Tuesday, March 31, 2015

March 2015 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

    Below is a summary of the activity reported for March 2015. The reported stories reflect: 4 guilty pleas or convictions in pending cases; over 54 years of newly imposed sentences for people involved in Ponzi schemes; a possible new massive Ponzi scheme involving $16 billion; and an average age of approximately 48 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.

    Bryan W. Anderson, 40, pleaded guilty to running a Ponzi scheme that lured in 18 investors who invested $8.4 million. It is believed that 12 investors ended up losing about $3.1 million. Anderson promised the investors that their investments were 100% risk-free and had a guaranteed rate of return of 5% to 20%. He solicited them to invest in stock options and to invest in his company, 360 Properties.

    Charles A. Bennett, 56, is in plea talks relating to an alleged $5 million Ponzi scheme that Bennett confessed to in a note written before a failed suicide attempt. Bennett is an attorney who formerly worked at Skadden Arps Slate Meagher & Flom LLP before he engaged in his admitted Ponzi scheme in which he defrauded at least 30 investors.

    Mary Faher, 57, was sentenced to prison for 23 months to 10 years in prison and ordered to pay about $2.6 million in restitution for her role in the Diversified Group Advisory Firm LLC Ponzi scheme. Faher had worked as a licensed investment advisor for Diversified, guaranteeing clients a 10% return on their investments and promising them their money would be safe. Shawn Dicken, 40, was previously convicted in connection with the scheme and sentenced to 11 years and 8 months to 20 years in prison.

    Gregory W. Gray, Jr., 39, and his firms Archipel Capital LLC and BIM Management LP were the subject of an asset freeze in an action commenced by the SEC. Gray allegedly took more than $20 million from 140 investors, promising them Twitter stock before the company went public. Gray was also arrested on charges relating to the alleged scheme.

    Jerry Lynn Helms, 50, was ordered to pay more than $1.5 million for defrauding at least 25 victims in a Ponzi scheme that he ran through his company, Prestige Pipeline. Prestige had been a profitable company before the economy crashed, but Helms began soliciting funds to invest in it.

    Craig Hipp, 54, was found guilty for his role in a virtual concierge Ponzi scheme. The scheme was run through JCS Enterprises Virtual Concierge program which is believed to have defrauded 100 of victims out of tens of millions of dollars. The program promised annual returns of 80% to 120%. Joseph Signore, Laura Grande-Signore, and Paul Schumack are all awaiting trial in connection with the scheme.

    Marguerite Martial Jean, 42, began her 8 year prison sentence in connection with her Ponzi scheme that she ran through her companies, MMJ’s Warehouse and VLM Enterprise. Jean targeted members of South Florida’s Haitian-American communities. She defrauded 293 victims by issuing them promissory notes for stakes in her businesses and guaranteeing them returns of up to 22%.

    Mahmoud “Mike” Karkehabadi, 57, had his conviction and 27 year prison sentenced affirmed by an appellate court. People v. Karkehabadi, 2015 Cal. App. Unpub. LEXIS 1921 (Mar. 16, 2015). Karkehabadi was convicted of running a $3 million scheme that promised investors 18% to 25% on loans to back production of a series of independent films. He ran the scheme through Alliance Group Entertainment.

    Michael Kratville, 54, was disbarred in Nebraska while awaiting sentencing for operating a Ponzi scheme in the Omaha area. The scheme defrauded about 100 victims out of about $4 million. Kratville had run the scheme with Jon Arrington and Michael Welke through companies called Elite Management Holdings Corp. and MJM Enterprises.

    Robert E. Lee Jr., 51, was sentenced to 5 years and 3 months in prison in connection with a $1.1 million Ponzi scheme. Lee was ordered to pay full restitution and to forfeit $358,077 that he had in an online trading account.

    Peter Madoff’s home sold for $3.5 million. Peter is the brother of Bernard Madoff, and the proceeds of the sale of the home will be contributed to the restitution amounts to be paid to victims. Peter Madoff is currently serving 10 years in prison for his role in the Ponzi scheme.

    Dee Allen Randall, 63, was found to have been running a $72 million Ponzi scheme by a federal bankruptcy judge. A federal bankruptcy judge found that “since at least 1997, Randall operated the [companies] as a ‘Ponzi scheme,’ and engaged in a continuing fraud.”

    Matthew John Ryan, 50, was ordered to pay his alleged victims $3.8 million in restitution. Ryan had pleaded guilty to running a Ponzi scheme through his company, Prime Rate and Return LLC, which sometimes did business as American Integrity.

    Trendon T. Shavers, 33, the former operator of Bitcoin Savings & Trust, pleaded not guilty to running Ponzi scheme. The U.S. Attorney had stated in court papers, “Trendon Shavers managed to combine financial and cyber fraud into a Bitcoin Ponzi scheme that offered absurdly high interest payments, and ultimately cheated his investors out of their Bitcoin investments. This case, the first of its kind, should serve as a warning to those looking to make a quick buck with unsecured currency.”

   Ricky Lynn Stokes, 54, was sentenced to 5 years in prison in connection with the Cay Clubs scheme. Barry J. Graham, 59, was also sentenced to 5 years in connection with the scheme.

    Ephren Taylor II, 32, was sentenced to 19 years and 7 months in prison and ordered to pay restitution of more than $15.5 million in connection with a $16 million Ponzi scheme that defrauded more than 400 victims. Taylor had run the scheme through City Capital Corp., claiming that 20% of his investments’ profits went to charity. Wendy Connor, 46, was also sentenced to 5 years and ordered to pay back $5.8 million.

    Deepal Wannakuwatte, 64, was ordered to pay $108 million in restitution. Wannakuwatte was sentenced to 20 years in prison last year in connection with an over $200 million scheme that involved investments into a medical supply company, International Manufacturing Group, selling latex gloves to veterans’ hospitals. He represented that he had $125 million worth of contracts when in reality they were only worth $25,000.

    Joel Wilson, 32, was convicted in connection with his Ponzi scheme run through Diversified Group Advisory Fund LLC. The scheme defrauded about 120 investors out of about $6.4 million.



    Nicholas Smirnow, 57, was arrested in Canada and an extradition requested has been submitted to the government of Canada for his extradition to the U.S. Smirnow is accused of running a $70 million Ponzi scheme operating under the name “Pathway to Prosperity.”


    Hong Kong police arrested 5 suspects in connection with the MyCoin alleged Bitcoin scam. MyCoin has been accused of operating a pyramid or Ponzi scheme, serving 3,000 clients who had invested as much as HK $1 million.


    Phillip Boakes, 55, was sentenced to 10 years in jail for his Ponzi scheme run through CurrencyTrader Ltd. that defrauded at least 30 investors out of more than £3.5 million. Boakes engaged in Forex spread betting, promising guaranteed returns of 20%. This is the longest sentenced imposed as a result of an investigation by the Financial Conduct Authority.

    Michael McIndoe, 35, is under investigation in connection with an alleged Ponzi-like scheme that defrauded hundreds of investors.

    David Gerald Dixon, 49, pleaded guilty to charges in connection with a Ponzi scheme that he ran through Aboretum Sports (USA) Incorporated and Arboretum Sports (UK) Limited. Dixon promised investors their money would be put in a no-risk gambling syndicate. Investors were defrauded out of about £4 million.


    Gautam Kundu was arrested in connection with the Rose Valley Ponzi scheme. Over 2,630 bank accounts were previously attached, and the corporate name was subsequently changed to Sun City Group and Chocolate Group.


    Cobus Kellermann, the head of Belvedere Management, has denied that Belvedere was running a Ponzi scheme. Belvedere is a Mauritus-based fund manager which manages about $16 billion in funds. David Cosgrove and Kenneth Maillard also run the company. Offshore Alert claims that Belvedere has falsely inflated the value of funds and is running a Ponzi scheme.

South Africa

    Investors in Defencex can now register claims for lost funds in scheme run by Chris Walker. Investors had purchased “points” that paid 2% per day in returns through the website trading as Net Income Solutions. Investors have 3 months to register their claims on the Repayment Administration Web Application website. The scheme is believed to have defrauded about 171,000 investors out of over R800 million.


    The Montauk Fire Department agreed to pay back $81,000 of funds it received from Ponzi schemers Brian R. Callahan and Adam J. Manson. The amount agreed to be paid was based on the profit it had made from its investment into Distinctive Ventures LLC.

    The Eighth Circuit overturned the lower court’s decision in dismissing the receiver’s lawsuit against Associated Bank in connection with the Trevor Cook $190 million Ponzi scheme. Zayed v. Associated Bank, N.A., 2015 U.S. App. LEXIS 3137 (8th Cir. March 2, 2015).  The court found that the elements of the aiding and abetting claim were properly plead, including that the bank had actual knowledge that it was providing “substantial assistance” to Cook. An assistant vice president of the bank allegedly allowed Cook to set up accounts for bogus entities and approved $3 million in transfers to Cook’s personal accounts, among other things. The bank was allegedly involved in $79 million of the $190 million Ponzi scheme run by Crown Forex SA.

    The trustee of Fair Finance Co. has agreed to settle lawsuits against Dan Laikin, the former head of National Lampoon, for about $3.5 million. Laikin is a former director of Fair Finance, which ran a $200 million Ponzi scheme. The trustee is also in settlement talks with National Lampoon.

    Roger Corman, a movie director, and his wife Julie Corman, sued Citco Group Ltd. alleging that it tricked them into withdrawing millions of dollars from a successful fund and investing it into a Ponzi scheme, resulting in a $60 million loss. The Corman’s allege that their funds were then under the control of Alphonse “Buddy” Fletcher, whose bankruptcy trustee has noted that Fletcher’s program “had many characteristics of a Ponzi scheme.”

    The father of Trent Francke, Edward Francke, is claiming ownership to $126,000 of collectible coins and silver that has been forfeited in connection with the David McQueen and Francke convictions for their $46.5 million Ponzi scheme. Edward Francke claims that the coins and silver belong to him, that he paid for them, and that he was unaware of any illegal conduct involving his son.

    A court declined to allow Santander Bank NA to remove a lawsuit from bankruptcy court which accuses the bank of wrongful conduct in connection with the bankruptcy proceedings of Liberty State Benefits of Delaware Inc., founded by convicted attorney Michael W. Kwasnik.

    The trustee of the Bernard Madoff Ponzi scheme case filed a petition for Supreme Court Review of a Second Circuit Decision allowing the safe harbor/stockbroker defense to bar some of the trustee’s avoidance power claims against investors.

    The Supreme Court declined to hear two separate appeals of rulings that barred investors in foreign investment vehicles from suing Madoff’s banks, JPMorgan Chase and Bank of New York Mellon. The Second Circuit had dismissed the lawsuits on the grounds that they were barred under the Securities and Litigation Uniform Standards Act. The cases are Trezziova v. Kohn and Davis v. JPMorganChase.

    A settlement was reached between a putative class of investors and law firm Astor Weiss Kaplan & Mandel LLP over allegations that the attorneys should have known that Mantria Corp. was running a Ponzi scheme. The $6 million settlement involved a series of defendants, including Astor Weiss, who agreed to pay $750,000. The settlement resolves all of the claims in the litigation.

    A jury awarded damages of $491 million against PNC Bank, as successor to Allegiant Bank, which served as trustee for National Prearranged Services. The lawsuit was filed by state life and health guarantee associations and the receiver of National Prearranged Services. The company had defrauded about 100,000 customers before it was shut down in 2008. Six officers and employees have been sentenced to prison time in connection with the scheme.

    In Ritche Capital Mgmt. LLC v. Stoebner, 2015 U.S. App. LEXIS 3735 (8th Cir. Mar. 10, 2015), the Eighth Circuit found actual fraudulent intent by rely on several badges of fraud in connection with the Thomas Petters Ponzi scheme, and did not rely on the Ponzi scheme presumption that was recently rejected by the Minnesota Supreme Court in Finn v. Alliance Bank, 2015 Minn. LEXIS 52 (Minn. Feb. 18, 2015).

    A district court partially dismissed investors’ claims against Proskauer Rose LLP and Chadbourne & Parke LLP in connection with the  Allen Stanford Ponzi scheme. The proposed class action alleged that the law firms aided the fraud, but those claims were dismissed. The court declined to dismiss many of the other claims in the lawsuit. Chadbourne & Park separately lost an effort to obtain from the Stanford receiver a list of the identities, residences and citizenship of the proposed class members.

    Westport Insurance Corp. argued in court that the firm of Breazeale Sachse & Wilson LLP is not covered against two related class actions against it in connection with the Allen Stanford Ponzi scheme. Westport contends that the firm concealed the fact that it represented businesses that Stanford used to run his scheme and that one of the firm’s partners, Claude F. Reynaud Jr., was a director at the Stanford Trust for 10 years.

    The Fifth Circuit reversed the lower court which had allowed The Golf Channel Inc. to avoid paying back $5.9 million that it had received as marketing revenue from Allen Stanford’s Ponzi scheme. See Janvey v. The Golf Channel, 2015 U.S. App. LEXIS 3818 (5th Cir. Mar. 11, 2015). The appellate court found that there was no showing by Golf Channel that its services preserved the value of Stanford’s estate or had “any utility from the creditors’ perspective.” The court found, "This was insufficient to satisfy its burden under TUFTA of proving value to the creditors. While Golf Channel's services may have been quite valuable to the creditors of a legitimate business, they have no value to the creditors of a Ponzi scheme."

    The Eleventh Circuit dismissed a lawsuit filed by investors of the Allen Stanford Ponzi scheme against the SEC for negligence in not spotting the Ponzi scheme. The court found that the SEC enjoys sovereign immunity. Zelaya v. U.S., 2015 U.S. App. LEXIS 5041 (11th Cir. Mar. 30, 2015). Although the court did not reach any conclusions about the SEC’s conduct, it did describe the plaintiff’s allegations as follows:  “According to Plaintiffs, notwithstanding its knowledge of Stanford’s likely nefarious dealings, the SEC dithered for twelve years, content not to call out Stanford and protect future investors from his fraud. And even though the SEC eventually roused itself to take action in 2009, by then, of course, the money was long gone, and many people lost most of their investments.”

    The trustee of TelexFree LLC reported that the scheme took in nearly $1.8 billion worldwide over a two year period and may have had about 1.9 million participants. TelexFree supposedly sold Internet telephone services, and people paid TelexFree to become promoters for the company. In exchange for placing online advertisements, they received telephone service packages that they could redeem for cash.

    The ZeekRewards receiver has sued alleged net winners with addresses in the United Kingdom. Last month he sued alleged winners who reside in Norway, and he had previously filed lawsuits against U.S. residents and residents of Australia, New Zealand, Canada and the British Virgin Islands.

    The ZeekRewards receiver has also taken action to tie up property in the Cook Islands which appears to have been purchased a vacation home in the Turks and Caicos Islands. The funds were transferred using a Zeek vendor known as Preferred Merchants Solutions LLC.

    The ZeekRewards received posted his Notice of Certification of Defendant Class Action on his website at:
www.zeekrewardsreceivership.com. The court has certified the defendant class of alleged net winners. The receiver is suing more than 9,000 individuals who are alleged to have received more than $1,000 from the program.

    Utah passed legislation to publish an online white collar crime database. The database will identify individuals convicted of certain white collar crimes, such as securities fraud, mortgage fraud, money laundering, and theft by deception. The database will include the offender’s name, physical description and a photograph.

Saturday, February 28, 2015

February 2015 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

    Below is a summary of the activity reported for February 2015. The reported stories reflect: 2 guilty pleas or convictions in pending cases; over 64 years of newly imposed sentences for people involved in Ponzi schemes; at least 5 newly discovered schemes involving more $138 million; and an average age of approximately 47 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.

    Kenneth Brewington, 50, was charged with running an alleged $2.5 million Ponzi scheme through a financial services marketing company called Compass Financial Solutions. The indictment alleges that Brewington and other co-conspirators falsely represented to investors that they held millions of Euros in overseas bank accounts and that investor funds would be used to obtain the release of the funds.

    John A. Geringer, 48, of GLR Advisors and GLR Capital Management was barred by the SEC from the securities industry. The SEC charged Geringer with running a $60 million Ponzi scheme which GLR advertised as “SEC approved” and represented that it had returns of 17% to 25% during every year of its operation. Geringer’s partner, Chris Luck, was recently sentenced to 10 years in prison in connection with the scheme.

    Stephen Goodrich, 57, was sentenced to 5 years in prison in connection with a Ponzi scheme that defrauded more than 10 investors out of more than $1.8 million. Goodrich ran the scheme using the name Goodrich Financial and falsely represented that he was licensed to conduct an investment business.

    Susanne Helbig, 49, was sentenced to 8 years in prison in connection with a Ponzi scheme that defrauded banks and mortgage lenders out of nearly $11 million. She ran the $7 million scheme through Genesis Mansion, a construction company. Helbig would buy lots and sell them at much higher prices to straw buyers, which inflated sales prices of undeveloped lots to help secure larger loans.

    Kristine L. Johnson, 60, and Troy A. Barns, 52, were accused of running a Ponzi scheme and were the subject of a court ordered injunction against their business called “The Achieve Community,” preventing the company from accessing its bank accounts. The SEC had filed civil lawsuit against the individuals and the company, alleging that they had raised more than $3.8 million of dollars by promising investors returns of 700%. Each $50 position would bring a $400 return. Money was sent to Achieve International, who was named as a relief defendant.

    Charles D. Jones, 61, pleaded guilty to charges relating to a Ponzi-type investment scheme in which he stole at least $8 million from his clients. Jones was the owner of Charles D. Jones Capital Management Inc., a financial planning and investment management firm.

    Gabriel Joseph was again indicted in connection with an alleged Ponzi scheme run by Rick Koerber who has previously been charged with allegedly operating a real estate Ponzi scheme. Previously charges against Joseph and Koerber were dismissed last year because of violations of the Speedy Trial Act.

    Mark Levinson, the former jeweler for convicted Ponzi schemer Scott Rothstein, was found dead of a self-inflicted gunshot wound to the head. Levinson had been sued for $10 million of funds received from Rothstein, but had settled for a fraction of that. Rothstein had testified that he bought millions of diamonds from Levinson and that they would turn off the cameras for those transactions. Levinson was 60.

    Jason A. Muskey pleaded guilty to stealing more than $2 million from 26 clients of his financial planning business. Muskey ran he scheme through his firm, Muskey Financial Services.

    Shervin Neman aka Shervin Davatgarzadeh, 33, was sentenced to 11 years in prison in connection with a $3 million Ponzi scheme in southern California that primarily targeted Iranian Jews. Neman ran the scheme through his company, Neman Financial Inc., falsely promising investors that their money would be used to purchase foreclosed real estate and stocks.

    Bich Quyen Nguyen, 60, was sentenced to about 12½ years in prison in connection with her Ponzi scheme that defrauded over 200 victims out of more than $24 million. Nguyen had represented to investors that she was the chief executive officer of Sun Investment Savings and Loan, and she guaranteed annual returns off more than 30% on one year certificate of deposits involving at least $1 million. Nguyen was found guilty at trial. Johnny Edward Johnson, 70, previously pleaded guilty to conspiracy charges related to the scheme and is awaiting sentencing.

    John Reid Perkins, 45, was sentenced to 5 years and 4 months in prison and ordered to pay $800,000 in restitution in connection with a real estate Ponzi scheme. Perkins’ co-defendant, Terry Wayne Grady, 51, was sentenced to more than 5 years last December.

    Frank Preve, 71, was sentenced to 42 months in prison for his role in the Scott Rothstein Ponzi scheme case. Preve worked with the Banyon Group, which invested in Rothstein’s bogus legal settlement program. Preve did not advise investors of problems before the scheme collapsed.

    Michael Szafranski, 36, was charged in connection with his role in the Scott Rothstein Ponzi scheme. Szafranski is accused of luring investors into the scheme by telling investors that he had reviewed confidential legal settlements in which they were investing, but the settlements did not actually exist. Szafranski is expected to plead not guilty.

    Germain Theodore, 34, was indicted in connection with what is alleged to be a $250,000 Ponzi scheme. He recruited investors to invest in his business, TGC Movement Inc. Theodore promised his clients that he could reduce their monthly bills by 35% and if they paid 65% of their bills, plus a fee, to TGC, then TGC would arrange for their bills to be paid in full.

    Gedrey Thompson, 42, and GFT Enterprises were the subject of a civil penalties aware in connection with a Ponzi scheme that involved at least $800,000 and 17 investors.  Thompson was ordered to pay $130,000 and GTF was ordered to pay $650,000. SEC v GTF Enterprises, 2015 U.S. Dist LEXIS 20355 (S.D.N.Y. Feb 19, 2015). Final judgments had previously been awarded against Gedrey, Thompson, Dean Lewis and Sezzie Goodluck in connection with the scheme.

    Sydney “Jack” Williams, 65, was indicted on new charges relating to the $930 million Ponzi scheme of Nevin Shapiro. Williams was a top recruiter for scheme and had previously pleaded guilty. He has now been indicted, along with his wife, on charges that they conspired to move more than $300,000 in cash.

    Wings Network and its operations were accused of running a $23.5 million Ponzi scheme in the Boston area that targeted Latino immigrants. The company claimed to sell digital marketing tools, apps and cloud storage services, but actual revenues appear to have come from selling memberships to investors. Related entities that were also charged are Tropikgadget Unipessoal LDA, and Tropikgadget FZE. Executives who were charged include Sergio Henrique Tanaka, 40, Carlos Luis da Silveira Barbosa, and Claudio de Oliveira Pereira Campos. Promoters who were charged include Yinicius Romulo Aguiar, 42, Thais Aguiar, 34, Andrew Elliot Arrambide, 47, Julio G. Cruz, 34, Wesley Brandao Rodrigues, 28, Dennis Arthur Somaio, 35, Elaine Amaral Somaio, 35, Pablo Andres Garcia, 38, Viviane Amaral Rodrigues, 37, Simonia De Cassia Silva, 43, Geovani Nascimento Bento, 41, and Priscila Bento, 36. Named relief defendants as the alleged recipients of ill-gotten gains are Uninvest Financial Services Corp., Compasswinner LDA, and Happy SGPS SA.

    William Wise, 63, was sentenced to more than 21 years in prison in connection with a $75 million Ponzi scheme run through Millennium Bank along with Jacqueline Hoegel. Wise had promised investors 16% returns on certificates of deposits. More than $129.5 million worth of fictitious CDs were sold to more than 1,200 investors.



    Melinda Scott, was sentenced to 6 years in connection with a $6 million Ponzi scheme that defrauded more than 150 investors. The scheme was run through her financial planning and advisory business, Roach Graham Scott, which was an authorized representative of Millennium 3 Financial Services, a wholly-owned subsidiary of ANZ Bank.


    Gary Sorenson, 71, and Milowe Brost, 61, were found guilty following their jury trial in what may be the largest Ponzi scheme in Canadian history. Sorenson and Brost ran a $400 million Ponzi scheme that allegedly defrauded more than 2,000 investors. Sorenson and Brost had both pleaded not guilty to charges that they had run the scheme, which involved companies named Syndicated Gold Depository SA, Base Metals Corporation LLC, Bahama Resource Alliance Ltd., Merendon Mining Corporation Ltd. and Strategic Metals Corp. The scheme promised investors 34% annual returns on investments of $99,000, and the investors were told that the business involved selling gold for refining. The jury returned a guilty verdict for both Sorenson and Brost after three days of deliberation following the five month long trial.

    Arvindbhai Bakorbhai Patel, 60, was charged with securities violations in connection with a $110 million Ponzi scheme operated by Rashida Samji. Patel is accused of advising about 90 investors to invest about $29 million in the scheme. Samji was fined $33 million last month for running a Ponzi scheme. She faces criminal charges relating to $17 million she allegedly stole from 14 victims.

    James “Jay” Macleod, 47, was charged in connection with a Ponzi scheme involving more than $1 million. The scheme promised high yields and low risk.

Hong Kong

    MyCoin, a bitcoin exchange, shut its doors with as much as $386 million of investor funds missing. MyCoin offered clients investment opportunities to invest in a contract that would provide a HK$1 million return on a HK$400,000 investment, and additional prizes of Mercedes-Benz cars or cash if investors recruited others. It is reported that as many as 3,000 investors may have invested as much as $129,000 each.

New Zealand

    A ruling from the Supreme Court limits a liquidator’s ability to claim back payments made by a failed company for goods and services up to two years before its collapse. However, this ruling may not have a significant impact on Ponzi scheme cases such as Ross Asset Management. The receiver of Ross Asset Management responded by noting that the receivers are using the Companies Act to go back two years from the date of their appointment to claw back funds from investors who withdrew money from the Ponzi scheme, but that they are using Section 297, which was not addressed by the Supreme Court ruling that impacted Section 292.


    The conviction of “pyramiding scam queen” Rosario Baladjay was affirmed in connection with a Ponzi scheme that was run through Multinational Telecom Investors Corporation.


    An investor lawsuit against JPMorgan Chase was dismissed by a federal court as being bared by the Securities Litigation Uniform Standards Act. The suit had alleged that JPMorgan and others enabled a $40 million Ponzi scheme run by Philip Barry.

    A district court refused to reconsider a ruling that American International Group Inc. is liable for breach of contract and bad faith insurance coverage in connection with a dispute with Fidelity National Financial Inc. over losses and claims tied to a real estate Ponzi scheme.

    Santa Cruz County Bank and 3 investment advisors, John Geringer, Christopher A. Luck and Keith E. Rode, were sued by investors defrauded in a Ponzi scheme. The lawsuit alleges that the bank lent its "name and prestige to the GLR Fund's operations in GLR Fund marketing materials." Although the lawsuit does not name the then-vice-president Chuck Maffia, it alleges that the bank and Maffia "knowingly participated in and substantially assisted the Ponzi scheme" by serving as a banking reference for the GLR Fund and soliciting investors.

    Investors of convicted Ponzi schemers Kevin James and Rudolf “Rudi” Pameijer will be receiving over $150,000 of restitution through the Indiana Securities Restitution Fund. About 14 investors were defrauded out of $1.5 million. James was sentenced to 10 years in prison and ordered to pay $1.4 million in restitution. Pameijer was sentenced to 18 years and ordered to pay $1.8 million.

    In connection with the Bernard Madoff case, the Sixth Circuit affirmed the lower court ruling that no inflation or interest should be paid in connection with customers’ claims against the estate. In re Bernard L. Madoff Investment Securities LLC, 2015 U.S. App. LEXIS 2724 (2d Cir. Feb. 20, 2015). The Madoff trustee may be able to distribute an additional $1 billion if no further appeals are taken in connection with this matter.

    A court dismissed claims against Wells Fargo Bank brought by the receiver of the Arthur Nadel estate for failing to properly monitor the account activities of Nadel. The court found that there was no evidence that the bank knew about Nadel’s $168 million Ponzi scheme. Following the court's ruling, Wells Fargo said that it will seek $4 million in attorney's fees and expenses from the receiver.

    The Eleventh Circuit affirmed a district court decision denying the Arthur Nadel receiver’s motion to vacate an arbitration award in favor of an investor sued in a clawback action. The receiver had sued Herbert Schneidrman seeking to recover $164,000 of “false profits” as a fraudulent transfer, but the court found that arbitration was appropriate and that the arbitration award would stand.

    Four lawsuits were filed against BMO Financial Group by investor groups in connection with the Tom Petters Ponzi scheme. The investors allege that a bank acquired by BMO, Marshall & Ilsley Corp., was complicit in the scheme.

    JPMorgan Chase moved to dismiss a complaint filed by Ritchie Capital Management LLC and other hedge funds in connection with the Tom Petters scheme on the grounds that it was time-barred.

    The Eleventh Circuit denied TD Bank NA’s motion for a stay pending its appeal of a district court’s order that it pay the $74 million against it to a group of investors who were defrauded in the Scott Rothstein Ponzi scheme case.

    A court found that former U.S. Ambassador to Ecuador, Peter Romero, must return $758,000 of fees, expenses and interest that he earned while advising Ponzi schemer, Allen Stanford. Romero recruited new investors into Stanford's scheme.

    The trustee of TelexFree filed a status report in the case, stating that the company and its affiliated company in Brazil, Ympactus Comercial Ltda., raised as much as $1.8 billion from over 1 million participants worldwide. The company collected at least $58 million per month at the end of 2013 and the beginning of 2014. The trustee has recovered over $17 million since his appointment.

    A court granted the motion filed by the receiver of Zeek Rewards to certify a class of 9,400 alleged net winners of more than $1,000. The receiver had “asked that the Court appoint one or more of the largest net winners sued by name as class representatives because they will, by virtue of their own defense to the same claims, be adequate and appropriate representatives for the rest of the Net Winner Class.” The court found that “If the Receiver herein was forced to file separate actions against the 9,400 Defendants, he would certainly be risking inconsistent and varying adjudications.”

    The Zeek Rewards receiver filed lawsuits against more than a dozen net winners in Norway. The receiver has previously sued residents of the U.S., Australia, New Zealand, Canada and the British Virgin Islands.

    The Minnesota Supreme Court ruled that the state’s fraudulent transfer act does not include a Ponzi scheme presumption. Finn v. Alliance Bank, 2015 Minn. LEXIS 52 (Sup. Minn. Feb. 18, 2015).