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

Kathy is a senior business trial attorney with more than 27 years experience prosecuting and defending claims for 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 an expert on 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

Wednesday, July 31, 2019

July 2019 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for July 2019. The reported stories reflect at least 15 new Ponzi schemes worldwide; at least 2 guilty pleas, over 6 years of newly imposed sentences for people involved in Ponzi schemes; 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.
Jose Angel Aman, Harold Seigel and his son Jonathan Seigel, were sued by a group of Venezuelan nationals alleging that they were lured into a $30 million Ponzi scheme with promises of returns on investments in diamond-backed cryptocurrency, Argyle Coin. The scheme was run through two diamond companies, Natural Diamonds and Eagle Financial, and an associated cryptocurrency business. Over 300 investors were defrauded. The Seigels deny any wrongdoing.

Monica Brady, 44, of Rhode Island, pleaded guilty to charges relating to a $10 million real estate Ponzi scheme that she ran through MNB. Brady claimed to be overseeing renovations on foreclosed properties and she promised investors returns from the profits from the sale of the properties. Investors were promised returns of 50% of the profits from the projects.

Joseph Bernard Charde, 72, and Allen Roy Duquet, 68, of Florida were arrested in connection with an alleged real estate Ponzi scheme that defrauded 26 victims out of $6 million. The scheme was run through Oneir Sales and Rentals LLC and an investment program called The Commission Resource Program. The dollar amount allegedly stolen is more than $6 million.

Natalie Cochran was accused of running an investment fraud with her late husband, Michael Cochran. The alleged scheme was run through Tactical Solutions Group and Technology Management Systems, which were government contractors. Cochran filed bankruptcy following the fraud charges.

Myles Hannigan, 48, was charged with federal tax crimes in connection with an alleged Ponzi scheme run through Payroll Professionals, Inc. The company is a third-party payroll processor that assists clients by issuing payroll checks and forwarding tax payments to taxing agencies.
Hunter Hanson, 22, of North Dakota, pleaded guilty to charges relating to his grain business that was alleged to be a Ponzi scheme. The plea deal calls for Hanson to forfeit his assets and pay $11.4 million in restitution.

David Kaplan, 52, and his companies, Synchronized Organizational Solutions International Ltd. (SOSI), Synchronized Organizational Solutions LLC (SOS), and Manna International Enterprises Ltd., were charged in connection with an alleged Ponzi scheme. Kaplan allegedly used his role as an attorney to defraud investors in a scheme that netted more than $12 million from investors. Investors were promised returns of 10% per month.

Bernard Madoff, 81, asked President Trump to reduce his 105-year prison sentence. Madoff asked that his sentence be commuted and that he be released – a request that the prosecutor called “the very definition of chutzpah.”

William J. Milles and Donald J. Lutzko, co-founders of Capital Energy Group LLC, were sued by the SEC on allegations that they were running a $3.9 million Ponzi scheme. The scheme allegedly offered high returns on oil and gas offerings, guaranteeing 237% or 363%. The scheme allegedly defrauded approximately 70 investors.

Clayton Morris, a former co-host on Fox News’ Fox & Friends, and his wife, Natalie Morris, were accused of defrauding investors through their company, Morris Invests. They have denied the claims and moved to Portugal. Morris was a part owner of Oceanpointe, a company that sold turnkey landlord services in Indianapolis to investors. Morris and his partner, Bert Whalen, have both been sued and accused of doing substandard repairs to properties.
Mark Nordlicht and David Levy were convicted of fraud in connection with the Platinum Partners scheme.  They had been accused of defrauding investors in Black Elk Energy, an oil company that was one of Platinum’s largest assets.

Paul Andrews Rinfret, 70, was arrested in connection with an alleged $19 million Ponzi scheme. Rinfret allegedly ran the scheme through his investment fund, Plandome Partners LLC.

Landon M. Smith, 29, of Utah was charged by the SEC was running a $2.4 million Ponzi scheme through J&L Real Estate. The scheme promised returns of up to 100% on investments that would be used as “earnest money” down payments for real estate that Smith would buy and then sell. The scheme defrauded 50 investors.

Henry Wieniewitz, III and his Tennessee company, Wieniewitz Financial, were charged by the SEC with unlawfully offering and selling securities of Woodbridge Group of Companies LLC and 1 Global Capital. Woodbridge was previously charged by the SEC with operating a $1.2 billion Ponzi scheme. Wieniewitz and his company are alleged to have sold securities to more than 630 investors.


An alleged Ponzi scheme defrauded victims through a website called Coinexx.org. The scheme promised returns of up to 15% weekly.
Richard Philip Lambe was banned from providing financial services for 3 years following his involvement in a $120 million Ponzi scheme run by Veronica Macpherson that defrauded nearly 2,000 people. Lambe was found to have failed in his duty to supervise Macro Group Company 511 GTN and Macpherson as director of Anquan Securities and Investment.

Kelvin Clive Wood was sentenced to 6 years and 3 months in prison for a Ponzi scheme run through his foreign exchange brokerage. The scheme defrauded 18 investors and more than $7 million was lost in the scheme.


John James Illidge, 66, and Vincent Phillips, 74 were charged in connection with an alleged $1 million Ponzi scheme. Illidge represented that he was an investor for different companies.


Justin Sun, the CEO of Tron, aka Wave Field, is accused of running a Ponzi scheme that defrauded thousands of investors out of at least $30 million. The scheme was run through Wave Field Super Community, and victims invested in Tron cryptocurrency, TRX.


Authorities seized $4.24 million from Samuel Golding, 42, and Shantell Deacon, 40, in connection with a China trade investment Ponzi scheme. The scheme was run through Digital Wealth and Outsourcing Express and defrauded 1,000 investors.


Sandeep Singh Dua was arrested in connection with a cryptocurrency scam involving Kashhcoin.
Vijay Prajapati, Dhiraj Patel, Kamruddin Syed, and Ashiq Shaikh, the alleged creators of the cryptocurrency, KBC Coin, were arrested.

Rajesh Khantwal was arrested on charges that he was running a scheme through Maple Innovative Promoters and MIP Bikes. Over 5,000 investors put money into the motorcycle sharing aggregator alleged Ponzi scheme.


Authorities have issued a warning that Emirate Coin Tech is not licensed or registered and has no authority to provide any investment, crypto or another type of financial services.


The SEC ordered Alabel Maasim Mining (ALMANICO) Corp. and Alabel-Maasim Credit Corp. (ALAMCCO) to stop operations without a license.  The SEC alleged that the companies were running a Ponzi scheme that promised returns of 35% per month.

South Africa

A bitcoin scheme allegedly defrauded thousands of investors through a company called Bitcoin Wallet. The scheme promised returns of 100% in 15 days. Investors set fire to the home of Sphelele “Sgumza” Mbatha following the collapse of the scheme.

South Korea

The crypto firm, PlusToken, was accused of running a Ponzi scheme that stole $3 billion from customers. PlusToken had 3 million users and expected to have 10 million users by the end of 2019. The scheme promised returns of 6% to 18% per month.

Authorities believe that about 2.7 trillion won ($2.3 billion) has been lost to crimes in cryptocurrency in the last two years.


Deloitte, EisnerAmper, Sidley Austin, TD Ameritrade, Integrity Bank & Trust of Colorado, Duff & Phelps agreed to pay $234.6 million for allegedly enabling the Ponzi scheme run by Aequitas Capital Management.

Kingate Management Ltd. agreed to pay back $860 million to the Bernard Madoff estate.

Sunday, June 30, 2019

June 2019 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for June 2019. The reported stories reflect at least 7 new Ponzi schemes worldwide; at least 7 guilty pleas, over 43 years of newly imposed sentences for people involved in Ponzi schemes; and an average age of approximately 45 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed.
Syed Arham Arbab, 22, was sued by the SEC, who alleged that Arbab was running a Ponzi scheme from his fraternity ho use at the University of Georgia. Arbab told investors that he had earned his undergraduate degree and was pursuing his master’s degree in business. He offered investors returns from two allegedly bogus hedge funds. Arbab started Artis Proficio Capital Investments when he was a junior in college and claimed that it had over 350 members. Arbab also ran Artis P. Capital Management. He claimed that he raised more than $700,000 from 42 individuals, but information sent to investors reflected more than 110 investor accounts and over $2 million raised. Arbab promised annual returns between 22% and 56%.

Yehuda Belsky  aka Jay Bell, 47, of New York, pleaded guilty to charges relating to a binary options and securities Ponzi scheme run through Y Trading, LLC. Belsky was permanently barred from trading in commodities futures transactions and options in 2008 by the CFTC. Belsky represented he was investing investor funds into securities and binary options but instead used the funds for personal expenses and to pay investors who demanded repayment.

Kevin Brody, 55, of Pennsylvania, pleaded guilty to charges relating to a $12 million Ponzi scheme that defrauded at least 50 people. The case against his co-defendant, Matthew Eckstein, is still pending. They ran the scheme through Conmac Funding Corp. and investors were promised that their investments were risk-free. Investors were given usernames and passwords to a website where they could see their account statements and the supposed accrual of interest. Brody and Eckstein used the funds for other businesses including a hamburger restaurant and other personal expenses.
Nickolas M. Godfrey, 41, was sentenced to 37 months in prison and ordered to pay more than $1.6 million in restitution for his involvement in a Ponzi scheme he ran in South Carolina. Godfrey owned the Blakeney Shopping Center and convinced investors to invest in small businesses, taking more than $1 million from more than 20 victims through his company, Coast to Coast Business Funding.
Hunter Hanson, 22, agreed to plead guilty to charges relating to his role in an $11 million Ponzi scheme that defrauded North Dakota and Canadian farmers. Hanson ran the scheme through Midwest Grain Trading, which would purchase grain from sellers in Canada and the U.S. and would take delivery of the grain without paying for it.

Todd Hitt, 54, of Virginia was sentenced to 6½ years in prison in connection with a $20 million Ponzi scheme. Hitt is a real estate developer and was the CEO of Kiddar Capital and a member of the real estate family behind Hitt Contracting. Kiddar Capital claimed to manage $1.4 billion in assets but the FBI has only been able to account for $27 million.

James E. Hocker, 49, was hit with a final judgment in favor of the SEC for his conduct in connection with a $1.5 million Ponzi scheme. The SEC had charged Hocker with running a $1.5 million Ponzi scheme. He was an insurance agent that promised investors returns between 10% and 30% from S&P 500 and other investment vehicles. Hocker was previously sentenced to 17 years in prison.

Konstantin Ignatov pleaded not guilty to charges that he ran a $3.8 billion cryptocurrency Ponzi scheme through OneCoin Ltd. Ignatov and his sister, Ruja Ignatov, were charged and arrested by the U.S. Department of Justice.

Olaf Janke, 48, pleaded guilty to charges relating to the scheme run through Aequitas Capital Management. Co-founder, Brian Oliver, previously pleaded guilty to the scheme. The scheme is estimated to have defrauded more than 1,400 victims out of between $300 million and $600 million.  CEO Robert Jesenik and chief operating officer, N. Scott Gillis, are also believed to be central to the scheme.
Jay B. Ledford, 55, and Kevin B. Merrill, 53, pleaded guilty to charges in connection with a $550 million scheme run with Cameron R. Jezierski, 28, who previously pleaded guilty. They solicited investors to purchase consumer debt portfolios.

Steven A. LeProhon, 30, was accused of running a Ponzi scheme. LeProhon is the owner of Steven LeProhon Marine and Motorsports and is accused of theft and failing to do work as part of a Ponzi-style scheme.

Paul Ricky Mata, of California, was indicted in connection with an alleged $14.5 million real estate scheme. Mata was an elder in the Water of Life Community Church and had allegedly been paid to teach members how to invest. In 2015, the SEC sued Mata and his entities, including Secured Capital Partners LLC, alleging that they had defrauded victims. Mata had formed the unregistered advisory firms Logos Wealth Advisors, Inc., Logos Lifetime University, and Lifetime Enterprises, Inc.

Patrick McDonnell aka Jason Flack, 46, pleaded guilty to running a fraudulent cryptocurrency investment scheme. McDonnell operated a bitcoin trading firm Coin Drop Markets. McDonnell claims that investors could make a 300% return on investments in less than a week and issued false balance statements to persuade investors.

James Moore, 58, co-conspirator of Renwick Haddow aka Jonathan Black, was convicted for operating a Ponzi scheme through Bar Works Inc. Moore and Haddow are British citizens, and Haddow had previously been disqualified as a director of any U.K. company for 8 years. To disguise his identity, Haddow went by his alias name, and the two solicited investments into workspace leases through Bar Works. Haddow also operated Bitcoin Store Inc. Haddow pleaded guilty last month. Moore is seeking a new trial.

Stephen Condon Peters, 46, was found guilty by a North Carolina jury for the $15 million Ponzi scheme he ran through VisonQuest Wealth Management. Peters promised investors returns of 8% to 9% on low-risk investments. Peters diverted $6 million for his own personal use.

Benjamin Reynolds and Control-Finance Ltd. were sued by the CFTC who alleged that they ran a $47 million Ponzi scheme. The CFTC alleged that Control-Finance promised returns of 45% a month. The complaint seeks the returns of about 23,000 bitcoin, valued at $47 million and to bar the principals of UK-based Control-Finance Ltd. from trading. The scheme allegedly defrauded more than 1,000 investors by representing that the company employed expert virtual currency traders who earned guaranteed daily trading profits on bitcoin deposits.

Paul A. Rinfret, 70, was accused of running a securities Ponzi scheme in which he purported to trade in futures contracts relating to the S&P 500 utilizing a bespoke algorithm he had developed. Rinfret obtained more than $19 million form about 6 victims.

Daniel B. Rudden, 72, of Colorado was sentenced to 10 years plus one month in prison for running a Ponzi scheme that defrauded 175 victims. Rudden ran the scheme through Financial Visions, which provided funeral funding services to nearly 600 funeral homes and cemeteries. Investors were promised 12% interest, and losses were estimated at $19 million.
John Gregory Schmidt, 68, was sentenced to 5 years in prison in connection with a scheme run through Schmidt Investment Strategies Group while he was employed by Wells Fargo Advisors. Schmidt stole money from investment accounts in order to cover other stolen money in investors’ accounts. He was accused of having misappropriated about $1.1 million.
Lo Van Tran, 42, of California is accused of running a $3 million Ponzi scheme that defrauded more than 10 investors. Investigators are searching for more victims, and most of the victims are believed to be Vietnamese. Tran ran the scheme through SmartBuy Outlet Inc., which had two storefronts and operated under the name SavMax Solutions Inc. Tran claimed to have a partnership with a third-party logistics company known as Zyp Corporation which would allegedly facilitate the buying and selling of large amounts of Apple products. However, Zyp Corp. did not actually exist.

Christopher B. Warren, 50, of Florida was sentenced to 9 years in prison and ordered to pay $15 million in restitution in connection with a $28 million Ponzi scheme that he ran through Clean Energy Advisors. Warren claimed the company owned multiple solar farms in North Carolina, and he created phony audited financial statements to defraud investors.



Douglas Gordon Johnston was sentenced to 6 years in jail for his role in a scheme that defrauded investors out of about $815,000. Johnston ran the scheme through Small Business Management Pty Ltd. and Investman Nominees (USA) Pty Ltd with his wife Maureen Johnston, who was sentenced to 5½ years in connection with the scheme. Their daughter, Fiona Johnston, also received a 6-month sentence in connection with the scheme.

Liam James Collins, 45, and David James Robert Bone, 37, were each sentenced to 21 months in connection with a scheme run through a number of companies known as the CBS Group. Investors were told that their funds would be used to purchase and renovate student housing. After CBS Group failed, Collins and Bone set up a new investment scheme called the Collins and Bone Partnership.

Hudspiths Fund has been accused of operating a Ponzi scheme. The foreign exchange firm is believed to owe more than £40m to creditors. Hudspith’s chief executive Karl Lubieniecki denies the allegations.

Seven directors of IMA Jewelers were arrested in connection with the Ponzi scheme. Mohammed Mansoor Khan, the owner of IMA (I Monetary Advisory) Group of Companies, is still at large. More than 26,000 investors have lodged complaints. IMA promised 10% returns and claimed to have a presence in bullion trading, retails sales of gold, silver, diamond and platinum jewelry, educational academies, healthcare service, supermarkets and real estate development, among other things. Authorities several branches of IMA Jewels and seized 41 kg worth of jewelry.

Misbahuddin S. Mukarram, the managing director of Injaz Builders and Developers, was arrested on allegations that he defrauded investors out of Rs 89 crore, promising 25% monthly returns.


Uno Michael Eke was arrested for his role in the alleged Ponzi scheme run through Micheno Multi-purpose Cooperative Society Ltd. The scheme promised 80% interest in 40 days if they invested in Swissgolden packages.


Dexter Cuyos, 24, and Robert Padayogdog, 31, were arrested in connection with an alleged Ponzi scheme run through Kapa-Community Ministry International Inc., a religious organization that promised “too good to be true” investments. The assets of Kapa were frozen on allegations that it operated the largest investment scam in recent Philippine history. Kapa solicited investments in a minimum amount of P10,000 and promised investors a 30% monthly return for life. Kapa would need P15 billion per month to pay its alleged 5 million members. Pastor Joel Apolinario was accused of engineering the Ponzi scheme.


A class action was certified against Stuart Fraser, GAW Miners LLC and ZENMiner LLC, accusing them of defrauding thousands of investors

Court approval of a $65 million settlement for victims of the Stanford Financial Ponzi scheme was reversed by the Fifth Circuit. The settlement required insurers to pay $65 million to the receiver of the companies run by Allen Stanford. The First Circuit, however, found that the lower court did not have authority to void or release some claims against the insurances and to bar further legal challenges over their policies and the Stanford companies.