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

Saturday, November 30, 2019

November 2019 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for November 2019. The reported stories reflect at least 12 new Ponzi schemes worldwide; at least 8 guilty pleas and convictions, over 81 years of newly imposed sentences for people involved in Ponzi schemes; 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.
   
Mark Alan Blankespoor, 49, was sentenced to 80 months in prison and ordered to pay more than $8.4 million in restitution to more than 100 victims who were defrauded in a $15 million Ponzi scheme. The scheme promised 40% returns in the development of “medically oriented gyms.”
  
Morgan Bullock, 33, was sentenced to one year in prison in connection with a Ponzi-like scheme that defrauded 6 families buying homes out of about $400,000. Through his companies Bullock Building and Development LLC and Silver8 LLC, Bullock took deposits for new homes but did not deliver the homes to the victims.

Neil Burkholz and Frank Bianco, both of Florida, were the subject of an SEC enforcement action seeking a restraining order and asset freeze on allegations that they were running a $6 million Ponzi scheme called the “Amazing Profits Group.” They allegedly defrauded about 55 investors through their companies, Palm Financial Management LLC and Shore Management Systems, and falsely represented that their proprietary options trading strategies were highly profitable. They promised returns as high as 34% at a time when the fund actually  lost 55% of its value. The SEC complaint also names Rhoda Burkholz and Suzanne Bianco as relief defendants.

Marc Celello, 47, of Georgia, pleaded guilty to conspiracy charges relating to the Ponzi scheme run by James Torchia. Celello served as general counsel for several limited liability corporations owned and operated by Torchia that defrauded investors out of $40 million. Celello was vice president and general counsel to Credit Nation and also advised Credit Nation Capital, Credit Nation Acceptance, American Motor Credit, Credit Nation Auto and Spaghetti Junction.

Jin K. Chung, 56, a Korean national living in California, was sentenced to 10 years in prison after pleading guilty to running a $60 million Ponzi scheme with his business partner, Peter Son, 47. The scheme was run through NC Asset Management, Inc. and SNC Investments, Inc. and promised investors 24% to 36%  returns from foreign exchange trading.

Alcibiades Cifuentes, 36, and Jennifer Wee Cifuentes, 38, of New York, each pleaded guilty to defrauding about 25 investors out of more than $500,000 in a Ponzi scheme. They promised returns from investments in foreign currency and commodities markets through their company Cifuentes Fund Management.

Jamie Crager, of Nebraska, was indicted on allegations that he was running a Ponzi scheme through Blazefly.  Blazefly promised returns from rolling several phone apps into one and represented that President Trump was involved. Crager pleaded not guilty.

Derek Elliott, 49, was sentenced to 2 years in prison for his role in a Ponzi scheme involving vacation resorts in the Dominican Republic. Elliott had pleaded guilty about 5 years ago and had been working with authorities to provide evidence against James Catledge, one of the co-conspirators in the scheme.

David Gentile and his company GPB Capital Holdings were accused of running a Ponzi scheme in a class action lawsuit. The firm raised $1.8 billion from at least 2,000 investors to purportedly invest in auto dealerships and waste management companies. GPB promised investors returns of 8% annually.

Jordan Goodman was charged in connection with the Woodbridge Group of Companies LLC Ponzi scheme Goodman was paid almost $2.3 million for raising about $147 million from 1,200 retail investors who invested with Woodbridge.

Ford Graham, 56, and his wife Katherine Graham, 55, of New Jersey, were arrested in connection with a civil contempt order stemming from a jury verdict that they ran a fraudulent scheme through Vulcan Power Group. The Grahams had been sued for failure to pay a commission, among other things and, after appeals, the jury verdict of $2 million was upheld. The New Jersey Bureau of Securities had filed a lawsuit in January alleging violations in connection with a $5 million fraudulent sales of securities for low-risk, high-reward investment opportunities in gas and oil projects.

Hunter Hanson, 22, was sentenced to 8 years in prison in connection with a grain trading scheme that defrauded farmers. Hanson represented that he traded about $23 million in grain, operating Midwest Grain Trading, a roving grain buyer’s business, and then Nodak Grain, a warehouse business.

Konstantin Ignatov, 33, pleaded guilty to charges in connection with the OneCoin cryptocurrency scheme that defrauded investors out of $4 billion. Ignatov is the brother of Ruja Ignatova, 38, who is currently on the run and is accused of orchestrating the scheme. Ignatov has agreed to inform on his co-conspirators and has been offered witness protection.
 
Scott A. Kohn, 65, of California was charged on allegations that he was running a Ponzi scheme through Future Income Payments LLC. The scheme targeted veterans and over 2,600 victims lost about $300 million.
 
Donnie Laing, 39, of Louisiana, was indicted on charges stemming from an alleged Ponzi scheme run through Capital Energy Investments. Laing represented that investors’ funds would be invested in oil and gas equipment which would then be leased to companies engaged in oil and gas exploration.
 
Jay Ledford, 55, of Texas was sentenced to 14 years in prison for his role in the $396 million Ponzi scheme masterminded by Kevin B. Merrill. Ledford pitched investors in the scheme. Merrill was sentenced to 22 years in prison last month.

Anthony Wayne March, 48, was charged with securities fraud in connection with an alleged Ponzi scheme that defrauded at least 22 investors out of more than $8 million. The scheme was run through Asset Trader which is a purported nonprofit tax-exempt company formerly known as CGA Exchange or The CGA Exchange Inc. The company used its tax-exempt status to solicit tax-deductible donations in exchange for charitable gift annuities.

Joseph Meli pleaded guilty to defrauded more than 130 investors out of $95 million on promises that he would purchase tickets to various live events for resale at a profit. Craig Carton, 48, and Michael Wright, 41, were also charged in connection with the scheme. Carton contends he is a victim and is not guilty of the charges.

Stephen Condon Peters, 46, was sentenced to 40 years in prison and ordered to pay $15 million in restitution in connection with a Ponzi scheme run through VisionQuest Wealth Management. Peters promised returns of 8% to 9% per year on low risk investments.

Ruless Pierre, 50, of New York, was accused of defrauding at least 100 investors out of more than $2 million in his investment club, the Amongst Friends Investment Group. Pierre had two separate schemes that mostly defrauded Haitian investors. One was run through R. Pierre Consulting Group LLC in which he promised 20% returns every 60 days to 40% over 60 days. through stock trading. In the second, Pierre embezzled about $400,000 out of bank accounts belonging to two hotels that he previously worked for.

Brett Pittsenbargar of Texas was accused of making $1 million in commissions in selling more than $18 million of securities to at least 45 investors as an unregistered agent in connection with the Woodbridge Group of Companies LLC scheme. Pittsenbargar used his companies, MGM Home Remodeling aka BP Financial and Tax Design Group to sell the investments.

Daniel Rivera, 60, pleaded guilty to charges that he ran a Ponzi scheme through Robbins Lane Properties Inc. Rivera represented that real estate professionals would invest in real estate ventures. Rivera engaged in a $2.7 million Ponzi scheme that targeted approximately 30 investors. Rivera told investors that they would share in the profits of Robbins Lane from the purported buying, redevelopment and selling of properties.

Merrill Robertson Jr., a former Philadelphia Eagles player, pleaded guilty to charges relating to a $10 million Ponzi scheme. Merrill had previously been tried and convicted in connection with the scheme that he ran with Sherman C. Vaughn Jr. through Cavalier Union Investments LLC. The conviction and 40-year prison sentence were vacated and the case remanded. Robertson and Vaughn defrauded more than 60 investors and promised them 10% to 20% returns from business ventures such as restaurants, real estate, alternative energy and assisted living facilities.
 
David Gilbert Saffron and Circle of Society Corp were accused by the CFTC of fraudulent conduct relating to foreign currencies and cryptocurrency. They guaranteed rates of return of up to 300%.

Mark Scott was found guilty of laundering $400 million in connection with the OneCoin crypto scheme. Scott was the lawyer behind the scheme run by Ruja Ignatova. Amer Abdulaziz Salman, 56, who started Phoenix Thoroughbreds in 2017, has been accused of stealing €100 million in connection with the scheme.
   
Burt Whalen, 45, of Indianapolis, was accused of running a Ponzi scheme with Clayton Morris. The scheme was run through Oceanpointe Property Management and involved the renovations of run-down homes. Real estate investors were provided false information about the condition of the properties and fake leases for unoccupied properties.
 
INTERNATIONAL PONZI SCHEME NEWS 

Canada

Todd Norman John Bezzasso was found to have defrauded 85 investors through a Ponzi scheme. The $5 million scheme was run through Bezzaz Holdings Group Ltd. and Nexus Global Trading Ltd. Investors were told that Bezzaz owned Nexus, which was a company that distributed certain brands of alcohol. Bezzaz also supposedly sold health supplements and e-cigarettes. Rates of return between 5% and 30% were promised through post-dated checks and about 85 investors were defrauded. Wei Kai Liao aka Kevin Liao sold $1.6 million worth of securities to 27 investors.

Dubai

Aziz Com Mirza was arrested on charges that he created a fictitious cryptocurrency. The Leverage Programme was one of the ventures through which the scam was run. About 1,200 investors were defrauded. Other scams were run by Mirza, such as Habibi Coin and International Success Group.
 
England

Alistair Greig, 65, was accused of running a £13 million 'Ponzi scheme' fraud in which he guaranteed high returns on short term deposits.

Germany

Authorities issued a cease and desist order against Karatbit Foundation, alleging that it was issuing KaratGoldCoin without the necessary license. Karatbit represented that it had a blockchain-based payment system that enables customers to conduct transactions with gold and to also trade gold with cryptocurrencies. Karatbars claims that it owns a share in a gold mine in Madagascar that supposedly contains $990 million worth of precious metal.

India

Investors protested outside of Kanva Souharda Credit Cooperative Society Ltd. alleging fraud. The company offered 12.5% returns on investments but stopped paying investors over the past several months.

Ganesh Shinde, Abhijeet Jadhav, Samadhan Chinchole, Sanjay Gaware and Babban Sadaar were arrested in connection with a scheme that allegedly cheated over 4,000 people of Rs 14 crore. The scheme was run through Capital Club Transfers. Investors would get two grams to 30 grams of gold or 4 grams to 60 grams of silver along with a 3% return per week on their investments.
 
Rasiklal Shah, 55 and Nilesh Rasiklal Shah, 53, two brothers, were arrested on charges that they ran a scheme through Rasiklal Sankalchand Jewellery that defrauded customers out of Rs 300 crore.

Balaraju Mallikarjun Raju, the director of Sastra Enterprises Limited, was arrested on charges that he was running a fraudulent scheme that defrauded hundreds of investors.

Ireland

Arrests were made in connection with an alleged Ponzi scheme run through Custom House Capital.

Malta

Regulators cautioned residents about a new unlicensed Bitcoin scheme run through Bitcoin Future. Authorities caution that the scheme is a Ponzi scheme.

South Korea

Kang-mo, the CEO of CoinUp was sentenced to 16 years in prison for his role in the $384 million scheme that promised returns of up to 200% on cryptocurrency investments in 4 to 10 weeks. The firm’s chief financial officers, Mr. Kwon and Mr. Shinmo were each sentenced to 11 years in prison, and the “governor” of CoinUp, Mr. Yunmo, was sentenced to 7 years in prison.
 
Thailand

Wantanee “Mae Manee” Tippaveth, 28, and her husband, Metee Chinpa, 20, were charged with fraud in connection with a scheme that promised investors a 93% profit per month from a “gold shop.” The scheme is known as Forex 3D and there are 3,400 known victims who have lost more than 850 million baht. They have denied any wrongdoing. Authorities believe that up to 30,000 victims were defrauded. Wilaiwan Hongprachasap, 25, Thawalrat Tippaveth, 47, who is the mother of Mae Manee, and downline recruiters, Piya Khirisuwannakul, Pornsawan Phuin-oy and Suphanee Nikornkul, were also detained in connection with the scheme.

Thursday, October 31, 2019

October 2019 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for October 2019. The reported stories reflect at least 3 new Ponzi schemes worldwide; at least 10 guilty pleas, over 103 years of newly imposed sentences for people involved in Ponzi schemes; and an average age of approximately 49 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed.
   
Kraig Aiken, 51, agreed to plead guilty to charges relating to an alleged $1 billion Ponzi scheme. The scheme was run through Future Income Payments and involved the sale of military benefits, preying upon veterans and other investors.

C. Dean Alford, 66, was accused by investors of running a $6 million Ponzi scheme. Alford was formerly on the Georgia Board of Regents setting policy for the state’s colleges and universities. A group of investors sued Alford, alleging that there were 436 investors defrauded by Alford and others, including Alford’s wife, Dlugolenski Alford, and her son, David Dlugolenski, who deny knowledge of the scheme. Alford raised funds from investors to supposedly build a waste-to-energy plant. The alleged scheme was run through Allied Energy Services and Augusta Waste to Energy. Others invested with Alford through the Georgia Power Solar Farm Project.

Joseph S. Anile II pleaded guilty to charges relating to the $72 million Ponzi scheme run through Oasis International Group Ltd. The scheme defrauded 700 investors who were promised returns from pooled investments in the foreign exchange market. The following other entities and individuals were charged in connection with the scheme: Oasis International Group, Limited; Oasis Management, LLC; Satellite Holdings Company; Michael J. DaCorta; Raymond P. Montie, III; Francisco “Frank” L. Duran; and John J. Haas.

Syed Arham Arbab, 22, pleaded guilty to running a $1 million Ponzi scheme from his fraternity house at the University of Georgia. Arbab defrauded 117 investors to invest in Artis Proficio Capital Management and Artis Proficio Capital Investments, representing that those were hedge funds paying returns of 22% or 56%.

Jan Douglas Atlas, 74, pleaded guilty to charges that he facilitated a Ponzi scheme run through 1 Global Capital LLC. The scheme raised more than $330 million from thousands of investors through a purported commercial lending program.

James T. Booth, 74, was indicted in New York on charges of securities fraud in connection with an alleged Ponzi scheme run through Booth Financial Associates. He pleaded guilty later in the month. Instead of investing funds as promised in securities, Booth used most of the nearly $5 million of investors’ money to pay his personal expenses. Booth represented he would invest the funds in advisory and brokerage accounts but directed the money to the bank account of Insurance Trends Inc., an entity he controlled. About 40 investors lost their funds in the scheme.

Hal Herring Brown, Jr., 69, of North Carolina, was charged in connection with an alleged $13.5 million Ponzi scheme. Using his company Oodles Company, Brown claimed he was selling intellectual property to large companies. At least 23 investors were defrauded in the scheme.

Michael S. Cohn, a former SEC employee, was charged with obstruction of justice, unauthorized computer access and unauthorized disclosure of confidential information in connection with an alleged Ponzi scheme run through GPB Capital Holdings. Cohn is accused of using his position as an SEC investigator to access sensitive information upon his departure from the SEC and his employment by GPB Capital. Cohn allegedly accessed data on the SEC servers relating to its investigation of GPB. Last month, GPB Capital fired David Rosenberg without explanation, which followed Rosenberg filing a lawsuit alleging that GPB Capital was running a Ponzi scheme and inflating dealership values.  A group of investors has also filed a class action against the company.
 
Christopher LuGrand Dawkins and his wife, Fern Carty Dawkins, were sued on allegations that they were running a real estate Ponzi scheme. The lawsuit alleges that they defrauded 35 investors out of at least $2 million.

Viktor Gjonaj, 42, of Michigan, has been accused in multiple lawsuits of running a real estate Ponzi scheme through Imperium Group, LLC. Gjonaj is real estate broker and denies the allegations.

Brian Lee Kissinger, 49, and Kenny Rojas, 41, of California, pleaded not guilty to charges that they were running a “scam resembling a Ponzi scheme.” Investors believed they were buying liens on distressed real estate properties through Kissinger’s company, Aria Management Group. The scheme involved about $1.5 million.

Rick Koerber was sentenced to 14 years in prison in connection with a Ponzi scheme that he ran through Founders Capital, Franklin Squires Investments, and Franklin Squires Companies. Koerber had promised returns of 24% to 60%.

Kevin B. Merrill, 54, was sentenced to 22 years in prison and ordered to pay $189.1 million in restitution in connection with a $396 million Ponzi scheme that defrauded investors out of $189.1 million.  His wife, Amanda Mahlstedt Merrill, 30, pleaded guilty to conspiring to remove property and obstruct justice in connection with the scheme. Amanda had been caught removing cash from a safe in their $11 million vacation home in Florida. Jay Ledford, 55, had pleaded guilty and was also sentenced this month to 14 years in prison. Cameron Jezierski, 28, has also previously pleaded guilty to the scheme.

Mark Ray, 59, of Illinois, was sued by the SEC in a complaint accusing Ray of running a Ponzi scheme through a cattle trading operation and marijuana business. Reva Stachniw, 67, was named as a co-defendant on charges that she allowed Ray to use bank accounts she opened.

Ronald L. Roach, 53, and Joseph W. Bayliss, 44, pleaded guilty to charges relating to an alleged $2.5 billion Ponzi scheme through DC Solar Solutions. Roach is a certified public accountant and Bayliss is an electrician, and both have agreed to cooperate with authorities in the ongoing investigation of the DC Solar scheme run by Jeffrey and Paulette Carpoff. The Carpoffs were named in the plea agreements and neither has been charged in the case. The scheme offered investors tax incentives to lease mobile solar generators that could be used at racetracks and concerts and to power remote cell phone towers during power outages. But only about 3,000 to 5,000 generators of the 12,000 represented had actually been produced. Roach and Bayliss admitted to providing false reports that misled investors. Investor losses are estimated at $1 billion. The auction of the Carpoff’s car collection by the U.S. Marshals netted $8.2 million.

Scott Rothstein, 57, lost his appeal to the Eleventh Circuit seeking to get a reduction in his 50-year prison sentence.
  
David Gilbert Saffron of Las Vegas was charged by the CFTC with running a Ponzi scheme that defrauded at least 14 investors out of $11 million worth of Bitcoin. The scheme was run through Circle Society Corp. Saffron claimed that investors could double their money in two weeks by using trading bots on 57 separate computers.

Perry Santillo aka King Perry, 39, pleaded guilty to running a Ponzi scheme that obtained at least $115.5 million from about 1,000 investors. Investors are still owed about $71 million. Santillo was sued along with Christopher Parris by the SEC last year. The scheme was run through Lucian Development in New York as well as Advice and Life Group, Poconos Investments, First American Securities, and Financial Planners Group of America.

Robert H. Shapiro, 62, was sentenced to 25 years in prison for orchestrating the $1.3 billion Ponzi scheme run through Woodbridge Group of Companies, LLC. The scheme defrauded more than 8,000 investors and had promised them returns of up to 10% from real estate loans to property developers. In reality, the real estate was often owned by Shapiro or didn’t exist at all.
 
INTERNATIONAL PONZI SCHEME NEWS
 
China

Fair Win, a gambling platform, was accused of running a Ponzi scheme when it was discovered that about $10.6 million in Ethereum had disappeared.  Fair Win has denied allegations that it is a Ponzi scheme.

India

About $1.2 million previously seized from a Bitcoin Ponzi scheme remain frozen in an Indian bank account because the bitcoin cannot be converted into rupees under Indian banking laws.

Ganesh Rajan Bhavanam, 34, Lonachan Kuriaoke Kuriapuram, 50, Kishore Rokade, 46, Ankush Aher, 50, SS Ramesh, 34, and Ramesh Mane, 49, were arrested in connection with an alleged scheme run through AM Pictures. Investors were promised interest of 1% per day in addition to incentives like foreign trips and free gifts.

Properties held by Injaz International Associates Group Company were seized on allegations that the company ran a Ponzi scheme that defrauded thousands of investors.

Poland

Marcin and Katarzyna P. were sentenced to 15 years and 12½ years, respectively, for a Ponzi scheme run through Amber Gold. The scheme defrauded 18,000 investors out of $225 million. Investors were promised that their money would be invested in gold or other precious metals and they were promised returns of up to 16% per year.
 
South Africa

David Wilmot, 47, was sentenced to 15 years in prison after pleaded guilty to running a scheme that defrauded investors out of R23m.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

Greenberg Traurig agreed to pay $65 million to settle charges relating to its alleged involvement with the $7 billion Ponzi scheme run by R. Allen Stanford.