Wednesday, August 31, 2016

August 2016 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

    Below is a summary of the activity reported for August 2016. The reported stories reflect: 4 guilty pleas or convictions in pending cases; over 40years of newly imposed sentences for people involved in Ponzi schemes; at least 4 new Ponzi schemes worldwide; and an average age of approximately 53 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.

    Brian Arias, 43, was sentenced to 2½ years in prison and ordered to pay $1.9 million in restitution for his role in the Agape World Ponzi scheme that defrauded more than 4,000 victims. Arias had entered into a plea agreement for his role in the $400 million fraud and is the fifth person to be sentenced in connection with the scheme. Arias and his brother, Hugo Arias, 46, were 2 of the 14 sales agents involved in the scheme, earning more than $52 million in commissions. Hugo Arias is awaiting sentencing. Other former Agape World brokers who have been sentenced are Anthony Ciccone who received 7 years, Diane Kaylor who received 6½ years, and Jason Keryc who was sentenced to 9 years. The founder, Nicholas Cosmo, is serving a 25 year term.

    Annette Bongiorno, 67, a former Bernard L. Madoff Investment Securities LLC employee, has reached a settlement with the trustee of the Madoff scheme and has agreed to assist the trustee in locating customer property that was involved in the scheme. Provided that Bongiorno cooperates with the trustee, he will dismiss his lawsuit against her to recover the more than $22 million paid to her and her husband from their investments with Madoff. 

    William Brian Candler and his firm Ari Financial Services Inc. have agreed to pay fines in connection with an investment program in Bridgeport Oaks Fund that FINRA alleges was a Ponzi scheme. The settlement did not admit or deny FINRA’s claims.

    Patrick Churchville, 47, pleaded guilty to running a $21 million Ponzi scheme. Churchville was the owner of ClearPath Wealth Management and used investor funds to buy a waterfront home and pay personal income taxes.

    Michael Anthony Collins, 42, was sentenced to 15 years in prison and ordered to pay $3 million in restitution in connection with a $5 million Ponzi scheme that promised investors returns in a few months from the trading of stocks. Collins ran the scheme through Collins Financial Group of Alice and had misrepresented to investors that he was licensed to sell securities even though his registration had expired.

    Daniel J. Flynn III, 52, who is set to begin his criminal trial based on allegations that he ran a Ponzi scheme, is seeking an extension due to new evidence that there are as many as 150 victims. 

    John Fox, 66, pleaded guilty to charges in connection with the alleged Ponzi scheme run through Premier Cru. Premier Cru filed bankruptcy in January, claiming $7 million in assets and $70 million in debt, most of which was unfulfilled orders of wine purchases for almost 9,000 customers. Premier Cru sold wine futures, selling in advance high quality vintages. As part of the plea argument, Fox’s maximum possible sentence has been reduced from 20 years to 6 ½ years, and he agreed to pay restitution of at least $45 million.

    Bobby Eugene Guess, 64, was ordered by the Texas Securities Board to stop selling investments through his firm, Texas First Financial LLC. Guess sold promissory notes in internet advertising firm Stamedia Inc., and investors also bought securities from Guess in North-Forty Development LLC. Guess has previously been embroiled in alleged securities violations when the SEC sued Credit Nation and James Torchia, a company in which Guess was an owner and vice-president, for running an alleged Ponzi scheme dealing with life settlement contracts. A recent search warrant setting forth detailed allegations is available at https://www.scribd.com/document/321692039/Search-Warrant-Affidavit-for-Texas-First-Financial-Bobby-Eugene-Guess#fullscreen=1.

    Paul J. Jackson, 59, was barred by the SEC from the securities industry after he was found to have taken more than $1.3 million from his clients at his firm, Paul J. Jackson & Associates. Jackson had promised his clients access to investments in initial public offerings of high profile companies like Twitter, Facebook and Alibaba. Jackson was also sentenced to 33 months in prison.

    Claude Roderick Koerber aka Rick Koerber, 43, had the dismissal of the criminal case against him changed from a dismissal with prejudice to a dismissal without prejudice. U.S. v. Koerber, 2016 U.S. Dist. LEXIS 114299 (D. Utah Aug. 25, 2016). The court concluded that, due to violates of the Speedy Trial Act, the case should appropriately be dismissed, but the dismissal should be without prejudice because Mr. Koerber’s constitutional right to a speedy trial was not violated under the Sixth Amendment.

    Robert S. Leben and Amy L. Leben lost a summary judgment motion against them by the CFTC and were found liable for more than $10 million in restitution, civil penalties and disgorgement of ill-gotten gains. The Lebens had been accused of running a more than $3.2 million Ponzi scheme through their company, Structured Financial Group LLC. They solicited at least 12 investors through a pool to trade commodity futures contracts. At least $2 million of the funds were used for their personal expenses, including a house, vacations, a pool, a car and cosmetic surgery. Robert Leben pleaded guilty to criminal charges in 2015 and was sentenced to 40 months in prison in April of this year.

    Christopher Maguire, 34, was sentenced to 10 years in prison and ordered to pay $4.9 million in restitution in connection with a scheme that he ran through Vivid Funding, IQ Options, and M Development. Maguire represented that he had a “proof of funds” loan business and promised 20% returns to investors. More than 150 investors lost money. A federal court also found that Maguire’s multi-million home that was purchased with proceeds of the scheme could be forfeited to the federal government. Maguire has filed a notice of appeal of his sentence, although no grounds for the appeal were set forth in the notice.

    Everett C. Miller, 46, lost his appeal of his 10 year prison sentence. U.S v. Miller, 2016 U.S. App. LEXIS 14847 (3rd Cir. Aug. 12, 2016). Miller had sold more than $1 million in phony promissory notes to more than 190 investors, promising annual returns of 7% to 20%. Miller ran the scheme through Carr Miller Capital LLC.

    Thomas Mullholland, 59, and James Mullholland, 59, were found guilty of running an $18.3 million Ponzi scheme that defrauded more than 200 investors. The twin brothers ran the real estate scheme through Mullholland Financial and promised more than 250 investors returns of 7%.

    Gina Palasini, 54, was sentenced to 6½ years in prison for her role in a Ponzi scheme that defrauded investors out of more than $2 million. Palasini is already serving a 10 year sentence for stolen funds.

    Lou Pearlman died at the age of 62 while serving his 25 year sentence for his $300 million Ponzi scheme. Pearlman was the creator of ‘NSync and Backstreet Boys, but ran a Ponzi scheme through his Trans Continental companies that defrauded 1,700 investors.

    Merrill Robertson Jr., 36, and Sherman C. Vaughn Jr., along with their company, Cavalier Union Investments, were charged by the SEC with defrauding investors through Cavalier. Robertson, a former pro American football player, allegedly used $6 million of the $10 million invested for personal expenses. The scheme provided promissory notes with fixed rates of return between 10% and 20% annually. Criminal charges have also been filed against Robertson which allege that the scheme caused over $8 million of losses to the investors.

    Paying Nothing-Profit for Life received an F rating from the Better Business Bureau. The company had claimed that investors could turn a one-time payment of $95 into $5,000 monthly. The BBB warned that it had received a number of inquiries and that it learned that the company is not registered with the Ohio Secretary of State.

    James E. Vanblaricum, 77, was arrested on allegations that he ran an oil and gas Ponzi scheme. The scheme allegedly defrauded 53 victims who had invested more than $2.6 million in Vanblaricum’s company, Signal Oil and Gas Company.

    Edward Frank Usewick III, 36, was sentenced to 2 years and 4 months in prison for his Ponzi scheme run through used car dealerships. Usewick created fraudulent titles for vehicles that the dealership did not purchase which then caused the financial institution offering a line of credit to release money to a bank account operated by Usewick. It is estimated that the fraud involved $510,000.

    Eliyahu Weinstein was not permitted to withdraw his guilty plea, the Third Circuit held, upholding the lower court’s decision. U.S. v. Weinstein, 2016 U.S. App. LEXIS 14845 (3d Cir. Aug.12, 2016). The court found that “Weinstein has neither ‘meaningfully reasserted his innocence,’ nor demonstrated that the withdrawal would not prejudice the Government.” Weinstein was sentenced to 22 years in prison in 2014 in connection with a $200 million Ponzi scheme in which he misrepresented that he had an inside track on the Facebook public offering.

INTERNATIONAL PONZI SCHEME NEWS

Australia

    It was discovered that Steve Halgryn, 52, was running a Ponzi scheme. His body washed up on shore and investors are starting to unravel the $100 million Ponzi scheme. Halgryn was a financial advisor at Buderim-based companies, Suncoast Financial Solutions and SFSGlobal Group and allegedly defrauded at least 600 investors by promising them returns of 24% per year.

Canada

    Gerrard Mok, 68, was arrested and charged on allegations that he was running a $2 million Ponzi scheme. Mok, in his capacity as a financial advisor, solicited money from at least 20 investors in what appears to have been a mortgage investment scam with no real estate behind it.

    Roberto Castano was sentenced to 27 months and ordered to pay $1.5 million in restitution in connection with a Ponzi scheme that he ran through Skyline Communications. Castano promised investors 5% per month returns on their investments through stock market trading.

    Thomas Arthur Williams was ordered to pay a $15 million fine in connection with a Ponzi scheme in which he defrauded 123 people of at least $11.7 million. Williams used finders to lure in investors into Global Group of Companies, which consisted of Global Wealth Creation Opportunities Inc., Global Wealth Creation Opportunities Inc. (Belize), Global Wealth Financial Inc., Global Wealth Creation Strategies Inc., CDN Global Wealth Creation Club RW-TW, and 2002 Concepts Inc. The investors were promised at least 2% returns per month, and Williams produced fictitious monthly statements to them showing return of up to 4%.

India

    A complaint was filed against Jagruti Agro Foods India Private Limited as well as against Sriranga, son of Satyawan Patil, in connection with an alleged sheep Ponzi scheme. Patil, along with Raj Gayakwad, lured residents of a village to invest in Jagruti, promising quadruple returns from the sheep scheme as well as new jobs from the sheep farm that would be established. The scheme took in Rs 10,30,000 from about 500 villagers.

    Jagdish Mishra, the promoter of the Rajgodson Pvt Ltd. scheme, was arrested on charges that he had defrauded investors by promising them returns from investments in the move “Mu Pherile Tumara.”

    The Securities and Exchange Board of India told the Supreme Court that banned Ponzi schemes do not fall under its regulatory purview and that only state governments can control them.

New Zealand

    Duncan and Nora Priest won their court battle with the liquidator of the Ross Asset Management Ponzi scheme over $2 million. The Priests argued that their $2 million was never part of the Ponzi scheme and should be returned to them rather than shared with all of the victims. The court agreed and found that the Priests had never given David Ross discretion to manage investments on their behalf.

    The liquidator of Arena Capital, trading as BlackfortFX, recovered $2.8 million and settled with the company’s director, Jimmie McNicoll. Arena had taken in about $25 million from about 95 investors in a Ponzi scheme.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

    The Sixth Circuit revived most of the claims of the trustee of Fair Finance Company against Textron Financial Corporation, reversing the lower court’s dismissal of the trustee’s claims based on in pari delicto. Bash v. Textron Financial Corp. (In re Fair Finance Company), 2016 U.S. App. LEXIS 15432 (6th Cir. Aug. 23, 2016). The Fair Finance scheme was run by Timothy Durham, James Cochran and Rick Snow. They represented that Fair Finance was primarily in the business of purchasing consumer receivable contracts from businesses. More than 5,000 investors lost about $215 million.

    A number of farmers defrauded by Cathy Gieseker, 52, over a decade ago have settled their lawsuit against Archer-Daniels-Midland Co.  The farmers alleged that Gieseker couldn’t have defrauded them without the assistance of ADM. The lawsuit alleged that “Giesker defrauded approximately 180 farmers out of at least $27 million in proceeds from grain sales she made on their behalf.” That lawsuit further alleged that “Gieseker was acting as an agent of ADM and the company is ‘vicariously liable’ for their losses.” Gieseker is presently serving a 9 year term.

    A final judgment was entered against Medical Capital Holdings, which ran a nearly $1 billion Ponzi scheme. The judgment concludes the SEC action against the company and resulted in an $831 million disgorgement order. About 9,000 investors were owed approximately $1.08 billion. The investors have recovered about 40% of their losses through the receivership.

    The bankruptcy court in the case of Steven and Lori Palladino found that tuition payments made to Sacred Heart University from the Palladino’s Ponzi scheme for their daughter’s education are not recoverable as fraudulent transfers. Degiacomo v. Sacred Heart University, Inc. (In re Palladino), 2016 Bankr. LEXIS 2938 (D. Mass. Aug. 10, 2016). The court found that the parents too received a benefit: “A parent can reasonably assume that paying for a child to obtain an undergraduate degree will enhance the financial well-being of the child which in turn will confer an economic benefit on the parent.”

    A Florida appeals court reinstated a legal malpractice lawsuit brought by Banyon Capital LLC against its former counsel, Hutchinson & Steffen. Banyon was the largest feeder fund in the Scott Rothstein Ponzi scheme.

    Maria Elena Perez was recommended for a 91 day suspension from practicing law due to her use of her representation of Nevin Shapiro to aid a National Collegiate Athletic Association investigation.

    The Fifth Circuit affirmed the dismissal of the lawsuit filed by the receiver of Stanford Financial against The Golf Channel for recovery of $5.9 million paid by Stanford Bank International to Golf Channel. Janvey v. The Golf Channel, 2016 U.S. App. LEXIS 15407 (5th Cir. Aug. 22, 2016). The court found that Golf Channel had provided value in exchange for the transfers under the Texas Uniform Fraudulent Transfer Act.

    The distribution plan was approved in the Doug Vaughan bankruptcy case, which will result in an 18.6% return to the victims of Vaughan’s Ponzi scheme. The scheme defrauded 600 investors out of $75 million, and Vaughan was sentenced to 12 years in prison following his guilty plea.

    The ZeekRewards receiver has posted an announcement on is website inviting victims to share their stories so they can be heard at the sentencing hearings for Dawn Wright-Olivares and Daniel Olivares. The receiver’s announcement states, “If a victim would like to have a letter describing the impact that ZeekRewards had on them submitted to the Court please send an email to HearingLetter@zeekrewardsreceivership.com. I will be attending the hearings on behalf of all ZeekRewards victims and will present your letters to the Court.”

Friday, August 5, 2016

July 2016 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

    Below is a summary of the activity reported for July 2016. The reported stories reflect: 7 guilty pleas or convictions in pending cases; over 21 years of newly imposed sentences for people involved in Ponzi schemes; at least 3 new Ponzi schemes worldwide; and an average age of approximately 51 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.

    Thomas Abdallah, 52, Mark George, 59, and Jeffrey Gainer, 52, pleaded guilty to charges in connection with a Ponzi scheme run through KGTA Petroleum Ltd. KGTA promised investors returns of 60% from the sale of fuel products. Other co-defendants - Kenneth Grant, Jerry Cicolani and Kelly Hood – previously pleaded guilty and are awaiting sentencing. About 70 investors lost $17 million in the scheme.

    Eric Bartoli, 61, pleaded guilty to charges that he operated a Ponzi scheme through his company, Cyprus Funds Inc. Bartoli was accused of raising $65 million from about 800 investors. Two other co-conspirators, Douglas Shisler and Peter Esposito were already tried and convicted. A third partner, James Binge, died while his case was pending.

    William Joseph Boyle, 47, was indicted on charges that he ran a $415,000 Ponzi scheme that defrauded his mostly elderly clientele. Boyle was an investment advisor and stock broker who promised his clients that their money would be invested in low or no-risk stocks, state municipal bonds, interest-bearing investment and real estate. He continued to defraud clients even after his licenses were suspended and he was barred from the securities industry.

    Paul Burks, 69, was found guilty by a jury for his involvement in the $900 million ZeekRewards Ponzi scheme. Burks was accused of misleading investors with false promises of 125% returns. Burks allegedly pocketed $11 million from ZeekRewards in 2011 alone. Burks was the owner of Rex Venture Group LLC through which he owned and operated ZeekRewards. The jury returned the guilty verdict in less than 3 hours. Burks faces a maximum of 65 years in prison.

    Andrew W.W. Caspersen, 39, withdrew his not guilty plea and admitted to defrauding family members and friends in a Ponzi-like scheme. His plea agreements requires him to forfeit nearly $45.2 million. It was alleged that Caspersen defrauded investors out of nearly $150 million. Caspersen said that he ran the scheme to fuel his gambling addiction.

    Patrick E. Churchville, 47, pleaded guilty to charges that he ran a $21 million Ponzi scheme. Churchville was president and owner of ClearPath Wealth Management LLC and had lost an $18 million investment he made in JER Receivables. Rather than notifying his clients of the losses, he took in $21 million from new investors to pay back old investors. 

    Thomas D. Conrad Jr., 85, and his son, Stuart P. Conrad, were accused of running a Ponzi scheme in a group of hedge funds they managed. The funds held $10.7 million. They had invested in another Ponzi scheme, Valhala Investment Partners and were forced to repay $2.3 million in false profits they had received. Additionally, Thomas Conrad had failed to disclose that he had been subject disciplinary action in 1971 and had been barred from the investment industry.

    Dorian Garcia, 31, was the subject of a verdict against him on charges brought by the CFTC alleging that he was running a Ponzi scheme. The judgment requires that Garcia and his companies, DG Wealth Management, Macroquantum Capital LLC, UKUSA Currency Fund, and DG Wealth’s successor, Quanttra LP, were required to pay restitution in the amount of over $5 million. Garcia and his companies are also liable for a $7.5 million civil penalty and almost $5 million in ill-gotten gains, for a total of about $17.5 million.

    Diane Kaylor, 40, was sentenced to 6½ years in prison for her role in the Agape World Ponzi scheme that was run by Nicholas Cosmo. The scheme defrauded approximately 3,800 investors out of about $150 million. Kaylor was a broker who took $3.6 million in commissions during the scheme which she spent on luxury automobiles, exotic vacations, and home improvements. Previously, another ex-broker, Jason Keryc, was sentenced to 9 years in prison, Anthony Ciccone, also an ex-broker, was sentenced to 7 years, and Cosmo was sentenced to 25 years in 2011 after pleading guilty.

    Lawrence Leland “Lee” Loomis, 59, revoked his guilty plea. He had entered into a plea agreement that could have sent him to prison for 18 years, but he had a change of heart. Loomis is accused of running a $10 million Ponzi scheme through his company, Loomis Wealth Solution, that defrauded 50 investors. Loomis promised 12% returns to investors through the purchase of life insurance policies or real estate investments.

    Adam Jonathan Martin, 35, was charged with running a Ponzi scheme through which he allegedly stole more than $350,000 from a Minnesota brewery and another $330,000 from family and friends.

    Ronald Earl McCullough, 45, was caught in Atlanta after fleeing North Carolina following an indictment in 2013 alleging that he ran a Ponzi scheme. McCullough posed as a religious leader and defrauded church members out of more than $1 million.

    Joey Preston, who was identified as a promoter of the Ponzi scheme run by Ron Wilson through Atlantic Bullion & Coin, agreed to repay $1.2 million that he received from the Ponzi scheme. Preston invested $192,000 but received back $1.4 million. The receiver of Atlantic Bullion had alleged that Preston had hosted parties at his home to entice investors and did not disclose to investors his failure to understand the investment. 

   Kim Rothstein aka Kim Wendell, 42, ex-wife of Scott Rothstein, requested that the court shave off the last 8 months of her probation, and her request was granted. Kim has been working as a car saleswoman at a luxury car dealership and says that she has turned her life around. She served 15 months in prison for trying to hide more than $1 million worth of assets from prosecutors and in bankruptcy proceedings. Kim said she would be eligible for a promotion at her work if her probation was terminated early.

    David Scoville, 36, and his company, Traffic Monsoon LLC, were the subject of an SEC lawsuit asking for a temporary restraining order against them.  The SEC alleged that Traffic Monsoon is a Ponzi scheme that took $207 million from more than 160,000 investors around the world. The company has about $60 million in cash in the U.S., Canada and the U.K. It was supposedly an online advertising services company in which users could buy “Banner AdPacks” for $50 each and could earn $5 per AdPack in two months, for a return of about 10%.

    Trendon Shavers, 33, was sentenced to 18 months in prison in connection with his Ponzi scheme run through Bitcoin Savings and Trust. He was ordered to forfeit $1.23 million and pay restitution in that amount for what the judge called a “class Ponzi scheme.” He raised at least 764,000 bitcoins, which at the time were worth more than $4.5 million, promising rates of return of 7% per week to investors who loaned bitcoins to Bitcoin Savings and Trust. Out of the 100 investors, at least 48 suffered losses of about $1.23 million.

    Justin Spearman was sentenced to 2 years and 3 months in prison in connection with his Ponzi scheme. Spearman’s scheme was based on gas and oil well royalties, and he promised investors that their money was being invested in oil and gas leases, and investments and real property in Texas. 

    Barry Carlton Taylor, 64, was sentenced to more than 11 years in prison and ordered to pay $2.2 million in restitution in connection with a Ponzi scheme in which he falsely claimed he was an expert in the foreign currency exchange market. Taylor represented that he had a computer software system that enabled him to generate very high returns. He spent more than $500,000 on himself and lost the rest of the money. Taylor pleaded guilty in January.

    Quten “Tony” Tran, 60, and his wife Mai “Lisa” Tran, 56, were charged with felony grand theft and warrants were issued for their arrest in connection with an alleged Ponzi scheme. It is alleged that the couple stole $256,000 from 8 investors who were fellow members of their Vietnamese church and social circles. The couple promised them returns from a fake pharmaceutical company’s public stock offering.

    Tyson D. Williams, 44, and D. Stanley Parrish, 44, were hit with judgments in favor of the SEC in connection with their scheme that took more than $7 million for approximately 50 investors. The scheme was run through STV Ventures, in which investors were told they could purchase collateralized mortgage obligations which could be leveraged to produce a high return.

INTERNATIONAL PONZI SCHEME NEWS 

Brazil

    Dorian da Silva Santos was found murdered in Brazil amid speculation that the death may have been tied to the TelexFree scheme in Brazil. Santos participated in TelexFree through a company known as Ympactus. The trustee of the U.S. based TelexFree bankruptcy case does not believe that Santos was a participant in the U.S.-based TelexFree operation.

Cambodia

A government agency announced that Empire Big Capital Ltd. and related firms AIF and ICA were engaged in investment fraud.

Dubai

    Exential Group was shut down by authorities on suspicion that it was running a Ponzi scheme. The company managed a foreign exchange fund and promised annual returns of up to 120%. Exential Group also used the names Exential Mideast Commercial Brokers LLC, Tadawul ME, and Exential Mideast Investment LLC.

England

    Michael Hunte, one of 9 men charged with running a Ponzi scheme that defrauded Quaker Oats, stood trial for the scheme. Charges were withdrawn against six of the others -- Mark Knapp, Benjamin Walsh, Patrick Whalen, Giovanni Martino, Claude Battiste and Santo Raso. Mark Alexander and Jeffrey Paquette pleaded guilty for their roles in the scheme.

    The Financial Conduct Authority warned that Bit Management Ltd. is providing financial services or products without regulatory permission. The website reflects that it is a high-yield investment program the promises high returns on investments.

India

    The Central Bureau of Investigation filed charge sheets against two companies on allegations that they were running Ponzi schemes. One of the companies charged is Tower Infotech Ltd. along with its directors, Ramendu Chattopadhyay and Ashis Chatterjee. The only company charged is Aha Agro Equipment Industries India Ltd., along with its three directors, Ranjit Santra, Tarun Kumar Barui and Parimal Biswas.

    Binayak Mishra, 53, and Gitanjali Panigrahi, 45, two directors of Maa Mangala Savings & Credit Cooperative Limited, were sentenced to five and three years in prison, respectively.

    Charges were filed against Sastra Enterprises Pvt. Ltd and its managing director, V. Sampath, in connection with an alleged Ponzi scheme.

    Soubhagya Samal and his wife, Nirupama Samal, were arrested on allegations that they defrauded investors out of about Rs 50 crore through Midas Touch Assets and Securities Ltd. and Midas Touch Realtech Ltd., companies in which they were directors. 

Nigeria

    The offices of The First Group, a real estate development company, were locked up on suspicion that the firm may be at the center of a Ponzi scheme that allegedly defrauded Nigerians out of more than $200 billion. 

Spain

    Eleven directors of Afinsa were sentenced to up to 12 years in connection with a Ponzi scheme that defrauded more than 190,000 investors out of $2.8 billion.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

    A class action lawsuit was filed by a group of victims of the alleged Ponzi scheme run by William Apostelos against PNC Bank. The victims allege that the bank missed red flag warnings that Apostelos used his accounts in a suspicious manner. The complaint stated that “PNC knew or should have known Apostelos was using the PNC accounts to launder money as part of some larger criminal undertaking.” The lawsuit seeks damages of at least $30 million.

    The trustee in the Bernard L. Madoff Securities LLC case had his claims for $905 million against Avellino & Bienes limited. Picard v. Avellino et. al. (In re Bernard L. Madoff Investment Securities LLC), 2016 Bankr. LEXIS 2686 (Bankr. S.D. July 21, 2016). The court held that the trustee cannot recover transfers made before 2001. The trustee has alleged that the principals of the firm, Frank Avellino and Michael Bienes, assisted Madoff in concealing the Ponzi scheme.

    The Second Circuit denied the appeal of Ritchie Capital Management LLC against Costco Wholesale Corp. Ritchie Capital had argued that Costco knew that Thomas Petters was using counterfeit purchases to obtain loans to finance his Ponzi scheme. 

    TD Bank has filed $300,000,000 in claims against its insurance companies to try to recover some of the money that it paid in settlements to resolve claims against it in connection with the Scott Rothstein Ponzi scheme case.

    A court approved a settlement between the trustee of Banyon 1030-32 LLC and St. Paul Fire and Marine Insurance Co. and Federal Insurance Co. in which the insurers agreed to pay $2.2 million to the trustee. The settlement arises from the Scott Rothstein $1.2 billion Ponzi scheme.

    The receiver is ZeekRewards reported that he has recovered $356 million and has disbursed $251 million to 107,096 claimants.

    British Virgin Island foreign exchange trader,  Capital World Market Ltd. (CWM Ltd.) and associated companies, along with Cayman Islands-based DMS Bank & Trust Ltd., were sued by 318 people for the loss of $65.9 million they allege were lost in a Ponzi scheme.