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

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.


Saturday, July 31, 2021

July 2021 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for July 2021. The reported stories reflect at least 5 new Ponzi schemes worldwide, 5 guilty pleas, more than 72 years of prison sentences, 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.  

George S. Blankenbaker Jr., 56, was sentenced to 5 years in prison in connection with a fraudulent scheme run through his companies, three business entities, Stargrower Commercial Bridge Loan Fund 1 LLC, Stargrower Asset Management LLC and EDU Holding Trust. More than 100 individuals invested more than $10 million in the scheme that supposedly needed funds to finance the use of shipping containers of food. 

Thomas F. Casey and Dennis R. Di Ricco, the founder and CFO of Golden Genesis, Inc., respectively, were ordered to pay $1.6 million in connection with a scheme that defrauded seven Missouri investors. They utilized an unregistered Las Vegas broker-dealer, Retire Happy, LLC, to sell more than $9 million in investments. 

Manuel Chavez, 30, of Florida, and Mark Oman, 36, of Washington, were convicted on charges relating to a sweepstakes scheme that took $4.5 million from victims. The two defendants falsely told victims they had won a sweepstakes prize but requiring investors to pay a fee to collect their reward for supposed taxes and fees.

David deBarardinis, 59, of Louisiana, pleaded guilty to running a Ponzi scheme that defrauded more than 20 investors. Prosecutors allege that the fraud exceeded $100 million. deBarardinis convinced investors to loan him money to act as a middleman in energy trades.

Allen Roy Duquet, 70, was sentenced to 25 years in prison and ordered to pay over $5 million in restitution in connection with a Ponzi scheme that defrauded 26 investors. Duquet solicited money from investors for real estate investments but instead mismanaged and misused the funds. Joseph Bernard Charde has also been accused of acting as a broker to the transactions made by Duquet as a part of its investment program called "The Commission Resource Program."

Richard E. Geaerhart, 71, of Indiana, was sentenced to 5 years in prison and ordered to pay $5.3 million in restitution in a securities Ponzi-like scheme. Gearhart was a licensed insurance agent from 2008-2013 operating out of Gearhart & Associates. He was also CEO of Asset Preservation Specialists Inc. He sold unregistered securities to his insurance clients and promised them that there was no risk to their principal and returns of 6% to 8%.

Craig Harbaugh of Nebraska was found dead on the day he was to be sentenced following his conviction for running a Ponzi scheme. Harbough was a former deputy sheriff and was convicted of defrauding a bank and several individuals out of nearly $11 million. He provided false purchase orders and service contracts for his business which sold tactical gear for law enforcement.

Bernard Ross Hansen aka Ross B. Hansen, 60, of Washington, was convicted on charges that he defrauded investors in a scheme run through Northwest Territorial Mint. Vault manager, Diane Renee Erdmann, 48, was also convicted.  They ran both a custom business that manufactured medallions and other awards, as well as a bullion business that involved the selling, buying, exchanging, storing, and leasing of gold, silver, and other precious metals.  

George Heckler, 65, was sentenced to 5 years and 3 months in prison and was ordered to pay restitution in the amount of $19.25 million in connection with a scheme that defrauded investors out of about $20 million. Heckler ran the scheme through multiple investment funds, including Conestoga Partner Holdings, Cassatt Short Term Trading Fund LP, and CV Special Opportunity Fund LP.

Joshua Heppensen, Laura Mascola, Ryan Maasen, and Michael Noble settled with the SEC in connection with their role as promoters of the BitConnect scheme. The Bitcoin scheme raised over $2 billion before shutting down.

Naim Ismail, 60, pleaded guilty to running a $15 million Ponzi scheme that involved supposed real estate investments. Ismail defrauded both individual and corporate victims.

Roger Nils-Jonas Karlsson, 47, a Swedish citizen, was sentenced to 15 years in prison and ordered to pay over $16 million in restitution in connection with a cryptocurrency scheme. Karlsson had pleaded guilty to running the scheme through a business called “Eastern Metal Securities.”

Joy Kovar, 86, and her son Brent Kovar, 54, were sued by the SEC on allegations that they were running a $12 million Ponzi scheme that defrauded 277 investors. The alleged scheme was run through their Las Vegas based company, Profit Connect Wealth Services. The Kovars represented that supercomputer and artificial intelligence could generate 20%-30% fixed returns per year with monthly compounding interest.

Dane Roseman, 38, and Ivan Acevado, 44, of California, pleaded guilty in connection with the Woodbridge Group of Companies Ponzi scheme. They worked as sales agents for Woodbridge and falsely claimed that Woodbridge was profitable and promised high rates of return. The scheme defrauded more than 9,000 investors out of more than $1.29 billion. 

Alexander S. Rowland, 30, of New Jersey, was sentenced to 9 years in prison and ordered to pay more than $3.1 million in restitution. Rowland defrauded more than 120 clients who thought they were investing in Rowland’s company, Roaring Investments, Inc., for purposes of investing in stocks and cryptocurrency. He promised a minimum return of 25% with potential returns of 50% or higher.

Lambert Vander Tuig and Ben Schachtshneider were sued by the SEC on allegations that they ran a $50 million Ponzi scheme through Biosynetics and Biosynetics Management. Investors were told that the funds would be used for research and development. Additionally, the sum of $763,500 was raised from 28 investors through the nonexistent pharmaceutical company that supposedly had secured distribution agreements with major retailers.

Howard L. Young, 75, was sentenced to 8 years on prison. Young solicited cancer patients to invest in his company, Integrative Medical Services, telling them he had received a $2 million grant from Vanderbilt University to study cancer. Participants had to pay $10,000 up front, but he did not hold the money in escrow as he promised. Patients also did not routinely receive the nutritional supplements, exercising, coaching or gym memberships promised by Young.

INTERNATIONAL PONZI SCHEME NEWS 

Australia

Michael Gu, whereabouts unknown, is the founder of the property group iProsperity and is accused of running a $245 million Ponzi scheme. The scheme collapsed last year when authorities accused of him of defrauding clients by claiming he was buying a portfolio of commercial property in Australia. Harry Huang, the CFO, was also accused of misappropriating investor funds. Gu allegedly passed $8 million though the Crown Melbourne Casino.

Mirror Trading International, a collapsed cryptocurrency trading firm, was placed into final liquidation. An additional 8,000 bitcoin, valued at about $268 million, were traced and added to the 1,281 bitcoin previously recovered.

Chris Marco, 63, is under investigation for running a Ponzi scheme that allegedly defrauded as many as 340 investors for 16 years. The fraud is alleged to have defrauded investors out of $250 million.

Joe Papalia, an accountant, is being investigated in connection with an alleged Ponzi scheme.

United World Enterprise is accused of running a Ponzi scheme through the cattle farm at Currabubula Station. UWE is Chinese-owned and lured more than 900 retirees into investing up to $46 million for fake agritourism and aged-care village schemes. 

Brazil

Claudio Oliveira was arrested in connection with an alleged $300 million cryptocurrency scheme run through the Bitcoin Banco Group. 

England

Stephen Allen pleaded guilty in connection with his role in the Renwick Haddow Ponzi scheme. Allen forged information regarding Haddow’s assets.

Ghana

Authorities sought to shut down Q-NET Company Limited, Q-NET Investments Limited, and Q-NET Limited on allegations that they were operating a Ponzi scheme. The directors of the companies are identified as Mbun Mbabugri Kazani and Braimah Suraju.

India

Syed Fakruddin, 47, Miran Mohideen, 48, and Mohammad Manas, 32, were arrested in connection with a scheme allegedly run through a mobile app called “Share me.”

Chetan Dand, 42, was arrested on allegations that he was running a Ponzi scheme that defrauded over 100 investors out of Rs 16 crore. Dand’s accomplice, Kelvin Kenia, 23, left for Africa with the money but his family claim he died during the pandemic. 

Mir Sahimat alias Kalu and Mir Jamiruddin were arrested in connection with an alleged Ponzi scheme run through Green Ray International.

Pratap Kumar Biswal was arrested on charges that he was running a Ponzi scheme through Mass Infra Reality

Dillip Kumar Jain, one of the directors of Ocean Videsh Limited, was arrested in connection with a scheme that defrauded investors by promising returns from long-terms loans at low rates of interest. The company was shut down in 2013 and two other directors had been arrested.  Jain had been on the run.

Turkey

Mehmet Aydin, 29, is being extradited to Turkey to face charges that he was running a $130 million Ponzi scheme. Aydin is the developer of the Farm Bank online game also known as Cliftlik Bank. Aydin turned himself in in Brazil out of fear for his life. He faces 75,000 years on prison for running the scheme that defrauded over 130,000 people. Fatih Aydin, the brother of Mehmet, was detained in Uruguay and is expected to be extradited to Turkey.

A real estate company called Ger├žek Evim (My Real Home) operating under SAS Holding has been found to be part of a Ponzi scheme that grossed $69.2 million. The company promised 10% returns to its 13,000 customers.