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

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

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

Thursday, September 30, 2021

September 2021 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for September 2021. The reported stories reflect at least 8 new Ponzi schemes worldwide, 6 guilty pleas, more than 67 years of prison sentences, and an average age of approximately 50 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. 

Glen Arcaro, 44, of California, pleaded guilty to charges for his role in defrauding cryptocurrency investors in the worldwide Bitconnect Ponzi scheme. The SEC also filed charges against Arcaro and Bitconnect in connection with the $2 billion scheme. Arcaro was the lead promoter of the scheme through his website, Future Money, and he earned no less than $24 million in connection with the scheme. The SEC also sued Bitconnect founder, Satish Kumbhani, for obtaining 325,000 bitcoins through the “lending program” where investors were falsely told that their funds would be pooled and used to earn daily returns.

Jan Douglas Atlas, 76, of Florida pleaded guilty to charges relating to a $322 million Ponzi scheme that was run through 1 Global Capital LLC.  He was a securities lawyer who served as outside counsel for 1 Global and prepared letters that contained false descriptions about how the 1 Global investments actually worked. Atlas had pleaded guilty in 2019, and he was sentenced to 8 months in prison and ordered to pay $29.8 million in restitution. Another lawyer in the same firm, Andrew Dale Ledbetter, 79, was sentenced to 5 years in prison and ordered to pay nearly $149 million in restitution.

Bryan Bartz, 39, was sentenced to 5 years and 10 months in connection with a Ponzi scheme that stole more than $1 million from investors. Bartz worked as a broker at different insurance companies and created more than 100 fraudulent policies, collecting commissions and bonuses.

Efrain Betancourt Jr., of Florida, and his company, Sky Group USA, LLC were sued by the SEC on allegations that they defrauded more than 500 investors in the Venezuelan-American community in South Florida. Fraudulent promissory notes totaling $66 million were sold to investors who were told their funds would be used to make payday loans and cover the costs of such loans. Investors were promised returns as high as 120%. In reality, Betancourt spent at least $2.9 million for personal use, including an extravagant wedding and vacations. Another $ 3.6 million was transferred to friends and family, including his ex-wife Angelica Betancourt and to the firm EEB Capital Group LLC, a company controlled by Betancourt.

Gregory Demetrius Bryant, Jr. aka Gregory Surrey England, formerly of Hawaii, was charged by the CFTC with running a Ponzi scheme through an unlawful commodity pool operated by Surrey Libor Capital, LLC and Libor Capital. Bryant solicited $426,000 from at least 35 participants, promising guaranteed monthly futures and forex trading returns of 60% to 80%

Jason Bullard, 57, and Angela Romero-Bullard, 49, and their company Bullard Enterprises LLC, were sued by the SEC accusing them of running a multi-million Ponzi scheme. The SEC alleges that they raised $17.6 million from about 200 investors. The investors were told their funds would be used for investments supposedly providing returns of 10% to 12%, but instead the funds went to pay credit cards, life insurance premiums and to prop up their other businesses including Empire Racing Stables. The SEC alleges that the Bullards had received $434,000 in federal funds from the Paycheck Protection Program that had been established to help employers retain employees during the pandemic but, instead, the Bullards used the PPP money to continue to operate the Ponzi scheme. 

Gregory Ciccone, 43, was charged with running a Ponzi scheme through fake companies, such as Platinum Travel and Entertainment and Platinum Enterprises & Concierge Service. Ciccone promised 50% returns within 6 months by buying luxury hotel rooms which he would supposedly resell to elite clients. 

Victor Farias, 48, was sentenced to 11 years and 3 months in prison with a Ponzi scheme he operated through Integrity Aviation & Leasing. Investor losses were over $7.4 million. Farias misrepresented that investors’ funds would be used to purchase aircraft engines and that the aircraft engines would be leased to airlines for profit. About 90 investors were defrauded.

Maurice Fayne, 38, of Georgia, also known as Arkansas Mo, was sentenced to 17½ years in prison and ordered to pay $4.5 million in restitution for running a Ponzi scheme and other fraudulent activity. Fayne pleaded guilty in May to charges stemming from false statements made to a financial institution involving a loan application for $3.7 million from the Paycheck Protection Program. Fayne intended to use the PPP program as a cover for a long-running Ponzi scheme run through his supposed trucking business, Flame Trucking, that defrauded more than 20 people. Fayne, who was a reality TV star, used the PPP funds to cover expenses, pay a previous fraud restitution obligation, and for luxury items such as jewelry and a Rolls-Royce lease.

Zachary Joseph Horowitz aka Zach Avery, 34, has agreed to plead guilty to charges relating to a $650 million Ponzi scheme that defrauded more than 250 investors. Horowitz admitted that he has failed to repay $231 million in a scheme run through 1inMM Capital LLC. He misrepresented that investors would lend money for film deals and that they would be repaid with a return of 25% to 45% within a year. Horowitz acknowledged that the distribution and licensing contracts were forged and that investors were shown fake correspondence with Netflix and HBO executives. 

Katie Lynn Mancuso, 40, of Tennessee, was charged in connection with an alleged Ponzi scheme in which she solicited $2.8 million from at least 26 investors. The scheme was run through Gray Area Marketing, which was purportedly a sports marketing agency that represented famous athletes. 

Oppenheimer & Co was sued in a class action lawsuit by investors alleging that one of its advisers, John J. Woods, was operating a Ponzi scheme through Horizon Private Equity III LLC. The SEC sued Woods last month alleging that he defrauded more than 400 investors.

Stefan Qin, 24, was sentenced to 7½ years in prison for running a $90 million Ponzi scheme that defrauded more than 100 victims. The scheme was run through Virgil Sigma Fund LP and which was supposedly a hedge fund that had generated 500% returns by exploiting the price gaps between cryptocurrencies on 40 exchanges throughout the world.

Philip Elvin Riehl, 68, of Pennsylvania was sentenced to 10 years in prison in connection with a Ponzi scheme that took in $59 million from 400 investors. Riehl was not licensed to invest other people’s money, and he targeted Amish and Mennonite families.

Roberto Gustavo Cortes Ripalda, Fernando Haberer Bergson, and Ernesto Heraclito Weisson Pazmino were arrested on allegations that they were running a scheme that caused more than $155 million in losses.  The three are former managers of a Florida financial services firm, Biscayne Capital, and are accused of defrauding both investors and financial institutions. 

James “J” Siniscalchi, 48, was sentenced to a year of home confinement and ordered to pay $1.9 million restitution in connection with the sports and theater ticket resale Ponzi scheme operated by mastermind, Joseph Meli. Meli was sentenced to 3 months in prison in connection with the scheme.

Brenda Smith, 61, of Philadelphia pleaded guilty to charges relating to a $100 million Ponzi-like scheme. Smith is a former broker who ran the scheme through Broad Reach Capital, a fund she controlled in which she claimed had positive returns and was highly liquid. She raised money from approximately 40 investors and transferred the funds for “purposes inconsistent with the trading strategies” including $2 million on credit card bills.

Kent R. E. Whitney of California was sentenced to 14 years in prison and ordered to pay $22 million in restitution in connection with a Ponzi scheme he ran through Church of the Healthy Self. Whitney was the pastor of the church who pleaded guilty last year to running a Ponzi scheme. 

INTERNATIONAL PONZI SCHEME NEWS 

Australia

Devin Persens was arrested on accusations that he defrauded investors into a Ponzi scheme that promised 20% to 30% returns on their investments. 

Canada

Joshua James Tenhove pleaded guilty to charges relating to a multi-million Ponzi scheme involving the purchase and rental of industrial light towers.

China

Six suspects were arrested after raising $5.7 million for over 700 clients in a scheme involving women’s beauty services. The scheme was run through a beauty service agency called Cansi.

India

Four directors of the wealth management firm, IQRA Wealth Management, were held on charges that they were running a Ponzi scheme. It is alleged that they defrauded 91 investors by promising high returns.

Philippines

SCET Colleens Corporation and Shara Jane Casao Chavez, Kay Anne Cuizon Leyson, Edith Francisse Villegas Tablante, Rita Saguindel and Artemio Tarona Ponce Jr. were accused of running a Ponzi scheme. The scheme promised investors 5% to 8% returns per month from a beauty and personal care business.

Russia

Lilia Nurieva and Dina Gabdullina, 31, were arrested in connection with the Finiko crypto currency scheme. The women are accused of managing around $10 of victim funds. Finiko founder Kirill Doroniin has already been arrested. 

Zimbabwe

The Crypto Share Investment Scheme formed by Martin Mhlanga has been accused of running a Ponzi scheme. Investor losses are estimated at $6 million. Mhlanga is missing and his South African phone number is unavailable.


Tuesday, August 31, 2021

August 2021 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for August 2021. The reported stories reflect at least 4 new Ponzi schemes worldwide, 3 guilty pleas, more than 32 years of prison sentences, and an average age of approximately 57 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. 

Interactive Brokers was sued in a class-action lawsuit alleging that it aided and abetted a $23 million Ponzi scheme run through the account of Haena Park. Park lost over $14 million of investor contributions that were deposited into the account. She was sentenced to 3 years in prison in 2018.

Kim Butler, of Texas, was barred by the SEC for steering investors into the Ponzi scheme run by Woodbridge Group of Companies.

Brian Davison, the CEO of EquiAlt LLC, settled claims of the SEC against him that he took part in a $170 million Ponzi scheme. The EquiAlt real estate scheme raised $170 million from about 1,100 investors. Davison ran the scheme with Barry Rybicki.

David DeBerardinis, 59, pleaded guilty to certain charges in connection with a fraud that prosecutors alleged exceeded $100 million and affected more than 20 investors. He had previously pleaded not guilty to charges that he defrauded investors out of $96 million. Investors, mostly from Louisiana, believed they were buying into legitimate energy trades and were promised 17% returns. 

Johanna M. Garcia, of Florida, and her two companies, MJ Capital Funding LLC and MJ Taxes and More Inc., were charged by the SEC with running an alleged Ponzi scheme. More than 2,150 investors invested at least $70 million in the scheme that involved fraudulent securities offerings. Investors were promised annual returns of 120% to 180% returns from supposed small business loans called “merchant cash advances.” The SEC alleges that possible sales agents included Bryant Guayara and Shanaz Ali of Da VibezCreations LLC and DaVibezStudio; Erick Ruiz of Four Corners Investors Group LLC; Steven Fernandez and Monica O'Mealia of Empire Investors, LLC; Gloria M. Galvez and Mauricio A. Guayara of GMG Special Services, LLC; Shaaz Ali of Obsidian South, LLC; Raed Kahn of Ascension Capital Group, LLC; Marco Rosas and Mauricio Rosas of M5 Store LLC, Zio Marco Transportation LLC and Zio Marco Services LLC; Leonela Duarte and Harry Medina of HAMN, LLC, LeDuarte Corp. and LeDuarte USA, LLC; and Osmary Soto and Fabricio Guzman of DMFabrimar General Services, LLC. A group of investors have sued Wells Fargo Bank for allegedly aiding and abetting the scheme.

Michael David Greenfield aka Michael Ben-Ari and his Israeli investment company, EGFE Israel Ltd., are suspected of operating a Ponzi scheme in Israel. A U.S. Bankruptcy Court issued an emergency order approving a lawyer representing Israel to recover $150 million of lost funds in the U.S. Greenfield was arrested in April by Israeli authorities but he fled the country using a fake passport. His whereabouts are unknown. 

Joshua Jeppesen, Michael Noble, and Laura Mascola agreed to a settlement with the SEC regarding their involvement in the Bitconnect Ponzi scheme. The settlement involves more than $12 million and is in relationship to the $2 billion scheme that collapsed in 2018.

Joy Kovar, 86, and her son, Brent Kovar, 54, were sued by the SEC, and the appointment of receiver was sought in connection with an alleged scheme run through Profit Connect Wealth Services Inc. The scheme allegedly raised at least $12 million from more than 277 investors. Investors were told that their funds would be invested in securities and cryptocurrencies such as bitcoin and that investments would be made based on recommendations from an “artificial intelligence supercomputer.”

Andrew Dale Ledbetter, 79, was sentenced to 5 years in prison for his role in raising about $149 million as part of a $322 million Ponzi scheme run through 1 Global Capital LLC. Ledbetter had reached a plea agreement earlier in the year and agreed to relinquish his law license. The scheme promised investors returns from business loans known as merchant cash advances and defrauded 3,600 investors in 42 states. Jan Douglas Atlas and Alan G. Heide were previously sentenced in connection with the scheme, that was masterminded by CEO Carl Ruderman.

Wayne McKelvy, 59, of Colorado, was sentenced to 18 years in prison and ordered to pay $37 million in restitution for his role in a $54 million “green energy” Ponzi scheme run through Mantria Corp. McKelvy ran the scheme with the help of Troy Wragg, 39, and Amanda Knorr. The scheme promised investors up to 484% returns. 

Mirror Trading International is under investigation by U.S. authorities on allegations that it was running a bitcoin scheme. The company is based in South Africa but many of the 260,000 investors are outside of that country. 

Christopher A. Parris, 41, of Georgia, pleaded guilty to charges relating to a Ponzi scheme as well are wire fraud involving the purported N85 masks during the pandemic. Parris, along with co-defendant Perry Santillo, defrauded about 1,000 investors out of at least $115.5 million through their company, Lucian Development. Lucian had acquired City Capital Corporation, which turned out to be a Ponzi scheme being run by Ephren Taylor. Lucian offered returns from investors in products issued by First Nationale Solutions (FNS), Percipience Global Corporation, United RL Capital Services, Boyles America, Middlebury Development Corporation and NexMedical Solutions. Santillo was previously convicted and is awaiting sentencing.

Timothy Patrick Peabody and Monarch Capital Investment Fund LLC were the subject of a final cease and desist order sought by the Missouri Secretary of State, Securities Division. They used a company called Retire Happy, LLC to raise funds for the investments in the unregistered securities. They raised more than $7 million. Investors were told their investments were to fund real estate investment ventures in Florida.

Martin A. Ruiz of New York was arrested on charges that he defrauded investors out of more than $8 million of retirement savings. Ruiz is an investment advisor who solicited investors in his hometown in New Mexico to buy limited partnership shares in a supposed real estate investment vehicle called RAM Fund. Ruiz’s Carter Bain Wealth Management LLC controls more than $61 million in client investments. 

William Stenger of Vermont reached a plea deal in connection with the Ponzi scheme run through Jay Peak Resort. Stenger was the former president of the ski resort. Ariel Quiros, the former owner of Jay Peak, changed his plea to guilty last year. William Kelly, an advisor to Quiros, was indicted along with Stenger and Quiros over their failed plan to build a biotechnology plant using money raised through an EB-5 visa program. About $110 million was raised from 220 immigrant investors in connection with the biotech project. 

John J. Woods of Georgia was sued by the SEC and his assets were frozen on allegations that he defrauded more than 400 investors out of $110 million. Woods allegedly ran the scheme through Horizon Private Equity III, LLC, and investment advisors at Livingston Group Asset Management Company dba Southport Capital. Woods denies that he was running a Ponzi scheme.

INTERNATIONAL PONZI SCHEME NEWS 

Brazil

Authorities seized 591 bitcoin worth about $28.5 million from an alleged Ponzi scheme in what is the largest cryptocurrency seizure ever in Brazil. GAS Consultoria Bitcoin promised returns of 10% to customers. The owner of GAS, Glaidson Acacio, was arrested along with 4 others.

England

Jolan Saunders was sentenced to almost 9 years in connection with a Ponzi scheme run through Saunders Electrical Wholesale Ltd. for failing to pay his confiscation order. His co-conspirators, Michael Strubel and Spencer Steinberg, were previously sentenced to 7 years and 6 years 9 months, respectively. The three defendants were previously convicted of lying about supply contracts to supposedly supply the Olympic village for the London 2012 Olympics. The scheme took almost £80m from investors.

India

Mohammad Aslam was arrested on allegations that he defrauded 50 investors in a Rs 2.5 crore Ponzi scheme.

Nandlal Kesar Singh, 55, chairman of the Phenomenal group of companies, was arrested on allegations that he defrauded investors out of Rs 684 crore. Singh allegedly convinced investors to invest in his companies, Phenomenal Housing Finance Ltd, Phenomenal Plantation Ltd, and Phenomenal Healthcare Services.

Nigeria

Joshua Adeyinka Kayode, 22, was arraigned on charges that he defrauded 170 investors out of N10.9 billion though his fraudulent investment program run through Quintessential Investment Company Limited.

Barimke Group has been charged with allegedly running a Ponzi scheme. The scheme promised returns of 27% and was run by Barisuka Turakpe aka Barisuka Craig and Uzoamaka Ijeoma Chinoyerum.

Russia

Kirill Doronin, one of the founders of Finiko, was arrested in July in connection with an alleged large cryptocurrency Ponzi scheme. Doronin had obtained Turkish citizenship under a different name, Onur Namik. Finiko’s other co-founders, Marat and Edward Sabirov and Sygmunt Zygmuntovish were placed on a wanted list by Russian police. Investors were promised returns and were to exchange bitcoin for the native token of Finiko in return. Investors’ losses might be up to $95 million.  

Turkey

Authorities busted an alleged Ponzi scheme involved Dogecoin. The scheme involved a Dogecoin mining system in which investors were promised guaranteed returns of 100% within 40 days. About 1,500 investors were defrauded.