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

Kathy is a senior business trial attorney with more than 28 years experience prosecuting and defending claims for high net worth 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 detailed knowledge about fraud or Ponzi schemes.

Kathy’s Clients in Ponzi Scheme Cases and Bankruptcy Matters
Equity Receivers
Bankruptcy Trustees
High Net Worth Investors
Debtors in Bankruptcy
Secured and Unsecured Creditors

Wednesday, September 30, 2020

September 2020 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for September 2020. The reported stories reflect at least 11 new Ponzi schemes worldwide, 4 guilty pleas, 31 years of prison sentences, and an average age of approximately 59 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed.   

Joseph Frank Abel, 50, of California, pleaded guilty to charges in connection with a cryptocurrency mining fraud that involved at least $722 million. Abel admitted that he sold unregistered securities for BitClub Network. Matthew Brent Goettsche, Russ Albert Medlin, Jobadiah Sinclair Weeks were also charged in connection with the scheme. 

Jose Angel Aman, 51, of Florida was charged with operating a Ponzi scheme that brought in over $25 million through Natural Diamonds Investment Co. and Eagle Financial Diamond Group. Aman claimed to be developing a diamond-backed token and promised investors their fund would be used to purchase diamonds that Aman would clean, cut, and resell for profit. Aman started a new business that he ran through Argyle Coin, LLC, which planned to develop a crypto token backed by diamonds. 

Syed Arham Arbab, 23, was sentenced to 5 years in prison and ordered to pay about $500,000 in restitution in connection with a Ponzi scheme that he ran from his fraternity house while a student at the University of Georgia. Arbab defrauded more than 100 people out of about $1 million. Arbab previously pleaded guilty to running the scheme through his companies, Artis Proficio Capital Management and Artis Proficio Capital Investments.

Steven Fitzgerald Brown, 52, or California, was charged by the SEC with operating a Ponzi-like scheme through Alpha Trade Analytics Inc. The scheme raised approximately $7.5 million from more than 75 investors claiming that the fund would invest in the financial markets in foreign exchange, but the SEC alleges that less than 3% of the funds were invested. Investors were promised safe and risk-free investments and were promised returns of 8% to 12%. Brown agreed to plead guilty.

Natalie Cochran pleaded guilty to charges related to an investment fraud she ran with her late husband, Michael Cochran. The scheme was run through Tactical Solutions Group and Technology Management Systems, which were government contractors. Cochran filed bankruptcy following the fraud charges. 

Milton J. Dosal, Jr. of Colorado settled charges brought by the SEC that he ran an alleged Ponzi scheme that targeted U.S. military service members. The scheme raised $100,000 from about 41 investors and promised the investors weekly returns of 10%. Dosal did not admit or deny the allegations. 

Raymond Erker, Kevin Krantz, and Tara Brunst, of Ohio, were indicted in connection with an investment scheme that brought in more than $9.3 million from 54 investors. Investors were told that their funds would be used to buy annuities and secured notes but instead the money was either misappropriated or placed in high-risk start up companies. 

Zvi Feiner, 50, and Erez Bayer, 50, of Chicago were arrested in connection with an alleged scheme that involved a nursing residence chain through FNR Healthcare LLC. Feiner is a rabi who owned the chain with Bayer. The scheme defrauded 75 members of the Orthodox Jewish community out of more than $22 million. The SEC had filed an action against Feiner and Bayer last year.

Scott Allen Fries, of Ohio, was charged by the SEC with defrauding clients in an alleged Ponzi-like scheme. Fries recommended that his brokerage clients invest with him outside of his brokerage firm.

Golden Genesis Inc. was ordered to cease and desist by the Missouri Secretary of State. The company sold more than $9 million in unregistered, non-exempt securities in the form of promissory notes through a Las Vegas-based unregistered broker-dealer, Retire Happy LLC. The scheme defrauded more than 240 investors. Thomas Casey, Dennis Di Ricco, Cynthia Wade, were ordered to show cause why they should not be ordered to pay restitution plus interest, civil penalties and investigation costs totaling more than $1 million.

Denni M. Jali, Arley Ray Johnson and John Erasmus Frimpong, of Maryland, were indicted for running what is alleged to be a $28 million Ponzi scheme. They are accused of passing themselves off as pastors to defraud churchgoers and others through their investment scheme involving cryptocurrency and foreign-exchange trading that promised 35% returns. They ran the scheme through their company, The Smart Partners, LLC aka 1st Million, which they ran as a wealth management and financial literacy firm. They defrauded approximately 1,200 investors. The SEC and the CFTC have also filed complaints against them.

Donnie Laing, Jr., 40, was sentenced to 3 years in prison in connection with a $1 million Ponzi scheme run through Capital Energy Investments LLC. Investors were led to believe that their funds were invested in oil and gas equipment that would be leased to companies engaged in oil and gas exploration.

Andrew Dale Ledbetter, 78, was charged in connection with the 1 Global Capital LLC alleged scheme. The SEC alleged that Ledbetter, a Florida attorney, raised more than $100 million from investors in connection with the scheme.

Jose Anibal Linares, 42, of Texas, pleaded guilty to charges relating to a Ponzi scheme run through JC Loans Finance and Inversiones JC Dallas. The scheme promised monthly returns based on investments in commercial and residential real estate, including a water resort and shopping centers in Honduras.

Paul A. Rinfret, of New York, was sentenced to 63 months in prison in connection with a $19 million Ponzi scheme he ran through Plandome Partners LLC. Investors were promised returns from the supposed trading of futures contracts, but only a small amount of their money was actually invested. Rinfret had pleaded guilty to the scheme last year and was ordered to pay back $12.3 million to the six victims.

Pablo Rodriguez, Gutemberg Dos Santos, Scott Hughes, Cecilia Milan, and Jackie Aguilar were charged in connection with an alleged Ponzi scheme run through AirBit Club. The scheme is allegedly a multilevel marketing club involving cryptocurrency. 

Denise Gunderson Rust, 61, was sentenced to 18 months in prison in connection with her husband’s Ponzi scheme run through Rust Rare Coin. Rust claims that she did not know that her husband, Gaylen Rust, was running a scheme, but she did not tell anyone when she learned that her husband was not doing what he told investors he was doing. Criminal cases against Gaylen Rust and their son, Joshua Rust, are pending. 

Mark Scott was the subject of a forfeiture action brought by the Department of justice seeking to confiscate about $400 million to Scott. Scott was the attorney who helped accused OneCoin launder hundreds of millions of dollars.

Steven M. Sexton and his firm, Sexton Advisory Group Inc., settled charges brought by the SEC that they were acting as unregistered brokers when raising $4.6 million as part of the Woodbridge Group of Companies LLC Ponzi scheme.

Avinash Singh was charged by the CFTC in connection with the commodity pool known as Highrise Advantage LLC. Daniel Cologero and Randy Rosseau were also charged with fraudulently soliciting investors into the scheme through commodity pools, Green Knight Investments LLC, Bull Run Advantage, LLC, and King Royalty, LLC. The complaint also charges Suruipaul Sahdeo and SR&B Enterprises with unlawfully soliciting funds to Highrise. The scheme brought in $4.75 million.

TMTE, Inc., d/b/a Metals.com, Chase Metals, LLC, Chase Metals, Inc., Barrick Capital, Inc. and its principals, Lucas Asher a/k/a Lucas Thomas Erb a/k/a Luke Asher, and Simon Batashvili were charged by the CFTC in collaboration with 30 state securities regulators with running a nationwide fraud that brought in $185 million. Tower Equity LLC is also charged as a relief defendant. All are located in California. The scheme targeted elderly victims and defrauded 1,600 investors. The defendants allegedly defrauded customers into purchasing precious metals bullion at grossly inflated prices. The overcharges averaged from 100% to more than 300% over the prevailing market price.

David Wagner, 55, the head of Downing Partners LLC, pleaded guilty to charges that he ran a Ponzi-like scheme. He solicited more than $8 million from investors and represented that Downing Partners was a venture capital firm that would invest in health care startups, in addition to providing sales, operations and management expertise to those companies.

Lewis I. Wallach was charged by the SEC with stealing $26 million in an alleged Ponzi scheme. Wallach and the deceased founder of Professional Financial Investors Inc. raised approximately $330 million from more than 1,300 investors. Criminal charges were also filed against Wallach.

David Wade Watson, 62, and Rajshree Patel, 45, of Florida, were arrested on allegations that they were running a $2.5 million Ponzi scheme. Watson told him victims that he was awaiting billions of dollars in settlements from the government and that he would pay them millions or billions of dollars for every $1,000 they invested.  

INTERNATIONAL PONZI SCHEME NEWS 

Australia

John Louis Anthony Bigatton was banned for 7 years from the securities industry due to his involvement in the BitConnect Lending Platform alleged Ponzi scheme. Bigatton was accused of being engaged in misleading or deceptive conduct in promoting Bitconnect.

China

Chen Shaofeng, Luu Jianghua, Lu Jianghua, Lu Qinghai, Jin Xinghai, Wang Yin, and Zhang Qin were charged in connection with the PlusToken Ponzi scheme. The scheme is a $5.8 billion cryptocurrency scheme.

Dominican Republic

Charles Paul Vincent Debono, 62, was arrested and deported to Canada where he faces charges relating to an alleged Ponzi scheme. The scheme laundered money through investments in hotels and fast food centers as well as in the purchase of luxury vehicles and real estate. Debono’s wife, Sol Esperanza Acosta Gonzalez, was also arrested. The scheme was run through a company called Debit Direct.

England

Joseph Lewis pleaded guilty to charges that he defrauded investors worldwide in an international investment scam. Lewis ran the scam from Turkey and told investors he was engaged in foreign exchange trading. The scheme took in about $27 million. 

Guyana

Yuri Garcia Dominguez, 34, a Cuban national and his wife, Ateeka Ishmael, 32, were charged on 10 additional charges relating to an alleged Ponzi scheme run through Accelerated Capital Firm Inc.

India

Popular Finance was exposed as a Ponzi scheme when investors started withdrawing their money due to the pandemic and related financial stress. Thomas Daniel Roy and his wife Prabba surrendered and their daughter, Rinu Mariam Thomas, was arrested.

Taluk LC Nagaraj and Manjunath N were charged in connection with the I-Monetary Advisory Ponzi scheme case, headed by Mansoor Khan.  

Philippines

Authorities identified Mining City as a Ponzi scheme and identified Gregory Rogowski, Anthony Aguilar and Jhon Rey Grey as key personnel involved in the scheme. The scheme is a bitcoin cloud mining company.

Spain

Arbicorp froze accounts of more than 120,000 investors after discovery of an error that caused one of its cryptocurrency bots to overpay. It claims that its trading bot called Community Bot paid 28% more in profits than were due. 


Monday, August 31, 2020

August 2020 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for August 2020. The reported stories reflect at least 9 new Ponzi schemes worldwide, 2 guilty pleas, 55 years of prison sentences, and an average age of approximately 56 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed.
   
Clarence Dean Alford, 67, was charged by the SEC for allegedly defrauding investors in a Ponzi scheme run through Allied Energy Services, LLC. The scheme involved at least 100 investors out of about $23 million, promising them returns of 12% to 34% from investments in energy projects.

Banana.Fund was accused of running a cryptocurrency Ponzi scheme by authorities who filed a forfeiture lawsuit. Authorities seized 482 Bitcoin and over $1.72 million. The fund was supposedly a crowdfunding project that would incubate startups by attracting Bitcoin from investors in exchange for shares in the business. Banana.Fund is believed to be operated by British National, Richard Matthew John O’Neill aka Jo Cook.

Victor Lee Farias, 47, of Texas, was accused by the SEC of running a Ponzi scheme. Farias allegedly told investors that their money would be used to purchase aircraft engines and other parts that would then be leased or resold to major airlines. He promised returns of 10% to 12%.

William Neil “Doc” Gallagher, 79, was sentenced to 25 years in prison and ordered to pay more than $10 million in connection with a Ponzi scheme that promised annual returns of 5% to almost 9% to people who invested in securities with him. Gallagher had a Christian radio show called “The Money Physician.” The scheme brought in about $29.2 million from about 60 investors.

Dennis Mbongeni Jali, 35, Arley Ray Johnson, 61, and John Frimpong, 40, were charged by the CFTC with running a $27 million Ponzi scheme through 1st Million LLC, Smart Partners LLC and Access to Assets LLC. The complaint alleges that they fraudulently solicited investors to trade in foreign currency and digital assets such as bitcoin. There are 1,200 investors who believed they held “secure contracts” promising their funds would be held in escrow or trust. The SEC also charged the Maryland-based companies this month. The scheme guaranteed monthly or quarterly returns of around 6% to 42%.

Scott A. Kohn, 65, and Joseph Hipp had more criminal charges filed against them in connection with a $450 million Ponzi scheme run through Future Income Payments LLC. Melanie Jo Schulze-Miller was also charged in connection with the scheme. Initial charges were filed in 2019 in connection with the nationwide scheme that defrauded pension holders and investors.

Jason Kurland, 46, a lawyer from New York, was charged in connection with an alleged Ponzi scheme involving lottery earnings. Kurland calls himself a “lottery lawyer” and promised jackpot winners that he would invest their winnings. Instead, he put their cash into investments run by reputed Genovese crime family soldier Christopher Chierchio, 52. Kurland allegedly received kickbacks for steering the money to Chierchio and his partners. It is believed that $107 million was skimmed from the scam.

Robert J. Jesenik, 61, Brian K. Rice, 54, Nelson Scott Gillis, 67, and Andrew N. MacRitchie, 56, were charged on fraud and money laundering charges in connection with the scheme run through Aequitas Management LLC and related entities. They solicited investments in notes and funds, many of which were purportedly backed by trade receivables in education, health care, transportation and other consumer credit areas.

Peter Madoff, 74, the younger brother of Bernard Madoff, was released from home confinement after having served about nine years of his sentence. Peter Madoff had pleaded guilty to falsifying documents and lying to regulators as part of the Ponzi scheme, and he was sentenced to 10 years in prison. Bernard Madoff, 82, is still serving his 150-year prison sentence.

Anthony Wayne March, of North Carolina, pleaded guilty to charges that he ran a $8.1 million. The scheme was run through Asset Trader and defrauded at least 22 victims. The scheme was to invest in charitable gift annuities and other products, but March instead use the funds to pay for a lavish lifestyle, including a jet, a yacht and property in the Bahamas.

Rodney Scott Phelps, 58, of Kentucky, was sentenced to 9 years in prison and ordered to pay more than $2.4 million in restitution in connection with a Ponzi scheme run with co-defendant, Jason Castenir.  The scheme defrauded 13 victims through a fake investment scheme run through Maverick Asset Management LLC. The scheme promised returns from a supposed opportunity to obtain an oil concession from the government of Belize.

Ariel Quiros, 64, of Florida, pleaded guilty to charges related to the Jay Peak and Burke Mountain ski resorts in Vermont. Quiros and three others were indicted over an investment scheme that brought in $200 million in foreign investors’ money through the EB-5 visa program that allows individuals to obtain a green card and permanent residency in the U.S. The plea agreement provides that Quiros will be sentenced after William Stenger and William Kelly are sentenced, if convicted.

Mark Colin Ramsey, 50, of North Carolina, was sentenced to more than 5 years in prison and ordered to pay close to $1.1 million in restitution for running a fraudulent scheme through at least six different companies, including Hypertrend and Good Living. Investors were given fake investment agreements, fabricated stock certificates, and were guaranteed returns on their investments.

Benjamin Reynolds remains missing, but the CFTC is nevertheless seeking a judgment of about $500 million again him for his role in the alleged Ponzi scheme run through Control-Finance. The CFTC alleges that Reynolds laundered 22,858 Bitcoin worth about $147 million at that time, and that he defrauded about 1,000 customers.

Glyn W. Richards, 56, of New Jersey, was denied his request to be released from prison due to COVID-19 concerns. Richards stole more than $5.8 million in a Ponzi scheme and was sentenced to 30 years in prison. He had falsely claimed to have defense contracts in Iraq with a trucking firm, All Freight Logistics Inc.

Philip Elvin Riehl, 68, of Pennsylvania, was sentenced to 10 years in prison and ordered to pay more than $59 million in restitution. Riehl defrauded his accounting clients and diverted funds to Trickling Springs Creamery LLC, which he owned. The scheme defrauded members of the Mennonite and Amish religious communities.

Pablo Renato Rodriguez, Gutemberg Dos Santos, Scott Hughes, Cecilia Millan and Jackie Aguilar were arrested in connection with a scheme run through Airbit.  Airbit was a global cryptocurrency-based Ponzi scheme that was sold as a multi-level marketing club. Victims were told they would earn passive, guaranteed daily returns on any membership purchased.

Dale Tenhulzen, 61, of Wyoming, was charged by the SEC with running a Ponzi scheme through Live Wealthy Institute. The scheme sold about $15 million of unregistered securities in real estate investment funds managed by Equialt LLC.

INTERNATIONAL PONZI SCHEME NEWS

Australia

Graeme Walter Miller was sentenced to 6 years in prison in connection with a $2 million scheme run through CFS Private Wealth Pty Ltd. Miller pleaded guilty to misappropriating $1.865 million of client funds when he served as a financial adviser.

Michael Gu, founder of iProsperity Capital Management Pty Ltd., fled the country amid allegations that he ran a $60 million Ponzi scheme. Reports reveal that $30 million was transferred to Landerer & Company, run by lawyer John Landerer.

Canada

Todd Norman John Bezzasso was ordered to pay $6.3 million in connection with a Ponzi scheme run through Bezzazz Holdings Group Ltd. and Nexus Global Trading Ltd. The scheme raised approximately $5 million from 85 investors. Wei Kai Liao acted as a dealer and advisor and referred 27 investors to the scheme.

Glenda Esteves, 45, and Teddy Lee Esteves, 44, were charged in connection with a Ponzi scheme called Project Cosmo that took in $3.5 million from investors. The scheme targeted the Filipino community. They used companies such as Mac Glamour Ltd., Infy Trading Inc., and B + E Investments to recruit victims into the scheme.

Vernon Fauth, 73, was charged with fraud in connection with an alleged multimillion Ponzi scheme through Espoir Capital. Fauth was banned from the securities industry last year and paid $2.6 million in disgorgement along with other costs. Investor funds were loaned to Fauth and his family members and businesses, including Fauth Financial.

China

Authorities arrested over 100 suspects in connection with the PlusToken cryptocurrency scheme. The scheme promised 9% to 18% returns and defrauded victims out of $5.7 billion. 

Guyana

Cuban national Yuri Garcia Dominguez, 34, and Ateeka Ishmael, 32, were arrested in connection with an alleged Ponzi scheme run through Accelerated Capital Firm Inc.

Singapore

Authorities warned that the investment program known as Building Our Success Stories Network, or BOSS Network, may be a fraudulent Ponzi scheme. The scheme solicits investments from a multi-level marketing program for personal care products.

Zimbabwe

Bevern Capital Private Limited closed its doors and authorities allege that the company was running a $2 million Ponzi scheme. Richard Samunda, a director of the company, was arrested, but Bevern Dzinoenda and Ambrose Chikukwa are still at large.

Phenias Fungai Kamba was charged in connection with an alleged Ponzi scheme run through Kuwait Dinair Digital Marketing that defrauded 22 investors out of $5 million.