three private funds known as the IIG Trade Opportunities Fund N.V., the IIG Global Trade Finance Fund, Ltd., and the IIG Structured Trade Finance Fund, Ltd.   

Robert A. Karmann, 55, was sentenced to 6 years in prison and was ordered to pay $624 million in restitution for his role as the chief financial officer in the $1 billion Ponzi scheme run through DC Solar. DC Solar defrauded investors by promising returns from trailer-mounted solar generators. DC Solar’s owner, Jeff Carpoff, was sentenced last November to 30 years in prison. Carpoff’s wife, Paulette Carpoff, pleaded guilty and is scheduled to be sentenced next month. Joseph W. Bayliss was sentenced to 3 years in prison, and other defendants have pleaded guilty and are scheduled for sentencing: Alan Hansen, 50, Ronald J. Roach, 54, and Ryan Guidry, 44.

John Law, 43, of New York, was sentenced to 10 years in prison and ordered to pay $1.3 million in restitution. Law previously pleaded guilty to charges in connection with a $115 million Ponzi scheme run by “King Perry” Santillo and Christopher Parris through Lucian Development that resulted in more than $70 million in losses. Santillo and Law sold securities to the public through various businesses including Advice and Life Group, Poconos Investments, First American Securities, and Financial Planners Group of America. Santillo was sentenced to 17 years in prison and Parris was also convicted but has yet to be sentenced.

Scott Merke and Eric Alexander of Florida have been sued by the SEC in connection with the $322 million fraudulent scheme run by 1 Global Capital LLC.

Casper Mikkelsen has been permanently banned by the CFTC from trading commodity interest in connection with a foreign exchange fraudulent scheme that purportedly paid forex trading profits to clients. The CFTC has coordinated with foreign regulators in Denmark on this case.

Robert T. Nicholas, 48, was indicted in connection with an alleged $150,000 Ponzi scheme. Nicholas defrauded his clients as an insurance agent. 

Charles Ochi, 27, of Texas, and Danielle Liggins, 32, or Arkansas, were arrested on allegations that they were running a Ponzi scheme using sham companies to transmit proceeds to Nigeria. They used Global Prime and Liggins Starflexx Commercial to receive money from investors.

Austin Delano Page, 26, and Brandon Alexander Teague, 26, of North Carolina pleaded guilty in connection with a scheme run through D&T Investment that took in $4.2 million from over 300 people. They represented that they were running a hedge fund that invested in securities, but there was no hedge fund and they did not hold any securities. They guaranteed 100% of the initial investment and promised 70% profits from trading.

Richard Dow Rockwell, of California, and Dow Rockwell LLC were charged by the SEC for undisclosed conflicts of interest related to a real estate Ponzi scheme run through Professional Financial Investors, Inc.  Rockwell and his company raised approximately $8 million for the scheme and earned approximately $400,000 in referral fees, which they failed to disclose to their clients.

William Stenger, 73, was sentenced to 18 months in prison and was ordered to pay $250,000 in restitution for his role in the Jay Peak EB-5 Ponzi scheme. Stenger pleaded guilty last year to submitting false information to the government. He raised more than $80 million from over 160 foreign investors through the EB-5 visa program, but the project known as AnC Bio VT failed, and Stenger and Jay Peak’s owner, Ariel Quiros, were accused of running a Ponzi scheme. Bill Kelly was also charged in connection with the scheme.

Junzo Suzuki, 73, and his son, Paul Suzuki, 43, were sentenced to 5 years in prison in connection with the Ponzi scheme run through MRI International Inc. out of Las Vegas. The two ran the scheme with Edwin Fujinaga, 75, who is serving a 50-year prison sentence. The scheme involved $1.5 billion and 10,000 investors, most of whom were Japanese. 

Abner Alejandro Tinoco and his company, Kikit & Mess Investments, LLC, were the subject of a consent order obtained by the CFTC. They had been charged by the CFTC and fraudulently solicited over $7.2 million from 322 clients. The clients had given their money to be managed in customized client portfolios for foreign exchange and crypto trading. Most of the money was instead used to pay Tinoco’s personal expenses such as chartering a private jet, renting a luxury mansion and cars, and buying real estate.

INTERNATIONAL PONZI SCHEME NEWS 

Brazil

Authorities are searching for the creators of Alpha Consultoria, Sadraqui de Freitas and Nathan Assis de Oliveira, who they believe defrauded more than 2,000 people on promises of 30% returns per month on investments in cryptocurrencies.

Canada

Mark E. Cohen, 42, was arrested in connection with an alleged $12 million pandemic-related Ponzi scheme. The scheme promised 13% from the supposed purchase and resale of used vehicles from rental companies.

England

Andrew Fuller aka James Wellesley, 55, and Stephen Burton, 57, are accused of defrauding wine collectors in a £76 million ($99 million) Ponzi scheme. They offered investors large returns on loans that were supposedly collateralized by valuable bottles of fine wines. The scheme was run through Bordeaux Cellars London and Hong Kong-based Bordeaux Cellars.

Kenya

Authorities report that Bitstream Circle is targeting investors in a Ponzi scheme across seven countries. The cryptocurrency scheme has targeting 11,000 people and promises returns between 5% and 8% on daily investments.

Lagos

Chinyere Emeka-Atu was accused of running a Ponzi scheme through her company, Family Food Support Association, that defrauded investors out of N600m. 

Nigeria 

The mother of Ovaioza Yunusa was arrested in connection with an alleged fraudulent scheme run through Ovaioza Farm Goods Storage Business. The scheme promised investors 70% to 80% returns and supposedly involved the buying, selling, and storage of certain commodities.

Philippines

ScentokoWorld Corp. and Brendahl Cruz Holdings had their corporate registration revoked by the SEC due to illegal solicitations from the public. The companies are both affiliated with Brendahl Cruz, the president and CEO and were promising investors 400% returns within 30 days from the purchase of perfume and beauty product packages.

Singapore

Authorities arrested a 29-year old man in connection with an alleged Ponzi-like scam run through Moviitech, a job platform. Job seekers received unsolicited messages on Telegram, Facebook, Instagram and YouTube, promoting a money-making opportunity through watching move trailers. People were promised payment from watching movie trailers and more money for recruiting more people. They were required to purchase a membership plan before they started earning commissions, but stopped receiving commissions and were unable to withdraw from their member accounts. 

Thursday, March 31, 2022

March 2022 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for March 2022. The reported stories reflect at least 15 new Ponzi schemes worldwide, 4 guilty pleas, more than 30 years of prison sentences, and an average age of approximately 56 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. 

Scott Allensworth, 68, of California, was sentenced to 33 months in prison and ordered to pay $2.3 million in restitution for his role in the Ponzi scheme run through Capital Growth Group Associates. The company provided financial services to clients. Allensworth, along with David Hunt Weddle, 66, defrauded clients through a private investment fund called JustInfo LLC. Investors were promised that their money would go into a brokerage account and that a special trading strategy would be used to limit their losses and generate monthly returns of between 5% and 20%. Over 50 victims were defrauded out of more than $2.3 million.

Americo “Rick” Antunes, 71, of Florida was arrested on allegations that he ran a Ponzi scheme through Platinum Bay Capital Management LLC. The scheme defrauded investors out of $2 million.

Darrell Arnold Aviss, 64, who was previously charged in a $12 million alleged Ponzi scheme faces new charges of failing to pay over $3 million in taxes and concealing bank accounts in Monaco.  The scheme promised to invest funds in annuities in Swiss insurance companies, but the funds were instead used to fund Aviss’ lavish lifestyle.

Matthew Beasley, 49, is under investigation for his role in an alleged $300,000 Ponzi scheme that operated in Nevada, Utah, and California. He is facing charges in connection with an FBI agent-involved shooting at his home. When the FBI arrived to investigate the alleged Ponzi scheme, Beasley pointed a gun at an FBI agent and was shot by an agent. A group of investors commenced a class action against Beasley alleging that Beasley, Jeffrey Judd, J&J Purchasing, and J&J Consulting defrauded them and promised investors returns of 10% to 20%.

Gordon Brad Beckstead, 57, pleaded guilty to charges relating to the Ponzi scheme run through BitClub. Beckstead admitted to helping the operators of the $722 million scheme conceal the scheme. He controlled the bank accounts associated with the scheme and the creator of the scheme, Matthew Brent Goettsche.

Vania May Bell, 57, the former comptroller and chief compliance officer of Executive Compensation Planners, Inc., pleaded guilty to participating in a conspiracy with her father, Hector May, in operating a Ponzi scheme. The scheme stole more than $11 million from more than 15 victims. They persuaded clients to withdraw money from their securities accounts with a broker-dealer and to invest in accounts at Executive Compensation Planners to invest in bonds. May was previously sentenced to 13 years in prison.

Robert Craig Bridgforth, of Missouri, and his company called Liberty Gold and Silver were the subject of an order to show cause why restitution, civil penalties and other administrative relief should not be imposed in connection with an alleged Ponzi scheme that defrauded investors out of at least $760,000 who were sold unregistered homemade “silver and gold certificates.”

Stephen Burton, 57, and James Wellesley, 55, were indicted on allegations that they ran a high-end wine Ponzi scheme through Bordeaux Cellars. The scheme took in $99 million from investors who thought they were providing loans to high-net worth individuals who had expensive wine collections that supposedly needed quick cash. Neither the loan recipients nor the wine collections existed.

Jeffrey Carley, 53, of Iowa, was sentenced to 5 years in prison and ordered to pay $1.36 million in restitution in connection with a Ponzi scheme run through Carley Financial Group, Prosperity Partners, and Main Street Solutions. Carley promised returns to victims by directing clients to move money out of traditional retirement accounts to “self-directed IRAs.”

Orazio DeGregorio, 45, was charged by the SEC with running a $1.2 million Ponzi scheme that targeted elderly clients between the ages of 78 and 94.

Kelly Gearhart was released from prison a year early from his 9-year prison sentence following an appeal. Gearhart ran a Ponzi scheme that defrauded hundreds of investors out of millions of dollars. 

Dwayne Golden, Gregory Aggesen, Marquis Egerton, and Indian national, Jatin Patel, were charged by both the CFTC and the Department of Justice in connection with an alleged scheme that defrauded investors out of over $23 million in Bitcoin and $21 million. They operated three digital asset scams through Empowercoin, Ecoinplus and JetCoin. Investors were told the returns were guaranteed and were promised a 200% profit in 90 days. 

Bradley R. Heinrichs, 41, of Idaho, was indicted on allegations that he ran a Ponzi scheme through Anthology Real Estate involving Arizona real estate. The scheme allegedly defrauded Christian families out of $82 million and promised returns of 25%. Heinrich’s business partner Stephen J. Hatch, 72, pleaded guilty in 2017. Heinrichs maintains that he is not guilty.

Dro Kholamian was sentenced to 4 years in prison and ordered to pay $755,000 in restitution in connection with a scheme run through his company, Blue Star. Kholamian solicited funds from investors in the Armenian community and he brought in $995,000 from investors for futures and foreign exchange trading. A consent order was entered in an action brought by the CFTC for solicitation fraud and misappropriation of client funds. 

Satish Kumbhani, 36, was charged in connection with the BitConnect Ponzi scheme with embezzling $2 billion. The scheme was a cryptocurrency Ponzi scheme that defrauded thousands of investors. Kumbhani is an Indian citizen and remains at large. He was sued last year by the SEC, along with Glenn Arcaro, one of the main promoters of the scheme.

Robert Mueller, a Texas attorney, was charged by the SEC with running a Ponzi scheme through Deeproot Funds. Deeproot bought life insurance viaticals, but collected $43 million after the last life insurance policy was purchased.  Deeproot has filed for bankruptcy.

Marco Perez, Jr. aka Sully Perez, 41, of Texas, was charged with allegations that he was running a Ponzi scheme through Permian Basin Proppants, Inc. Perez took in over $11 million for a scheme involving the resale of sand for fracking operations that was supposedly purchased at a discount. 

Gaylen Dean Rust, 62, was sentenced to 19 years in prison and ordered to pay $153 million in restitution in connection with a $200 million Ponzi scheme run through Rust Rare Coin in Utah. Rust, his ex-wife Denise Rust, and their son Joshua Rust, 39, were all indicted in 2019, and all three pleaded guilty to the scheme. The scheme defrauded 568 victims and involved a silver trading Ponzi scheme. 

David W. Schamens, 64, of North Carolina, was charged on allegations that he was running an alleged scheme through TradeStream TD Trading LLC, TFG Trading LLC, Analytics Ltd, Tradedesk Financial Group Inc, and others. He solicited investments into the Algo Fund, describing it as a “proprietary algorithmic trading fund managed by TradeStream. The fund was to use “state of the art servers” located in the same data center as the New York Stock Exchange and the NASDAQ. The scheme allegedly defrauded hundreds of investors out of $7 million and promised returns of between 12% and 30%.

INTERNATIONAL PONZI SCHEME NEWS 

Canada

Authorities warned against using Aweunion aka Awebuy, a company that has been called an online Ponzi scheme.  Authorities say that it falsely promises returns based on claims that its app purchases under-preforming products on Amazon to drive up popularity and spike consumer interest. Investors are promised commissions from their investments.

Charles Debono, 63, pleaded guilty to charges in connection with a Ponzi scheme run through Debit Direct that promised investors $.15 from every transaction with his debit machine business. The scheme involved more than 500 investors who invested more than $41 million. 

China

More than 10 suspects were arrested on charges relating to an alleged Ponzi scheme. A suspicious website recruited virtual currency investors and had more than 60,000 accounts with over $16 million invested. 

India

Braj Kishore Chaudhury was arrested on charges that he was running a Ponzi scheme that defrauded 6,000 investors. The scheme was run through Algo Academy.

Tapan Kumar Samanta, director of Mass Infra Realty Ltd was arrested on charges that he was running a Ponzi scheme. The company changed its name in 2012 to Human Welfare Credit & Thrift Cooperative Society Ltd.

Pranjil Batra was arrested in connection with an alleged Ponzi scheme run through Future Makers Life Care Private Limited. Batra is the software engineer who is accused of stealing funds from the company by creating fake IDs and using funds for his personal expenses.

Arpan Patel and Adyajyoti Nayak, directors of IAAVIC Pvt. Ltd, were arrested in connection with an alleged Ponzi scheme run through a fake stock market advisory company. They are accused of defrauding 400 investors.

Kamal K Bakshi, Paras Nath Singh, Pankaj Singh, Rakesh Singh, Rita Singh, Arvind Singh, Yogendra Pratap Singh, and Gurnam Singh were accused of running a Ponzi scheme through Unipay 2U Marketing Pvt Ltd and 2U Trading Pvt Ltd.

Kenya

An alleged Ponzi scheme called Bitstream Circle Limited, registered in the U.K., has collapsed and investors are unable to withdraw their funds. The director is listed as Quin Yang, of China. More than 11,000 investors who signed up in less than 4 months were promised daily returns of 5% to 8%

Nigeria 

Nurudeen Lawal Ekuma-Ezeogo Fabian Tochukwu was sentenced to 10 years in prison in connection with a scheme run though his Facebook account. Tochukwu created a fake Facebook account using the name Ogboi Ijeoma to defraud victims. 

Singapore

Authorities arrested eight men aged 18 to 30 who are suspected of running Ponzi-like schemes through an e-commerce affiliated business.