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

Kathy is a senior business trial attorney with more than 25 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 on 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

Friday, June 30, 2017

June 2017 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for June 2017. The reported stories reflect: 4 guilty pleas or convictions in pending cases; over 44 years of newly imposed sentences for people involved in Ponzi schemes; at least 6 new Ponzi schemes worldwide; 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. And please remember that I am just relaying what’s in the news, not writing or verifying it.


Rodney Allen, 65, is missing amid allegations that he was running a fraudulent scheme through his securities investment company, KA Investments Inc. Allen owes more than $1.1 million to investors. His accounts were frozen after his disappearance. Allen’s wife said that Allen took his passport, gun and cash from their safe.

William Apostelos, 55, was sentenced to 15 years in prison and ordered to pay restitution in excess of $32 million. Apostelos ran a $70 million Ponzi scheme through his firm, WMA Enterprises LLC, in which about 480 victims lost about $20 million.


Hugh Monroe Dyson, 67, was convicted of running a Ponzi scheme through his fictitious oil and gas drilling firm called Keyport Oil. He used scissors, tape and a copier to fabricate stock certificates for investors, who lost more than $289,000.


GAW Miners and ZenMiner, founded by Homero Joshua Garza, were ordered to pay $10.3 million in disgorgement and interest, plus a $1 million penalty, in an SEC action against them. Garza offered investors shares in a bitcoin mining operation and allegedly defrauded over 10,000 investors out of nearly $20 million.

Omar Hafez, 25, was sentenced to 46 months in prison and ordered to pay $1.5 million in restitution after pleading guilty to charges that he ran a Ponzi scheme through a number of entities, including Lotus Global. Hafez misrepresented that he had access to shares of companies before their high-profile initial public offerings. Over $1.5 million was invested in the scheme.


Stephen J. Hatch, 68, was sentenced to 5 years in prison for running a $70 million Ponzi scheme that defrauded 110 investors. The scheme involved investments in land in Arizona and Hatch preyed on Christian victims to invest in the real estate scheme. Hatch had previously pleaded guilty and one of the terms was that Hatch’s children, Stephen D. Hatch, Adam Hatch, Ryan Hatch, and Jessica Hatch, would not be charged.


Merl William Hickman Sr., 68, sought commutation of his 160 year prison sentence in connection with a scheme run through The Hickman Agency. His request was denied. About 160 investors lost more than $8 million. Investors were promised returns of 20% but no money was ever invested. Hickman’s son, Merl William “Billy” Hickman Jr., served a 5 year prison terms in connection with the scheme.

Patrick Kiley
, 79, had his 20 year prison sentence upheld by an appellate court. Kiley sold investments in foreign currencies on the radio on his show “Follow the Money” which was broadcast on a Christian radio network. He defrauded more than 700 people nationwide in a $194 million Ponzi scheme.


Karen McClaflin, 58, pleaded guilty to charges alleging she was running a Ponzi scheme through her franchise of “We Buy Ugly Houses” which she named Trademark Properties and Trademark Reality. The business used investor money to supposedly purchase and renovate distressed houses, then reselling the houses at a profit. Trademark filed bankruptcy and McClaflin moved the investors to a new company called Homesource Partners which did the same fix and flip business model. She promised them 6% to 15% profits and offered them trust deeds to secure their position. 


Randy Miland, 63, was sentenced to 7 years and 6 months in prison and ordered to pay $214,000 in restitution for operating a Ponzi scheme that defrauded investors out of $500,000. Miland fraudulently solicited money from 10 investors, promising them to invest in futures and other investments. He had previously been convicted in another fraudulent scheme and sentenced to 55 months in prison.


Raymond K. Montoya was charged with running a $30 million Ponzi scheme through his companies, Research Magnate Advisors LLC and Resource Managed Assets LLC. He allegedly use investors’ money for his personal benefit and was able to raise funds by exaggerating the size of his investment funds and by inflating returns.

John Kevin Moore pleaded not guilty to charges relating to an alleged $2 million Ponzi scheme run through a mining company called Big Sky Mineral Resources and a fine art investment company called Glacier Gala.


Jason Nissen, 44, was accused of running a $70 million Ponzi scheme that he ran through his ticket company, National Event Co. found at NECO.com. Nissen deceived a private equity firm and a diamond wholesaler into loaning him money to buy tickets to the Super Bowl, “Hamilton,” Adele concerts, and the US Open. National Event Holdings LLC filed a Chapter 11 bankruptcy petition as a result of the alleged fraud conducted by Nissen. The company’s subsidiaries National Event Co. II LLC, National Event Co. III LLC, National Events Intermediate LLC and World Events Group LLC also filed their own Chapter 11 bankruptcy petitions.

Rodney Scott Phelps (no relation to the author) was indicted on charges that he ran a Ponzi scheme through Maverick Asset Management LLC along with Jason Castenir. The scheme involved an alleged oil and gas venture in Belize as well as a supposed investment in a casino.


David Phoenix has been accused by former clients of running a Ponzi scheme in a lawsuit filed in Los Angeles. Phoenix is an interior designer for many celebrities and has been accused of taking millions of dollars to buy goods but instead delivering cheaper goods or no goods at all.


Peter Ressler, 70, pleaded guilty to running a $3 million fraudulent scheme. Ressler is a former partner with Groob, Ressler & Mulgueen, which was one of Connecticut’s oldest bankruptcy firms. The scheme was equated to a Ponzi scheme in the plea agreement. Ressler took retainers from at least 30 clients that were earmarked for bankruptcy and tax matters, but instead used the money on personal and business expenses.


Timothy Sammons, 61, is facing extradition to the U.S. in connection with an alleged Ponzi scheme involving artwork. Sammons would acquire art from collectors, promise to find a buyer, and then sell or borrow against the artwork and use the money for himself.


Steven Scudder, 62, was sentenced to 14 months in prison for his role in the $70 million Ponzi scheme run by William Apostelos. Scudder served as trustee of the WMA Trust, a land trust that purported to secure investments made with Apostelos. Apostelos pleaded guilty and was sentenced to 25 years in prison for the scheme.


Gary Todd Smith, 47, pleaded guilty to charges relating to his role in a $64 million Ponzi scheme. The scheme was a complicated lending program in which old loans were repaid with new loans.

Jeffrey M. Stauffer, 69, lost his appeal in the Sixth Circuit regarding his conviction and 10 year prison sentence. Stauffer was convicted on charges relating to his $1.9 million foreign exchange Ponzi scheme.


Cecily Sturge, 69, was arrested on charges that she made material false charges to a federal agent regarding Scott Wolas’, her ex-husband’s whereabouts. Sturge allegedly passed off Wolas as her brother, named Cameron Sturge.  Wolas, 67, is a disbarred lawyer who is charged with operating a $1.5 million real estate investment scheme.

Cory Williams was the subject of an asset freeze requested by the CFTC for an alleged Ponzi scheme run through Williams Advisory Group LLC. The CFTC accused Williams of running a $13 million trading scheme that defrauded members of the Mormon Church.


Roger Williams was scheduled for trial in connection with an alleged Ponzi scheme in which about 100 investors lost about $2 million.

Michael Wright, 30, was accused of running a Ponzi scheme through a company called Wright Time Capital Group. The scheme took in more than $400,000 from investors and, although he represented that he invested those funds in foreign currency transactions, he used the funds to pay personal expenses and to make payments to earlier investors.


INTERNATIONAL PONZI SCHEME NEWS


Abu Dhabi

Officials arrested 54 people in connection with a luxury car scam that defrauded over 1,000 victims. The scheme involved the purchase of second-hand cars using post-dated checks. The cars would then be sold to the victims, but not delivered. The money would be used to pay back previous investors. Investors were initially promised 100% returns on their money, which was later revised to 70 – 80%.

Australia


Bill Vlahos faced charges that he defrauded more than $120 million from members of his punting club in a Ponzi scheme. It is alleged that Vlahos defrauded hundreds of investors through his scam betting syndicate, The Edge

Cambodia


Teng Saroeun and Teng Makara were arrested and questioned with respect to the operations of Investment Consultant Association and Empire Big Capital Limited. The companies are believed to be operating a Ponzi scheme, promising monthly returns of 10%. The scheme allegedly defrauded 7,000 people out of $60 million.


Canada


Jeremy James (Jay) Peers was sentenced to 3½ years in connection with a Ponzi scheme that he ran through Federal Mortgage Co. and the related management company, Peers Foster Kristiansen Inc. The companies went bankrupt, leaving $77 million in debt.


India


Sunil Panda, the director of Green India, was sentenced to 3 years in prison for his involvement in a Ponzi scheme.


Venkatachari Sampath, the head of Sastra Enterprises, Ltd. was sentenced to 4 years in prison. Sastra had collected 50 crore from investors, offering high returns, but did not return at least 3.3 crore.

Ashraf Khan was arrested after having jumped bail several years ago. Khan is accused of involvement in several Ponzi schemes from 2011.

Regulators began investigation of an alleged Ponzi scheme run through Webwork Trade Links, a cash-for-clicks scheme. The scheme allegedly involved about $772 million, with payouts in bitcoin.



New Zealand


We Grow Bitcoins was accused of running a fraudulent scheme. The scheme promised investors $148,300 monthly returns and required a NZ$30 million entry fee.

Paul Hibbs was charged with defrauding investors in a Ponzi scheme run through Hansa Limited and Cameron Gladstone Investments Limited.


Guy Edwards Sayers was accused of soliciting investors to invest in Arena Capital, trading as BlackfortFX, which is believed to be a Ponzi scheme. 


South Africa


Myles Ndlovu, 34, was arrested in connection with an alleged scheme run through Ponzi Scheme Profit Trading.


Uganda


Equity Bank, under the instruction of its parent Bank of Uganda, suspended an account belonging to Magara Smart Protus, the promoter of an online sports trading platform called D9 Club. The club promotes high returns from sports trading on a site called BetFair which places bets on different sports and offers “bonuses” every Monday for 52 weeks through bitcoins. BetFair was founded in Brazil last year by Danilo Santana and recruits in Uganda and Kenya.

Vietnam


The government issued a strong statement against OneCoin, an alleged Ponzi scheme. The government says that it did not license the company and the Vietnamese license it claims to have is a forgery. Norway and Belize are also investing this scheme.


NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES


The Second Circuit affirmed a decision that backed the decision of the trustee of the Bernard Madoff scheme to ignore inter-account transfers when calculating claims of customers.

The trustee over the Bernard Madoff investment firm case settled with the estates of Madoff’s two sons. The settlement of $23 million will leave the estates of each brother with $3.75 million combined.


The Eighth Circuit upheld a lower court ruling that the insurers of 3M Co. do not have to cover 3M’s losses in the Ponzi scheme of WG Trading


The receiver over JCS Enterprises which operated Virtual Concierge Machine filed a new round of fraudulent transfer lawsuits seeking to recover funds for the defrauded victims. The scheme defrauded about 1,800 victims out of $80.8 million. Investors believes they were purchasing more than 22,500 Virtual Concierge machines which they were told would be placed in hotels, casinos and sports venues. They were promised $300 a month from advertising on the machines. In reality, only 84 machines were ever produced.

A court approved a settlement of more than $4.2 million between the receiver of the Arthur Nadel $168 million Ponzi scheme and Wells Fargo Bank.

A court declined to dismiss a lawsuit against General Electric Capital Corp. for its alleged participation in the $3.6 billion Ponzi scheme run by Tom Petters. The court allowed a lawsuit by the trustee of Palm Beach Finance Partners LP to proceed against GECC, finding that the trustee had standing to bring the lawsuit and that the trustee of the Petters case did not have exclusive standing to bring the claim.


The Eighth Circuit upheld a lower court’s ruling denying 69 investor plaintiffs the ability to recover from St. Louis Bank in connection with the Martin Sigillito Ponzi scheme.


Wednesday, May 31, 2017

May 2017 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for May 2017. The reported stories reflect: 5 guilty pleas or convictions in pending cases; over 141 years of newly imposed sentences for people involved in Ponzi schemes; at least 8 new Ponzi schemes worldwide; 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. And please remember that I am just relaying what’s in the news, not writing or verifying it.

Golan Barak, 49, pleaded guilty to one charge relating to a Ponzi-like scheme that he ran through Ergo Management. The real estate scheme involved mostly Israeli investors who were persuaded to invest funds to supposedly enter into a 50-50 partnership with Barak to buy real estate. Instead, Barak used the money to buy other properties or pay his expenses.

Larry Bates, and his sons, Chuck Bates and Robert Bates, and Kinsey Bates, were found guilty of running a Ponzi scheme through First American Monetary Consultants. More than 360 people lost more than $21 million in the scheme, which took in a total of $87 million for the purpose of buying precious metals. Larry Bates, a former Tennessee state representative, promoted the program through Christian television and radio programs and diverted more than $4 million to the creation of International Radio Network, a Christian radio system.

Richard Brandt, 62, was sentenced to 60 years in prison, with 20 years suspended, following his conviction for running a Ponzi scheme that took $1.9 million from 18 people. The scheme involved “house flipping,” and Brandt spent about $1.7 million on vacations and other expenses.

Thomas Bryant III (Trey) and his company, Bryant United Capital Funding, were accused by the SEC of running a Ponzi scheme. The SEC alleges that Bryant raised approximately $22.7 million from approximately 100 investors by promising risk-free, guaranteed returns of at least 30%. The complaint alleges that Bryant misappropriated $4.8 million for his expenses, he transferred $16.1 million to Wammel Group for securities trading, and he sent $1.37 million to concert promoter Carlos Goodspeed dba Top Agent Entertainment.

Alcibiades Cifuentes, 34, and his wife, Jennifer Wee Cifuentes, 36, were charged with running an alleged Ponzi scheme that defrauded about 20 people out of $500,000. The alleged scheme was run through the Cifuentes Fund Management hedge fund, and prosecutors say they used the money to buy themselves luxury items.

James Cochran, 61, appealed his 25 year prison sentence in connection with the Fair Finance Co. Ponzi scheme, blaming his sentence on ineffective lawyer. Cochran ran the scheme along with his partners, Timothy Durham and Rick Snow.

Daniel J. Flynn III, 54, was sentenced to 4 years in prison in connection with a $21 million Ponzi scheme that defrauded 90 victims. Flynn is an auctioneer who pleaded guilty to running a scheme that promised investors returns of 12% to 15%.
  
Paul Garceau Jr., 51, was charged on allegations that he was running a Ponzi scheme that defrauded elderly investors out of more than $800,000. Garceau ran the alleged scheme through Apex Wealth Management.

Franciso Illarramendi, 47, was ordered to pay about $26 million to the investors that he defrauded. Illarramendi is currently serving a 13 year sentence for the $700 million Ponzi scheme that he ran.

Mark Anderson Jones, 64, was sentenced to 70 months in prison for running a Ponzi scheme that defrauded 20 investors out of $10 million by promising them he was investing in Jamaican businesses.

Winstorn Ed Hoong Liang was sued by a group of foreign investors accusing him of playing a crucial role in the alleged $62 million Ponzi scheme run by North Dakota Developments LLC that sold interests in “man camps.” Liang allegedly tricked people into investing in four man camp projects that had serious flaws. The man camps were advertised as providing short-term housing for workers in Bakken oil fields of North Dakota and Montana.

Tamer Moumen, 39, pleaded guilty to running a $9 million Ponzi scheme. Moumen is a former hedge fund manager who mislead investors by misrepresenting that he consistently beat the S&P 500.

Yasuna J. Murakami, 44, was arrested on accusations that he was running a Ponzi-like scheme through investment advisory firms, MC2 Capital Management LLC and MC2 Canada Capital Management LLC. Murakami was the managing member of those entities that managed three hedge funds: MC2 Capital Partner Fund, MC2 Capital Value Fund, and MC2 Capital Canadian Opportunities Fund.

Hamlet Peralta, 37, pleaded guilty to charges in connection with an alleged $12 million Ponzi scheme that solicited funds for a supposed liquor wholesale business.

Antonio Reyes and Craig Kahler face civil charges in Colorado in connection with their role as sales people in the Ponzi scheme run by Kelly Schnorenberg. The scheme allegedly defrauded 225 investors out of $15.25 million.
  
Eminiano Reodica, 72, was sentenced to 10 years in prison and ordered to pay $29.7 million to his victims after pleading guilty, but then filed an appeal against his conviction and sentence. Reodica has run a $90 million fraud in the U.S. in 1988 but fled to Australia where he went by the name Roberto Coscolluela. He defrauded 27 victims in Australia and then attempted to fly to Canada when he was scheduled to appear in court. He California court proceedings dragged on for 5 years before he plead guilty.

William Schantz III, 63, and Verto Capital Management agreed to pay more than $4 million to settle charges brought by the SEC that they were running a Ponzi scheme. Schantz raised approximately $12.5 million from about 80 investors by selling promissory notes to supposedly fund Verto’s purchase and sale of life settlements.

David W. Schwarz, 60, the former chief financial officer of Cay Clubs Resorts and Marinas, was sentenced to 40 years in prison. The court found that Schwarz’s conduct resulted in $303 million in fraudulent proceeds and about $170 million in victim losses. The scheme promised returns of up to 20% based on promises to rent out condo units. About 1,400 people were victimized. Schwartz was also hit with a $303 million forfeiture order and money judgment.

Pradeep Singh, 60, was arrested on charges that he was running a Ponzi scheme. Singh is a former licensed insurance agent who promised 10% to 12% returns through his company, Pradeepsingh Corp. dba Secure Vision Associates Insurance Services.

Shirley Sooy, 66, was sentenced to 50 months in prison and ordered to pay $1.1 million in restitution in connection with a scheme she ran through a collection of companies known as TransVantage Group. The companies provided firms with audited freight bills generated by carriers and freight forwarders hired by those firms and was supposed to pay the carriers with funds provided by the firms. Instead Sooy used the funds to make mortgage payments for properties she owned in New Jersey and Florida, for a 48-foot yacht, a Maserati, credit card bills and to remodel her home.

Richard L. Thompson, 62, was sentenced to 4 years in prison in connection with a Ponzi scheme that he ran through Latten Management LLC. Investors bought shares in his real estate development company and would loan money to Thompson personally, believing that he owned more than 200 acres of land called Catawba Peak in Tennessee.

Carlos Uresti, 53, a Texas State Senator, was indicted in connection with an alleged Ponzi scheme run through a company called Four Winds Company. Gary Cain, 60, and Stanley Bates, 45, are also accused of running the Ponzi scheme with Uresti. Uresti claims that he is not guilty of any wrongdoing. The alleged scheme involved the sale of fracking sand for oil production. Four senior managers of Four Winds were also indicted and 3 have already pleaded guilty.

Sanderley Rodrigues de Vasconcelos agreed to pay more than $1.8 million to settle claims brought against him by the SEC in connection with the TelexFree Ponzi scheme.

Navin Shankar Subramaniam Xavier, aka Navin Xavier, aka “Dr. Navin Xavier,” 44, was sentenced to 15 years in prison in connection with a $33 million Ponzi scheme. Xavier solicited funds from about 100 investors who received promissory notes purportedly secured by an iron ore mine in Chile. The scheme was run through Essex Holdings, Inc. and involved supposed investments in sugar transportation and shipping, and iron mining.

Robert F. Wallace Jr. and Charles Cangelosi were charged in connection with an alleged Ponzi scheme run through Poker Entertainment Network LLC.

Cory D. Williams was accused by the CFTC of defrauding Mormon Church members out of $13 million in a trading scheme. Williams is the founder of Williams Advisory Group LLC and told at least 40 investors that he was trading futures contracts. Instead, Williams spent $1.3 million on himself, for meals, jewelry, vacations and charitable donations in his name.

Micah Christopher Wilson, 61, pleaded guilty to charges that he defrauded investors out of hundreds of thousands of dollars. Wilson worked in the insurance and securities industries but lost his licenses for both. He set up a real estate investment company, D&M Associates, LLC, with his brother, David Wilson.

INTERNATIONAL PONZI SCHEME NEWS 

Canada

Quintin Sponagle, 52, was ordered to pay victims $1.1 million. Sponagle pleaded guilty in December to charges that he defrauded 201 investors out of $1.1 million. The investors invested more than $4 million through Jabez Financial Services Inc., a company registered in Panama. He was sentenced to the 19 months prison that he already served.

Kenneth Charles Fowler, 67, was sentenced to 3 years for defrauding dozens of investors through The Investment Exchange. He raised $27 million to supposedly provide short-term loans but used the funds to support his personal lifestyle and pay dividends to some investors.

China

Authorities arrested 369 people believed to be involved in the Ponzi-like Nanning Investment Scheme. The scheme is code-named “Shen Jian” (god’s sword).

England

Peter Plimely, 68, was sentenced to 27 months in connection with a “Ponzi-style” scheme that defrauded victims out of almost £230,000.

Ghana

The Bank of Ghana issued a statement warning the public that a company called MMM Ghana is operating a Ponzi scheme through a virtual office.

India

Anjan Kumar Baliarsingh pleaded guilty to charges relating to a Ponzi scheme run through Capital Financial Services. He was sentenced to 3 years in prison. The scheme took Rs 15 crore from investors and promised them large returns. Others arrested in connection with the scheme are Ramachandra Hansda, Biju Janata Dal, Subarna Nayak, and Hitesh Bagarti,. 

Dipankar Ghosh, Malay Halder, Prasenjit Sil, and Malay Kumar Guha, officials of Real Tulip India Ltd., were sentenced to 3 years in prison. The Managing Director of Real Tulip, Tirtha Halder, was sentenced to 4 years.

Authorities filed charges against the Equinox Group and its four directors. Prasanta Chakraborty, purchased land, vehicles and valuable assets with the funds taken from over 100,000 people.

Police arrested Mansoor Siddiqui, who has been wanted for running a Ponzi scheme run through Admatrix Private Limited. The scheme allegedly defrauded more than one thousand people who lost up to Rs 20 crore in the scheme. The police had already arrested Ramniwas Pal, Ram Sumiran Pal and a few others in connection with the scheme.

Two directors of the Rightmax Technotrade International Ltd. Ponzi scheme were convicted and sentenced to 3 years in prison. Gunasekaran Murugan and Murugavel Nachimuthu were found guilty of misappropriating about Rs 17.6 crore from investors.

Two people were arrested in connection with an alleged Ponzi scheme run through Ablaze Info Solutions Limited. Pramod Kumar Solanki, 41, had set up a company called Solanki Enterprises, and Pramod Kumar Vimal, 45, had set up a company called Prizes Enterprises to solicit investors to invest in Ablaze.

Malaysia

A complaint was filed against Sean Tan, the chief operation officer of Empire Big Capital Limited, along with Huot Sovann, director of Asean Instrument Foundation, and Chi Gosaly, director of Investment Consultant Association. The lawsuit alleges that a Ponzi scheme stole about $46 million of their funds when they were promised 10% monthly profits and a return of their capital after 18 months.

Three people were arrested in connection with the JJ Poor to Rich (JJPTR) scheme.

New Zealand

The Supreme Court ruled that Investor Hamish McIntosh can keep the $500,000 he invested with Ross Asset Management, but must return the fictitious profits.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

A group of investors filed a lawsuit for $100 million against Fyre Media and its organizers, Jeffrey “Ja Rule” Atkins and Billy McFarland, alleging that Fyre Festival was a Ponzi scheme.

Investors in Thomas Kimmel’s investment scheme filed a lawsuit against First Baptist Church of Hammond Inc., alleging that the church facilitated a $5 million Ponzi scheme by hiring Kimmel to provide church members financial advice. The investors say they would not have invested with Kimmel without the church’s endorsement of him. Kimmel encouraged members to invest in Sure Line Acceptance Corp., which operated a car lot and financed car loans. The church’s former pastor, Jack Schaap, who is now serving a 12 year prison sentence for having sex with an underage church member, received a 1% kickback for each investment. Kimmel was sentenced to 22 years in prison in 2014.

The Second Circuit affirmed a bankruptcy court opinion agreeing to undo the sale of a $230 million claim by the liquidator of the Fairfield Sentry Ltd. feeder fund in the Bernard L. Madoff scheme. The liquidator sold the claim to a hedge fund, Baupost Group LLC, just days before the value of the claim skyrocketed due to a settlement that brought in billions of dollars for the Madoff estate.

The Justice Department disclosed the amount that it has paid to the Madoff Victim Fund administrator who has been engaged to distribute $4 billion to victims of the Bernard Madoff scheme. The administrator has been paid $38.8 million, although no distribution has yet been made. This distribution scheme is distinct from the SIPA proceeding in which the trustee has paid out more than $9 billion to date to “customers” as defined by the SIPA statute.

LTV Inc., doing business as Sterling Escrow, reached a settlement and agreed to pay $800,000 to a class of Japanese investors who accused the firm of participating in the Ponzi scheme run through MRI International Inc. and its principal, Edwin Y. Fujinaga. The scheme involved more than 8,700 investors, who argued that the escrow agent should have known about the alleged scheme because of the bookkeeping and account services it provided to MRI.

A class action was filed against PayPal on behalf of about 162,000 investors in a $207 million Ponzi scheme known as Traffic Monsoon. The scheme was founded by Charles David Scoville. The complaint, seeking at least $5 million in damages, alleges that “PayPal was aware that Traffic Monsoon was making Ponzi/pyramid scheme payments to investors and that Traffic Monsoon’s Ponzi/pyramid scheme was growing exponentially in classic Ponzi/pyramid scheme fashion.” Additionally, the complaint states, “PayPal provided substantial assistance to the Traffic Monsoon scheme by allowing Traffic Monsoon to use its services in an extraordinary and atypical manner.”

The Fifth Circuit upheld the dismissal of the receiver’s fraudulent transfer lawsuit against Dillon Gage Inc. in the R. Allen Stanford Ponzi scheme case. The receiver said to recover $5 million paid by Stanford Coin & Bullion to Dillon Gage