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

Monday, August 31, 2020

August 2020 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for August 2020. The reported stories reflect at least 9 new Ponzi schemes worldwide, 2 guilty pleas, 55 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.
   
Clarence Dean Alford, 67, was charged by the SEC for allegedly defrauding investors in a Ponzi scheme run through Allied Energy Services, LLC. The scheme involved at least 100 investors out of about $23 million, promising them returns of 12% to 34% from investments in energy projects.

Banana.Fund was accused of running a cryptocurrency Ponzi scheme by authorities who filed a forfeiture lawsuit. Authorities seized 482 Bitcoin and over $1.72 million. The fund was supposedly a crowdfunding project that would incubate startups by attracting Bitcoin from investors in exchange for shares in the business. Banana.Fund is believed to be operated by British National, Richard Matthew John O’Neill aka Jo Cook.

Victor Lee Farias, 47, of Texas, was accused by the SEC of running a Ponzi scheme. Farias allegedly told investors that their money would be used to purchase aircraft engines and other parts that would then be leased or resold to major airlines. He promised returns of 10% to 12%.

William Neil “Doc” Gallagher, 79, was sentenced to 25 years in prison and ordered to pay more than $10 million in connection with a Ponzi scheme that promised annual returns of 5% to almost 9% to people who invested in securities with him. Gallagher had a Christian radio show called “The Money Physician.” The scheme brought in about $29.2 million from about 60 investors.

Dennis Mbongeni Jali, 35, Arley Ray Johnson, 61, and John Frimpong, 40, were charged by the CFTC with running a $27 million Ponzi scheme through 1st Million LLC, Smart Partners LLC and Access to Assets LLC. The complaint alleges that they fraudulently solicited investors to trade in foreign currency and digital assets such as bitcoin. There are 1,200 investors who believed they held “secure contracts” promising their funds would be held in escrow or trust. The SEC also charged the Maryland-based companies this month. The scheme guaranteed monthly or quarterly returns of around 6% to 42%.

Scott A. Kohn, 65, and Joseph Hipp had more criminal charges filed against them in connection with a $450 million Ponzi scheme run through Future Income Payments LLC. Melanie Jo Schulze-Miller was also charged in connection with the scheme. Initial charges were filed in 2019 in connection with the nationwide scheme that defrauded pension holders and investors.

Jason Kurland, 46, a lawyer from New York, was charged in connection with an alleged Ponzi scheme involving lottery earnings. Kurland calls himself a “lottery lawyer” and promised jackpot winners that he would invest their winnings. Instead, he put their cash into investments run by reputed Genovese crime family soldier Christopher Chierchio, 52. Kurland allegedly received kickbacks for steering the money to Chierchio and his partners. It is believed that $107 million was skimmed from the scam.

Robert J. Jesenik, 61, Brian K. Rice, 54, Nelson Scott Gillis, 67, and Andrew N. MacRitchie, 56, were charged on fraud and money laundering charges in connection with the scheme run through Aequitas Management LLC and related entities. They solicited investments in notes and funds, many of which were purportedly backed by trade receivables in education, health care, transportation and other consumer credit areas.

Peter Madoff, 74, the younger brother of Bernard Madoff, was released from home confinement after having served about nine years of his sentence. Peter Madoff had pleaded guilty to falsifying documents and lying to regulators as part of the Ponzi scheme, and he was sentenced to 10 years in prison. Bernard Madoff, 82, is still serving his 150-year prison sentence.

Anthony Wayne March, of North Carolina, pleaded guilty to charges that he ran a $8.1 million. The scheme was run through Asset Trader and defrauded at least 22 victims. The scheme was to invest in charitable gift annuities and other products, but March instead use the funds to pay for a lavish lifestyle, including a jet, a yacht and property in the Bahamas.

Rodney Scott Phelps, 58, of Kentucky, was sentenced to 9 years in prison and ordered to pay more than $2.4 million in restitution in connection with a Ponzi scheme run with co-defendant, Jason Castenir.  The scheme defrauded 13 victims through a fake investment scheme run through Maverick Asset Management LLC. The scheme promised returns from a supposed opportunity to obtain an oil concession from the government of Belize.

Ariel Quiros, 64, of Florida, pleaded guilty to charges related to the Jay Peak and Burke Mountain ski resorts in Vermont. Quiros and three others were indicted over an investment scheme that brought in $200 million in foreign investors’ money through the EB-5 visa program that allows individuals to obtain a green card and permanent residency in the U.S. The plea agreement provides that Quiros will be sentenced after William Stenger and William Kelly are sentenced, if convicted.

Mark Colin Ramsey, 50, of North Carolina, was sentenced to more than 5 years in prison and ordered to pay close to $1.1 million in restitution for running a fraudulent scheme through at least six different companies, including Hypertrend and Good Living. Investors were given fake investment agreements, fabricated stock certificates, and were guaranteed returns on their investments.

Benjamin Reynolds remains missing, but the CFTC is nevertheless seeking a judgment of about $500 million again him for his role in the alleged Ponzi scheme run through Control-Finance. The CFTC alleges that Reynolds laundered 22,858 Bitcoin worth about $147 million at that time, and that he defrauded about 1,000 customers.

Glyn W. Richards, 56, of New Jersey, was denied his request to be released from prison due to COVID-19 concerns. Richards stole more than $5.8 million in a Ponzi scheme and was sentenced to 30 years in prison. He had falsely claimed to have defense contracts in Iraq with a trucking firm, All Freight Logistics Inc.

Philip Elvin Riehl, 68, of Pennsylvania, was sentenced to 10 years in prison and ordered to pay more than $59 million in restitution. Riehl defrauded his accounting clients and diverted funds to Trickling Springs Creamery LLC, which he owned. The scheme defrauded members of the Mennonite and Amish religious communities.

Pablo Renato Rodriguez, Gutemberg Dos Santos, Scott Hughes, Cecilia Millan and Jackie Aguilar were arrested in connection with a scheme run through Airbit.  Airbit was a global cryptocurrency-based Ponzi scheme that was sold as a multi-level marketing club. Victims were told they would earn passive, guaranteed daily returns on any membership purchased.

Dale Tenhulzen, 61, of Wyoming, was charged by the SEC with running a Ponzi scheme through Live Wealthy Institute. The scheme sold about $15 million of unregistered securities in real estate investment funds managed by Equialt LLC.

INTERNATIONAL PONZI SCHEME NEWS

Australia

Graeme Walter Miller was sentenced to 6 years in prison in connection with a $2 million scheme run through CFS Private Wealth Pty Ltd. Miller pleaded guilty to misappropriating $1.865 million of client funds when he served as a financial adviser.

Michael Gu, founder of iProsperity Capital Management Pty Ltd., fled the country amid allegations that he ran a $60 million Ponzi scheme. Reports reveal that $30 million was transferred to Landerer & Company, run by lawyer John Landerer.

Canada

Todd Norman John Bezzasso was ordered to pay $6.3 million in connection with a Ponzi scheme run through Bezzazz Holdings Group Ltd. and Nexus Global Trading Ltd. The scheme raised approximately $5 million from 85 investors. Wei Kai Liao acted as a dealer and advisor and referred 27 investors to the scheme.

Glenda Esteves, 45, and Teddy Lee Esteves, 44, were charged in connection with a Ponzi scheme called Project Cosmo that took in $3.5 million from investors. The scheme targeted the Filipino community. They used companies such as Mac Glamour Ltd., Infy Trading Inc., and B + E Investments to recruit victims into the scheme.

Vernon Fauth, 73, was charged with fraud in connection with an alleged multimillion Ponzi scheme through Espoir Capital. Fauth was banned from the securities industry last year and paid $2.6 million in disgorgement along with other costs. Investor funds were loaned to Fauth and his family members and businesses, including Fauth Financial.

China

Authorities arrested over 100 suspects in connection with the PlusToken cryptocurrency scheme. The scheme promised 9% to 18% returns and defrauded victims out of $5.7 billion. 

Guyana

Cuban national Yuri Garcia Dominguez, 34, and Ateeka Ishmael, 32, were arrested in connection with an alleged Ponzi scheme run through Accelerated Capital Firm Inc.

Singapore

Authorities warned that the investment program known as Building Our Success Stories Network, or BOSS Network, may be a fraudulent Ponzi scheme. The scheme solicits investments from a multi-level marketing program for personal care products.

Zimbabwe

Bevern Capital Private Limited closed its doors and authorities allege that the company was running a $2 million Ponzi scheme. Richard Samunda, a director of the company, was arrested, but Bevern Dzinoenda and Ambrose Chikukwa are still at large.

Phenias Fungai Kamba was charged in connection with an alleged Ponzi scheme run through Kuwait Dinair Digital Marketing that defrauded 22 investors out of $5 million. 

Friday, July 31, 2020

July 2020 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps
Below is a summary of the activity reported for July 2020. The reported stories reflect at least 10 new Ponzi schemes worldwide, 5 guilty pleas, 95 years of prison sentences, and an average age of approximately 54 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed.
   
Gregory Altieri, 53, the president of LNA Associates, was charged in New York with running a Ponzi scheme that took in between $75 million and $85 million from more than 80 investors. Altieri promised investors a 30% to 70% return within months from nonexistence wholesale jewelry deals where he would supposedly buy jewelry at closeout prices and resell it at a high profit.

Will D. Allen was sentenced to 6 years in prison for his role in a Ponzi scheme that he ran with his business partner, Susan Daub. They ran the scheme through Capital Financial Partners, which offered short-terms loans to professional athletes. The $31 million scheme defrauded investors out of $14 million. 

Silviu Catalin Balaci, 35, pleaded guilty to charges that he conspired to engage in wire fraud and sell unregistered securities linked to Bitclub Network. Balaci had been charged along with co-defendants, Matthew Brent Goettsche, Russ Albert Medlin, Jobadiah Sinclair Weeks, and Joseph Frank Abel. Balaci confirmed that the scheme brought in at least $722 million worth of bitcoin from investors and that BitClub never ran the bitcoin mining pools that had been represented to investors. 

Matthew Benjamin, 53, was charged in connection with an alleged scheme that defrauded investors out of $1.525 million. Investors thought they were investing in Benjamin’s cosmetics company, Clear Solutions, even though there was not really a company.

John D. Black aka John Barnes and his entities Financial Tree, Financial Solution Group and New Money Advisors, along with Christopher Mancuso and Joseph Tufo, were charged by the CFTC with operating a binary options and foreign exchange trading scheme. The scheme allegedly defrauded about 90 investors out of $14.5 million. Some investors were promised triple returns on their investment in 4 months, and one person was promised that a $100,000 investment would be quadrupled in three months. The FBI is currently searching for Black, and Mancuso and Tufo were arrested by authorities.

Hal H. Brown, Jr. was sentenced to 17½ years in prison and ordered to pay more than $17 million in restitution for his role in a $22.5 million scheme that defrauded at least 60 investors. He ran the scheme through OODLES, falsely claiming that the company owned hundreds of millions of dollars in intellectual property.

Gina Champion-Cain, 55, of California, pleaded guilty to charges stemming from a $400 million Ponzi scheme. Champion-Cain was the founder of American National Investments, which was charged by the SEC last year relating to an investment program that promised investors returns from loans to people seeking California liquor licenses. Crispin Torres, 53, the former CFO of American National Investments, also pleaded guilty to charges related to the scheme. Champion-Cain used at least $60 million of investor funds to pay expenses at her businesses and to pay for residences in Mission Beach and Rancho Mirage. 

Marvin Courson, and his company Alista Group LLC were charged by the CFTC on allegations that they were running a $900,000 Ponzi scheme involving precious metals. Company employees Christopher Kertatos and Luis Pineda Palacios were also named in the civil enforcement action. 

Christopher Dougherty, 47, was sentenced to 12 years in connection with a $7 million Ponzi scheme that he ran. Dougherty promised returns to his victims from investments in a 100-acre organic cattle ranch and a marijuana growing project.

William Neil “Doc” Gallagher, 79, was found liable for SEC charges related to a $29 million Ponzi scheme. Gallagher is a Christian radio personality and the author of “Jesus Christ, Money Master.”

Savraj “Sam” Gata-Aura, 33, co-conspirator of Renwick Haddow, pleaded guilty to running a workspace rental scheme that defrauded more than 800 investors out of about $36 million. Gata-Aura was sentenced to 4 years in prison and 3 years of supervised release for his role in the Ponzi scheme involving a co-working space company called Bar Works.

Alan Hansen, 49, of California, pleaded guilty to charges related to his role in the Ponzi scheme run by DC Solar. Hansen admitted that he signed fraudulent documents to convince a telecommunications company to invest in DC Solar. The scheme was run by Jeff and Paulette Carpoff, both of whom pleaded guilty earlier this year. Other co-conspirators were Joseph W. Bayliss, 44, Ronald J. Roach, Robert A. Karmann, 53, and Ryan Guidry, 53.

GPB Capital Holdings, which has been accused of running a Ponzi scheme, took between $3 million and $7 million in PPP loans. GPB previously represented that it had reported $1.8 billion from about 2,000 investors, but GPB has not paid redemption since 2018.

David Hu, 62, of International Investment Group, was arrested on charges that he ran a Ponzi scheme involving more than $100 million based on overvalued loans and fake assets. Hu represented that he specialized in trade-finance lending but allegedly mismarked millions of dollars of loan assets to cover up millions in losses. The company agreed to pay $35 million in March to settle fraud charges by the SEC. The SEC has also charged Hu, alleging that he sold at least $60 million in fake trade finance loans to other investors.

Naim Ismail, 60, was arrested on charges that he defrauded investors out of $15 million through a Ponzi scheme that targeted an Afghan Bank. Ismail convinced investors to invest in real estate projects that did not exist and used the money to fund his lavish lifestyle. 

John Law, 41, was indicted on charges that he conspired with Perry Santillo as part of a Ponzi scheme that took in approximately $115 million and resulted in losses to investors of $70.7 million. Santillo was the CEO of First Nationle Solution LLC, and Law offered and sold securities for the company.

Philip Lochmiller, 72, was granted a compassionate release due to his worsening dementia. Lochmiller had defrauded 400 people and was sentenced to 33 years in connection with a scheme run through his home mortgage companies, Valley Mortgage, Inc. and Valley Investments.

Professional Financial Investors Inc. and its primary fund, Professional Investors Security Fund Inc., filed for Chapter 11 bankruptcy protection in California. The corporate restructuring officer identified the Ponzi scheme-like operation that had been run by the late owner, Kenneth Casey.  The filing estimated that there were about 1,000 victims.

Philip Elvin Riehl, 68, of Pennsylvania was sentenced to 10 years in prison for his role in a $60 million Ponzi scheme that targeted members of the Amish and Mennonite communities. Riehl previously pleaded guilty. He operated Trickling Springs Creamery, which he abruptly closed following an FBI investigation.

William “Willie” Rittenbaugh, 49, of Texas was sentenced to 37 years in prison and ordered to pay restitution of $588,500 in connection with a cattle Ponzi scheme. 

Denise Gunderson Rust, 60, the wife of Ponzi schemer Gaylen Dean Rust, 59, pleaded guilty to charges that she held her husband run a $200 million Ponzi scheme. The scheme was run through Rust Rare Coin and involved a fake silver trading program. Gaylen Rust and his son, Joshua Daniel Rust, 37, are charged with fraud and money laundering conspiracy. Denise Rust admitted that she knew that Gaylen Rust’s accounts were not being used for silver trading.

Ronald “Wayne” Snyder, 47, an employee of Texas Express Funding, which is a subsidiary of the Bank of San Antonio, was said to be running a Ponzi-style scheme that involved $13.2 million. No criminal charges have yet been filed.

Troy Wragg, 38, was denied his request for early release due to COVID-19, after having served less than 2 years of his 22-year sentence. Wragg perpetrated a $54 million Ponzi scheme through Mantria Corp.


INTERNATIONAL PONZI SCHEME NEWS

Canada

Authorities ordered Todd Norman John Bezzasso, Wei Kai (aka Kevin) Liao, and Bezzaz Holdings Group Ltd. and Nexus Global Trading Ltd. to pay a total of $6.3 million in connection with a Ponzi scheme that defrauded 85 investors.

China

Authorities detained Zhao Don, co-founder of the crypto lending platform, RenrenBit.

Authorities arrested 109 individuals in connection with the PlusToken bitcoin scheme. The arrests put an end to the scheme that had more than 2 million participants, and it involved digital currencies exceeding $5.8 billion.

Mexico

Two promoters of the OneCoin Ponzi scheme were found dead in Mexico. The bodies of Oscar Brito Ibarra and Ignacio Ibarra were found stuffed in suitcases and dumped in a vacant lot.

New Zealand

Barry Edward Kloogh, 57, was sentenced to almost 9 years in prison for his role in a Ponzi scheme that defrauded victims out of at least $15.7 million.
Nigeria

Umanah Umanah, 62, was arrested in connection with his involvement in the Ponzi scheme, No Burn Global Limited. Umanah promised investors 50% interest within one week from his company that he said was a consultancy and entrepreneurship service provider.

Philippines

Authorities have warned against Forsage, a gifting scheme run by Lado Okhotnikov, as a possible Ponzi scheme. The scheme uses fees collected from new members to compensate existing members.

Singapore

Fok Fook Seng, 52, was convicted for his role in marketing the OneCoin scheme. OneCoin has been determined to be a fraudulent scheme run by Ruja Ignatova and Konstantin Ignatov. OneCoin’s lawyer, Mark Scott, was convicted on charges that he laundered $400 million for the scheme.

South Korea

Authorities are investigating an alleged cryptocurrency scheme known as Futurenet that allegedly defrauded at least 950 investors our of $16.66 million. Futurenet was founded by Stephan Morgenstern and Roman Ziemian