Tuesday, June 30, 2015

June 2015 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

    Below is a summary of the activity reported for June 2015. The reported stories reflect: 3 guilty pleas or convictions in pending cases; over 140 years of newly imposed sentences for people involved in Ponzi schemes; at least 7 new Ponzi schemes involving over $240 million; and an average age of approximately 51 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it.

    Thomas Abdallah, 51, and Mark George, 58, of Ohio, pleaded not guilty to charges that they ran a Ponzi scheme, along with Jeffrey Gainer, 51, through KGTA Petroleum Ltd. The three allegedly defrauded 70 investors out of $17 million. They promised investors returns of up to 5% per month, or 60% per year, for investments in oil and fuel.

    William D. Allen, 36, and his business partner, Susan C. Daub, 55, were criminally charged in connection with an alleged $32 million Ponzi scheme. Allen played for three NFL teams over his 12 year career, including the Giants, Dolphins and Patriots. Allen and Daub are accused of running a Ponzi scheme through their company, Capital Financial Partners Enterprises LLC, which was making high-interest, short-term loans to professional athletes. The company loaned out only $18 million of the $32 million it collected from investors. The FBI has said that $4.1 million went to Allen personally and $61,080 to Allen’s casino accounts.

    Jonathan Arrington, Michael Kratville, and Michael Welke were sentenced to 5 years, 4 years and 3 years, respectively, in connection with a $4 million Ponzi scheme involving 114 investors. The 3 men had pleaded guilty earlier in the year. The scheme involved commodities and foreign exchange.

    Charles B. Blackwelder, 70, had his attorney license suspended by the Indiana Supreme Court. Blackwelder is serving a four year prison sentence for running a $19 million Ponzi scheme through his firm CFS LLC in which he defrauded elderly victims. Blackwelder and his daughter, Cara Grumme, were accused of defrauding more than 300 elderly victims.

    John R. Bullar, 53, was sentenced to 8 years and four months in prison and ordered to pay $6.2 million in restitution in connection with a Ponzi scheme that he ran through Executive Management Advisors LLC. The scheme defrauded more than 46 victims, who were promised high returns and told their money was safe. Bullar claimed to invest in precious metals, bonds and foreign currency but actually “invested virtually nothing,” prosecutors said. Bullar also told investors he had devised a computer system that monitored the market for potential losses and, prosecutors said, claimed he "had been offered millions of dollars" for it.

    Tim Durham was resentenced after two of the charges against him were dismissed on appeal. Durham had appealed his original sentence of 50 years for running a Ponzi scheme through his company, Fair Finance Co. The scheme defrauded 5,200 victims out of $200 million. The appellate court found that the prosecution had failed to enter key documents. At his re-sentencing, Durham was again handed a 50 year sentence.

    Charles L. Erickson was charged with running a Ponzi scheme that defrauded at least 25 investors out of about $3.5 million. Erickson, who recruited from his church, claimed that the Holy Spirit had given him a proprietary day-trading system for a volatile type of futures contract. He guaranteed returns of over 96% to be paid over two years.

    Joseph Greenblatt, 53, was sentenced to 10 years in prison for writing bad checks to his victims. Greenblatt is already serving 18 years in prison in connection with a $31 million Ponzi scheme through Maywood Capital Corp. Greenblatt promised investors high returns on investments in inner-city commercial properties.

    Scott Anderson Hall, 50, was sentenced to 10 years in prison in connection with a $3 million Ponzi scheme that defrauded 48 victims. Hall promised investors large returns, sometimes over 12% from investments in his company, Abaco Securities International. He set up the company, which was a sham offshore investment company, in the Turks and Caicos Islands.

    Christina Hernandez, 43, was sentenced to 3 years of probation for her role in a Ponzi scheme that took in more than $100 million. Hernandez posed as a JP Morgan employee to assist Michael Goldberg in a scheme that defrauded investors out of more than $30 million. Goldberg misrepresented to investors that Chase had granted him a contractual right to purchase foreclosed and seized business assets from a Chase Foreclosure Manifest, which he would then supposedly resell at a profit, from which he would guarantee returns of up to 20% in about 90 days. Goldberg further represented that Chase would refund the purchase price of any asset that couldn’t be resold so there was no risk to the investor. Goldberg pleaded guilty in 2010 and was later sentenced to 10 years in prison.

    Wendell A. Jacobson, 61, and Allen R. Jacobson, 36, were charged in connection with an alleged Ponzi scheme run through the real estate investment firm called Management Solutions. The father and son used their membership in The Church of Jesus Christ of Latter-day Saints to lure in 400 investors and raise more than $200 million. They promised investors that they would buy apartment complexes at discounted prices, then renovate and sell them within five years.

    Kristine Louise Johnson, 60, was charged in connection with an alleged $7 million Ponzi scheme that defrauded more than 10,000 victims. The alleged scheme, run through a sham internet company called “The Achieve Community,” promised investors a 700% return in a 3 to 6 month period of time. Investors were paid back about $2 million during the scheme. Troy A. Barnes, 52, of Michigan was also charged in connection with the scheme. The scheme was previously operated under the name “Work with Troy Barnes Inc.” Johnson pleaded guilty to the charges.

    Herbert Ivan Kay, 57, was sentenced to 5 years in prison after being convicted on charges relating to a Ponzi scheme in which he marketed and sold investments in residential and commercial developments in Mexico. Kay was also ordered to pay $8 million of restitution to his victims.

    Stafford S. Maxwell, 46, pleaded guilty to charges relating to a multimillion Ponzi scheme that he ran through Millennium Capital Exchange, Inc. The scheme was a foreign exchange market trading program in which he promised his victims high fixed rates of return.

    Everett C. Miller, 45, was sentenced to 10 years in prison for a Ponzi scheme to which he pleaded guilty in 2013. The scheme, run through Miller’s company, Carr Miller Capital LLC, defrauded investors out of $5 million. He promised investors 7% to 20% returns through the sale of unregistered securities.

    Frederick E. Monroe Jr., 59, was charged with running an over $1 million Ponzi scheme through Capital Financial Planning. Monroe allegedly solicited money from clients to invest in bonds but never invested the money. Monroe pleaded not guilty.

    Randy Poulson, 44, pleaded guilty to charges that he ran a Ponzi scheme through his companies, Equity Capital Investments LLC and Poulson-Russo LLC. Poulson promised to pay the mortgages of distressed homeowners facing foreclosure if they sold their homes to him. He obtained deeds to more than 25 homes, put renters in the homes, and then stopped making the monthly mortgage payments. Poulson also brought in investors, promising then 10% to 20% returns, for investments in properties that Poulson claimed he would rehabilitate, rent out and then sell.

    Daniel Christian Stanley Powell, 33, was sentenced to 10 years in prison in connection with his $5.2 million Ponzi scheme. Powell centered his scheme around a sham “reverse life insurance” company. Powell represented to investors that his company, Christian Stanley Inc., owned policies worth $1.9 billion, but in fact did not own a single insurance policy.

    Premier Asset Management and its principals and employees, Gerald Lawler, Nicola Lawler, Mariam Williams, Claude L. Collins Sr., and Patrik Granec, were the subject of a temporary cease and desist order by the Massachusetts Securities Division and the Alabama Securities Commission. Premier solicited investments funds through Craig’s List and, at least in one instance, promised a 100% return in as little as 48 hours. One investor was assured that the account was 100% secure.

    William Allen Risinger was indicted on charges relating to an alleged $4.5 million oil and gas Ponzi scheme. Risinger allegedly sold fraudulent royalty interests relating to oil and gas wells through his entity known as RHM Exploration. Investors were invited to invest in ventures, such as the RHM-Sinton Joint Venture.

    Steven B. Rodd, 49, who previously served time for soliciting investors into Lou Pearlman’s $300 million Ponzi scheme, was arrested for drowning a rabbit. Rodd was observed tossing a rabbit into a hotel pool and watching it down, so has been charged with animal cruelty. Rodd’s involvement with the Pearlman Ponzi scheme related to his solicitation of over $32 million in investments to hundreds of Florida investors, for which he served a 3 year prison term.

    Keith Michael Rogers was accused by the Alabama state security commission of running a Ponzi scheme. Rogers is a financial advisor who is accused of defrauding investors out of millions of dollars and using $2.5 million for his personal expenses.

    Sunil Sharma, 68, pleaded guilty to running a Ponzi scheme that started as a risky day-trading strategy. Sharma set up Gold Coast Holding LLC to trade options and then later set up Safe Harbor Tax Lien Acquisitions. Sharma raised $8.36 million from 32 investors and paid $2.12 million in returns to earlier investors.

    Louis J. Spina, 58, was sentenced to 79 months in prison in connection with his $20 million Ponzi scheme. The scheme defrauded 42 investors through his company, LJS Trading LLC, and promised returns of 9% to 14%. Spina had been sentenced to 3 years and 5 months in prison for a bank robbery to which he had pleaded guilty in 2014. The judge in the Ponzi scheme criminal matter ordered that the two sentences be served consecutively, that Spina pay back $12.7 million, and that he forfeit over $800,000.

    Paul Sullivan, 50, was sentenced to 4 years and 7 months in prison and ordered to pay $1.9 million in restitution for a Ponzi scheme that defrauded investors out of about $1.9 million. Sullivan made investments for his clients that result in losses. In order to repay them, he solicited new investments with promises of high rates of return.

    Phil Donnahue Williamson, 48, of Florida, was charged by both the SEC and criminally in connection with an alleged Ponzi scheme run through Sterling Investment Fund LLC and Sterling Financial Partners. The scheme targeted retired teachers and police officers and promised investors returns of 8% to 12% for investments in distressed real estate. It is alleged that the scheme defrauded at least 17 investors. Williamson voluntarily surrendered and agreed to settle the SEC charges by paying about $750,000 in disgorgement of ill-gotten gains.

    Bryan Zuzga entered into a plea agreement in connection with a $25 million Ponzi scheme he was accused of running along with Jenifer E. Hoffman and John Boschert. The scheme was run through Assured Capital Consultants and defrauded about 100 victims. Zuzga was accused of impersonating a Florida attorney and assuring investors that their money was safe in an escrow account. Boschert pleaded guilty last year.
 
INTERNATIONAL PONZI SCHEME NEWS

Cambodia

    Seven more people believed to be involved with the Empire Big Capital alleged scheme were arrested, bringing the total to 14. The company was registered in Hong Kong, but had vacated its offices a few months ago. The individuals have been charged with fraud in Cambodia.

Canada

    More than 600 victims have sent in letters in connection with the sentencing of Gary Sorenson, 71, and Milowe Brost, 61. The two men were both found guilty of defrauding more than 2,400 investors out of $100-$200 million between 1999 and 2008.

England

    Geoffrey Langdale, who is currently serving a 6 year prison term for running a Ponzi scheme, was told that he must repay £272,729.86 or face a further three years behind bars.

India

    Five suspects were arrested in connection with the Win Realcon scheme that allegedly defrauded investors. The suspects are Mahitosh Ganguly, Joy Bhowmick, Rajib Debnath, Partha Pratim Roy and Raju Dey.

    Leena Maria Paul and her partner Sekar Chandrashekhar, along with Adil Akhtar Jaipuri, Akhtar Hussain Jaipuri, Salman Rizvi and Nasir Jaipuri, were arrested on charges that they defrauded over 1,000 investors by promising them 300% returns on their investments.

    Authorities located 180 bank accounts of Rose Valley and recovered Rs. 36.91 crore. Earlier this year, the company’s chairman, Gautum Kundu, was arrested in what is alleged to be a Ponzi scheme. Amit Banerjee was arrested in connection with the scheme as well.

Indonesia

    Kamal Tarachand was arrested in an alleged Ponzi scheme involving a fraudulent tissue paper business. Investors were promised between Rp 50,000 and Rp 200,000 ($3.7 - $15) per day in return for every Rp 1 million ($75) invested in the company. Tarachand represented that his company was making money by selling advertising space on the back of the tissue paper packets that his company produces.

New Zealand

    A court of appeal found that an investor in the David Ross Ponzi scheme was required to return fictitious profits received from the Ross Asset Management Ponzi scheme. The investor had invested $500,000 but had received back $954,000 so was required to pay back $454,000. There are almost 200 investors who received about $30 million of fictitious profits who are now facing claims to return those profits

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

    About 30 victims of the Philip G. Barry Ponzi scheme filed a lawsuit against JP Morgan, TD Bank, HSBC, and M&T Bank, seeking $11.1 million plus $25 million in punitive damages for the banks’ alleged failure to detect the fraud in the face of over 1,000 bounced checks and large repetitive transactions. Barry was convicted in connection with his $40 million Ponzi scheme that he ran through Leverage Group, Leverage Option Management Co. Inc., and North American Financial Services. The scheme defrauded about 800 victims.

    The Seventh Circuit ruled that liquidators in the British Virgin Islands cannot lift an injunction to disburse funds from the Nikolai Simon Battoo $340 million Ponzi scheme that had defrauded 800 investors. Battoo had defied an injunction issued in an SEC action against him and BC Capital Group in 2012 by transferring assets to the control of the liquidators.

    The trustee of Bernard Madoff’s business entered into a settlement with feeder funds, Ariel Fund Ltd. and Gabriel Capital LP, once run by J. Ezra Merkin. The settlements will free up $35.4 million for distribution to Madoff’s customers, and the funds will receive about $145 million in payments to catch with distributions made to other customers. The settlements do not resolve the trustee’s claims against Merkin himself or his related entities, Ascot Funds and Gabriel Capital Corp.

    The Bernard Madoff trustee announced a settlement with Plaza Investments International that will result in recovery of $140 million. The settlement will bring the total available to repay customers $10.874 billion. The trustee had sought $235 million from Plaza and its investment manager, Notz, Stucki Management (Bermuda) Ltd. Plaza will also be allowed its $405 million claim.

    The United States Supreme Court rejected the Bernard Madoff trustee’s appeal of a decision that blocked the trustee from recovering nearly $2 billion in direct recoveries. The Second Circuit had affirmed lower rulings finding that Section 546(e) applied to bar the trustee from seeking recovery of transfers made to Madoff’s customers.

    A district court declined to dismiss the claims of the receiver of Stanford Financial against two law firms, Chadbourne & Parke and Proskauer Rose. The receiver claims that Thomas Sjoblom, a lawyer who worked at both firms, obstructed investigations by the SEC and other regulators. The receiver may pursue negligence, aiding and abetting fraud, negligent supervision and civil conspiracy claims.

    Equity Trust Company, a company that offers self-directed IRAs, was charged by the SEC for its involvement with the $5 million Ponzi scheme run by Ephren Taylor and Randy Poulson. Equity Trust is alleged to have ignored red flags in connection with the investments. The scheme defrauded more than 100 investors out of $5 million that was invested through accounts at Equity Trust.

    The TelexFree trustee reported to the court on the status of his administration of the case. He reported that he has identified over 900,000 accounts that were registered with TelexFree, approximately 68,000 of them which appear to have profited from the scheme. The trustee believes that they may have profited an average of over $20,000 each, meaning over $1 billion in potential recoveries to be sought. The trustee has recovered approximately $16 million to date in the case.

    The court presiding over the Zeek Rewards receivership case ordered NxSystems to turnover $9 million to the receiver. NxSystems is an “e-wallet” account company. An e-wallet allows Internet users the ability to make electronic transactions, such as PayPal.

    The Zeek Rewards receiver settled with attorney Kevin Grimes, the Grimes & Reese law firm and a Grimes-related entity, MLM Compliance VT LLC, for $1.175 million. The receiver had alleged that they had received $843,000 from the sale of a “bogus compliance course” and that Grimes had received $342,510 less than a week before Zeek Rewards shut down. Grimes and the entities did not admit any wrongdoing in connection with the settlement.

    The Zeek Rewards receiver announced that he will be making a second partial interim distribution to the affiliates who hold allowed claims. Combined with the first partial interim distribution, the receiver believes this will return 60% of the allowed claim losses. The receiver is using the rising tide methodology of distribution which he described as follows: “two investors put $10,000 into the scheme and each will receive $6,000 total, whether it was received from the scheme itself, or from distributions from the receivership, or a combination of both.”
 

Sunday, May 31, 2015

May 2015 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

    Below is a summary of the activity reported for May 2015. The reported stories reflect: 7 guilty pleas or convictions in pending cases; over 62 years of newly imposed sentences for people involved in Ponzi schemes; at least 16 new Ponzi schemes involving over $130 million; 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. And please remember that I am just relaying what’s in the news, not writing or verifying it.
 
    Joyce Allen, 67, was sentenced to 3 years in prison and ordered to pay $20.7 million in restitution for defrauding hundreds of investors out of $40 million. Allen was associated with Benchmark Capital which was owned by Charles D. Candler. Allen would represent that they would refinance the investor’s property and put them into a program that would pay the mortgage payments.

    Douglas Bates, 56, had his 5 year prison term reduced by nearly two years due to the assistance that he provided to federal prosecutors in convicting three other individuals in connection with the Scott Rothstein Ponzi scheme. Rothstein himself has such a request pending to shorten his 50 year prison sentence, but no decision has yet been reached on his request.

    Jason Bo-Alan Beckman, Gerald Durand, and Patrick Kiley, all had their convictions and sentences upheld on appeal to the Eighth Circuit. United States v. Beckman, 2015 U.S. App. LEXIS 7805 (8th Cir. May 12, 2015). The court was not persuaded by their various arguments seeking to overturn their sentences in connection with the Trevor Cook Ponzi scheme that involved over $193 million. The dissent argued that the conviction and sentence of Kiley should be overturned because his counsel at the time of trial was “laboring under a conflict of interest that adversely affected his representation of Kiley.”

    Ian Bick, a 19 year old who was arrested earlier this year on charges that he was running a $500,000 Ponzi scheme, must now close his club, Tuxedo Junction, due to alcohol violations because the club does not have a license to serve alcohol. He is due to go to trial in the fall on the Ponzi scheme charges.

    Adam Jay Boskovich, 45, pleaded guilty to charges relating to a $200 million Ponzi scheme that was run primarily by Gerard Frank Cellette, 50. The scheme defrauded 80 investors who were told that Cellette had printing contracts with major corporations through his company, Minnesota Printing Services Inc., and needed money upfront to get a 20% discount on purchasing paper. Boskovich recruited about $17 million of the investor funds. Boskovich’s felony conviction was reduced to a misdemeanor, and he was sentenced to one day in jail.

    Patrick Churchville, 46, was charged with running an $11 million Ponzi scheme through his company, ClearPath Wealth Management. Churchville took investors dollars for his own use and lost some of it in a separate $23 million Ponzi scheme.

    Enrica Cotellessa-Pitz, 56, was sentenced to time served in connection with her role as a former employee of Bernard Madoff’s firm. Cotellessa-Pitz had faced up to 50 years in prison, but the judge cited her extensive cooperation with prosecutors which helped lead to the conviction of 5 other people.

    Frank DiPascali died at the age of 58 of lung cancer. DiPascali was one of Bernard Madoff’s top aids and had testified for the government against several other Madoff employees. DiPascali had admitted that he had made bogus trades with Madoff for 30 years but always thought that Madoff had enough assets to cover everything. DiPascali was set to be sentenced in September.

    David Fili Jr., 45, was charged with running a Ponzi scheme that allegedly defrauded several mortgage lending banks, including PNC Bank and Wells Fargo Bank, out of $9.7 million. Fili is the former co-owner of Capital Financial Mortgage Corp. and allegedly deceived numerous lenders into purchasing mortgages issued by his company that were represented to be first mortgages but were really worthless second mortgages.

    Daniel Fodiman, 51, was charged with running a multi-million dollar Ponzi scheme where he represented to investors that he was buying merchandise that he was reselling to TJ Maxx for a profit. Fodiman is accused of presenting investors with falsified TJ Maxx purchase orders and altered bank statements. Fodiman pleaded not guilty and was ordered held on $1 million bail.

    David G. Friehling, 55, was sentenced to a year of home detention after pleading guilty and cooperating with prosecutors in connection with the Bernard Madoff Ponzi scheme. Friehling was Madoff’s firm’s auditor and was also the personal account for Madoff and his sons. Friehling assisted the government in getting convictions for 5 former employees of Madoff. He has said that he was not aware of the fraud at the firm but that “I did not question what I should have questioned.” Friehling could have been sentenced to more than 100 years in prison for his role in the Ponzi scheme. Craig Kugel, 41, who worked in human resources for Madoff, was sentenced to time served, and his father, David Kugel, was sentenced to 10 months of home confinement for his role in helping create fake, backdated trading records.

    FX & Beyond Corp. and Steve H. Karroum were the subject of a motion by the SEC to enforce a subpoena again them in connection with an investigation of an alleged Ponzi scheme.

    Eduardo Galan, 64, pleaded guilty to charges that he defrauded 38 investors in a Ponzi scheme. Galan was once a licensed securities broker but was barred by FINRA in 2008 from selling securities. Galan admitted that he took more than $800,000 from investors and misrepresented to them that their money would be loaned out in private mortgages.

    Robert Gavin and Daniel Hogan, along with their company, North Dakota Developments LLC, were sued by the SEC who accused them of running a Ponzi scheme that allegedly raised more than $62 million from about 980 investors. The defendants represented to investors that they were selling stakes in four short-term housing projects known as “man camps” for workers in the Bakken oil field region of North Dakota and Montana. The investors were promised returns of 42% in the first year or a guaranteed annual return of up to 25%. The scheme allegedly raised money from investors in 66 countries, including the U.S., Australia, France, Great Britain and Spain. The North Dakota Securities Commissioner also issued a cease-and-desist order against the three defendants.

    Tyrone Herman, 56, was sentenced to 10 years in prison for operating a $20 million Ponzi scheme. Herman defrauded 51 victims by promising them investment returns as much as 30%. He told his victims that he purchased small appliances at below retail prices and then sold them with a 35% markup.


    Charles Huggins, 68, was sentenced to 10 years in prison in connection with a Ponzi scheme that defrauded investors out of more than $8 million. Huggins is a former music producer who helped launch Kenny G and Whitney Houston. He diverted investor dollars to one of his record labels and used funds to pay for his personal expenses.

    Michael Anthony Jenkins, 57, was sentenced to up to 13 years in prison following his guilty plea to charges relating to a Ponzi scheme that he ran through Harbor Light Asset Management. The scheme allegedly defrauded more than 435 victims out of $1.79 million in a commodities futures scam.

    Herbert Kay, 58, was sentenced to 5 years in prison in connection with a Ponzi-style operation that he ran through several companies, including Taxon LLC. Kay defrauded more than 30 people. He had initially pleaded guilty but then withdrew his guilty plea. 

    Shaine Joseph LaVoie, 46, was convicted on charges related to a Ponzi-like scheme that defrauded 12 victims. The scheme involved the supposed purchase of over-produced and out-of-season clothing for re-sale in a deal that was to involve a shipment of designer jeans being sold to a Japanese buyer. LaVoie promised investors a 100% profit.


    George Lindell and Holly Hoaeae were found guilty by a jury on charges relating to the running of a Ponzi scheme through their mortgage and insurance business, The Mortgage Store. The scheme defrauded 166 people, who invested $26 million and who lost a net amount of $8.9 million.

    Eric Lipkin, 41, was sentenced to nine months of home detention for his role in the Bernard Madoff Ponzi scheme. Lipkin had pleaded guilty to his role in helping to prepare fraudulent documents. Lipkin was also ordered to forfeit $1.4 million.

    Randy Miland, 61, lost his chiropractor license due renewed allegations that he defrauded patients and other investors. Miland’s license had previously been suspended but was reinstated in 2011, with the condition that he not engage in personal or business relationships with patients or their families. Instead of paying back old debt, Miland took on new debt involving patients, which violated conditions of his license.

    Brian J. Polito, 34, pleaded guilty to charges relating to an $11.8 million Ponzi scheme in which he sold phony oil and gas interests. Polito ran the scheme through GC Resources LLC. Prosecutors have recovered more than $664,000 by selling Polito’s cars, including a 2014 Rolls-Royce Wraith, a 2015 McLaren 650S Coupe, a 2014 Lamborghini, a Lamborghini Aventador Anniversary Coupe, a 2015 BMW M4 Coupe, a 2014 Mercedes E63 Wagon and a 2014 Ferrari 458 Speciale.

    Giuseppe Porcaro, 53, was sentenced to 8½ years in prison in connection with a $4 million Ponzi scheme. Porcaro put much of the money into his businesses, including the Australian Motor Finance Company. Porcaro had pleaded guilty to a number of charges relating to the scheme.

    Frank Preve challenged a request by the SEC that he pay a $1 million penalty for his role in running the largest feed funds for Scott Rothstein’s $1.2 billion Ponzi scheme. Preve, scheduled to begin his 3½ year prison sentence next month, says that he is destitute, in poor health, and they he has already suffered enough. He argued that he was an independent contractor for George Levin, who owned the funds.

    Devasc Sanderley Rodrigues aka Sann Rodrigues, 43, was arrested in connection with the TelexFree scheme. Rodrigues is a native of Brazil but has been living in the U.S. Rodrigues was one of the 8 TelexFree figures charged civilly by the SEC. James Merill and Carlos Wanzeler have also been charged criminally. A court has required Rodrigues to surrender his driver’s license as a condition of his release on a charge of immigration fraud.

    Perry Sawano, 51, pleaded guilty to charges in connection with a $4.8 million Ponzi scheme that he ran through Integrity Financial Consulting. Sawano offered investment opportunities to his investors but would move funds into “alternative investments” without notification to the investors. Sawano would take the money himself or use investors’ money to pay other investors.

    John Sposato, 64, was charged with wire fraud and accused of running a Ponzi scheme. Sposato allegedly defrauded 48 people who invested a total of about $810,000 in his companies that included Pegasus Investment & Development Corp.; Pegasus Investments; Oil Eaters; Organic Miracle Incorporation; Pegasus Truck Lines; and Pegasus Demolition & Debris Removal Service.

    Brandon Walton Stewart, 30, was accused of running a $13 million Ponzi scheme. Walton allegedly told investor that their money would be added to an investment fund with corporate stocks, including Facebook, and foreign investments.

    Barry C. Taylor, along with his companies OTC Investments LLC and Foreign Currency Trade Advisors, LLC, were charged by the CFTC with operating a foreign exchange Ponzi scheme. The scheme allegedly involved about $2.5 million and at least two dozen investors. The CFTC complaint alleges that Taylor promised investors 2% returns per month from foreign exchange trading.

    Garfield M. Taylor, 56, was sentenced to 13 years in prison and ordered to pay $28.6 million in restitution in connection with a $28.6 million Ponzi scheme that defrauded more than 170 investors. Taylor operated two companies, Garfield Taylor Incorporated and Gibraltar Asset Management Group, which traded in extremely risky options. Taylor had promised substantial returns to investors based on a sophisticated trading strategy that supposedly protected against loss. Taylor had pleaded guilty but has now filed a motion to withdraw the plea.

    Germaine Theodore, 35, was indicted on charges that defrauded clients through his purported bill payment and debt consolidation business, Save My Future, in which he promised to cut customers’ bills by 35% but instead was running a Ponzi scheme. Theodore had been indicted in February for stealing $250,000 through his company, TGC Movement, but had posted bail. He began the Save My Future scheme while out on bail.

    Jack Utsick, who had pleaded not guilty to running a $300 million Ponzi scheme through his company, Worldwide Entertainment Inc., had his case set for trial in November. Utsick’s scheme allegedly defrauded about 3,300 investors.

    Veros Partners and its executives, Matthew D. Haab and Adam Decker, were named in a lawsuit filed by the SEC, along with associates Jeffrey B. Risinger and Tobin J. Senefeld, accusing them of running a $15 million Ponzi scheme that defrauded approximately 80 investors. The scheme was run through Veros Farm Loan Holding LLC and FarmGrowCap LLC. Investors were told that they money would be used for short-term operating loans to farmers.

    Stu Voigt, 66, pleaded not guilty to charges that he and Jeffrey Gardner, 61, ran a real estate Ponzi scheme through Gardner’s business, Hennessey Financial. Gardner had previously pleaded not guilty.

INTERNATIONAL PONZI SCHEME NEWS

Australia

    An investor couple who lost $450,000 in the Ponzi scheme of Neovest had their judgment upheld against Wealthsure, the financial advisers who advised the couple to invest. The judgment is for over $1.7 million. The High Court upheld the trial judge’s ruling that Wealthsure was 100% liable for the loss despite that finding that others were also responsible.

    Michael Samra was charged in connection with an alleged $12 million Ponzi scheme run through his company, ALC Company Pty Ltd. Samra represented that investor funds would be lent to unnamed builders and property developers on a short-term basis and that investors would receive 30% to 48% returns annually.

Canada

    The British Columbia Securities Commission issued an Investor Alert on DFRF Enterprises LLC, DFF Enterprises Ltd., and other companies associated with Daniel Fernandez Rojo Filho. The Commission alerted investors to the scheme that it said was characteristic of investment fraud, noting that the scheme is offering returns of up to 15% per month and stating that DFRF will soon be listed on the public stock exchange after which investments will triple within 30 days.

    Shabnam Shafi, 41, and Shafi Shauaid, 27, were charged with running a Ponzi scheme that defrauded 24 investors out of $4 million.

    An arrest warrant was issued for John Paul Baron after he failed to appear in court for his sentencing. Baron had been convicted on 28 charges in a $3 million Ponzi scheme that defrauded 22 investors. Terrence McGill, 57, was sentenced in March to 23 months, and Leeanne Houle, 46, is scheduled to go to trial in November in connection with the scheme.

England

    Joe Lewis, 60, was arrested in connection with an alleged £130m Ponzi scheme. It is believed that more than 370 victims were defrauded by Lewis’ company, JL Trading.

    Peter Bernstead, 72, killed himself in the middle of his trial on charges that he was running a Ponzi scheme. Bernstead was on trial for defrauded 12,500 people out of £19.5 million through Crown Currency Ltd.

    Four suspects, Sal Palermo, Sal Darsee, Santos Palermo, and Santos Salvatore, were arrested in York for allegedly operating a romance-based Ponzi scheme that defrauded at least 20 victims out of $1.2 million. Yiaoming Liang, 47, and Ansari Farhan, 32, also face charges in connection with the scheme, and Tatiana Krainova, 39, was charged in January.

India

    Dandapani Sethi, the principal of Zodiac Foundation, was arrested on charges that he was running a Ponzi scheme.

    Deba Kumar Panda, of Vista Management Services Limited, was arrested on charges that he defrauded investors out of more than Rs 50 crore. Bijay Swain, the director of the company, was also arrested.

    Arindam Das aka Bumba was arrested in connection with the Saradha Group Ponzi scheme. Das is alleged to be mentoring the operation of the scheme.


    Subhransu Singh, the managing director of Sree Bhumi Construction, was arrested in connection with an alleged Ponzi scheme that defrauded victims out of Rs 50 crore.

Singapore

    Leong Lai Yee may have defrauded over 100 investors by promising them 30% returns from a deal involving the buying and selling of properties in Singapore. Leong has been reported missing, and it is believed that she owes investors more than $60 million.

Thailand

    The Department of Special Investigation warned consumers not to get involved with Virgin Gold Mining Corporation, which it described as a “money game.” Investigators have also found that a claims subsidiary of Virgin Gold, Asia Pacific Gold Mining Investments Ltd. in Toronto is not registered for gold futures trading.

    Police raided a Bangkok apartment complex in connection with an investigation of the UFUN alleged Ponzi scheme. It has been estimated that 120,000 people invested in the scheme. Losses could be as much as $1.13 billion.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

    The receiver in the Ponzi scheme run by Donald Ray Babb and Ralph Ruth obtained permissions to sue recipients of payments from nearly 100 victims of the Ponzi scheme that received in excess of 46.7% of their investments. The receiver is seeking to use the rising tide method of distribution.

    The trustee in the Fair Finance Co. bankruptcy case reached a $35 million settlement with Fortress Credit Corp. in connection with the scheme run by Tim Durham. The trustee had alleged that Fortress had turned a blind eye to the Ponzi scheme because it was making millions of dollars at the lender and held first priority liens on the assets with value.

    A District Court dismissed a lawsuit filed by investors in the Ponzi scheme run by 3 investment advisors, John Geringer, Christopher A. Luck and Keith E. Rode, through their company GLR Fund. The lawsuit against Santa Cruz Country Bank was not allowed to proceed because the court found that the investors did not show how the bank profited from the fraud. The lawsuit had alleged that the then-vice-president Chuck Maffia "knowingly participated in and substantially assisted the Ponzi scheme" by serving as a banking reference for the GLR Fund and soliciting investors.

    A receiver was appointed in the $800 million Ponzi scheme case of MRI International and Edwin Fujinaga. Fujinaga had told investors he could buy medical accounts receivable at a discount from medical providers and recover the full amounts from insurers.

    The Eighth Circuit upheld the dismissal of an investor’s legal malpractice lawsuit against Martin Sigillito based on procedural grounds because the investor, Phil Rosemann, had failed to name an expert during discovery to testify as to whether Sigillito was negligent.

    The receiver in the Stanford Financial case reached settlements with two law firms and some individuals that will result in payment of $5 million. The receiver had sued Adams & Reese and Breazeale Sachse & Wilson, along with some of the lawyers involved, for negligence, breach of fiduciary duty and aiding and abetting, alleging that they referred clients into Stanford’s $7 billion Ponzi scheme.

    The Allen Stanford receiver sued the State Department, demanding documents relating to $16.4 million in fraudulent transfers to former Stanford insiders, David Miguel Nanes and Hasibe Elizabeth Ancona. The receiver believes that those two individuals have possession and knowledge relating to millions of dollars of transfers. In fact, the receiver already has a judgment against Nanes’ company, Wealth Management Services, Ltd. for over $9.8 million. The Receiver says that Nanes’ has taken steps to make sure he is not found and Nanes’ lawyer says he does not know of his whereabouts. The State Department has objected to the Receiver’s subpoena on the following grounds: (1) disclosure is prohibited under the Privacy Act, (2) disclosure is prohibited under the Immigration and Nationality Act, (3) disclosure would expend Department resources for purposes other than the conduct of official business, and (4) disclosure would reveal information protected by privileges available under federal or state statutory, constitutional, or common law."

    A settlement was reached in the George Theodule $68 million Ponzi scheme case between the receiver administering the Theodule case an Wells Fargo Bank. Wells Fargo will pay $3.175 million to settle a lawsuit that has been pending for several years. The receiver had alleged that Wells Fargo’s predecessor, Wachovia Bank, had turned a blind eye to Theodule’s fraudulent scheme. This settlement, along with several others reached by the receiver (Bank of America for $2.75 million and TD Ameritrade for $1.25 million), will allow the receiver to begin making distributions to the approximately 2,500 Haitian-Americans who were defrauded in the scheme.

    The receiver of Zeek Rewards filed a new set of fraudulent transfer lawsuits against net winners in Brazil, Denmark, France, Germany, Israel, Ireland, Netherlands and Sweden.