December 2015 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

    Below is a summary of the activity reported for December 2015. The reported stories reflect: 6 guilty pleas or convictions in pending cases; over 14 years of newly imposed sentences for people involved in Ponzi schemes; at least 5 new Ponzi schemes worldwide; and an average age of approximately 47 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it.

    Lori Ann Anderson, 53, was charged in connection with an alleged Ponzi scheme in which she solicited investments for the purpose of day trading. Anderson was the agent for SMTS Association, an investment business she ran out of her house.

    Fred Davis Clark Jr. aka Dave Clark, 56, the ex-CEO of Cay Clubs Resorts and Marinas, was found guilty of running a $300 million Ponzi scheme. The scheme promised nearly 1,400 investors returns from the refurbishment of properties into luxury homes, guaranteeing returns of 15% to 20%. Two other Cay Clubs executives, Barry Graham and Ricky Stokes, previously pleaded guilty and were sentenced to 5 years each.

    Homero Joshua Garza, 30, and his companies, GAW Miner, LLC and ZenMiner, LLC, were named by the SEC in an enforcement action charging them with fraud. The defendants were allegedly running a Ponzi scheme by selling Hashlets, which were advertised as the “world’s first digital cloud miner” of virtual currency. Over 10,000 investors invested at least $19 million over a four month period in mid-2014.

    Tracy Gilmond, 45, was charged by the SEC in connection with her role as a promoter of the ZeekRewards $850 million Ponzi scheme. Gilmond spoke at ZeekRewards’ events and solicited investors into the scheme for which she was paid more than $1.7 million in commissions.

    Alex Haxton, 27, pleaded guilty to charges that he ran a fraudulent Internet-based investment scheme that defrauded more than 100 victims.

    Vu H. Le aka Vinh H. Le, 39, and TeamVinh.com LLC was accused by the SEC of running a Ponzi scheme. The scheme allegedly involved the purchase of VPAKs and raised more than $3 million from at least 5,600 investors. Team Vinh was using the name ACCESS WEW, which stood for “A Crazy Cost Effective Self-Sustainable Wealth the Easier Way.” The scheme involved a commodities trading program over the internet, promising 5% weekly returns.

    Levi Lindemann, 39, was charged in connection with an alleged Ponzi scheme that defrauded about 50 investors out of about $2.5 million. Lindemann was a broker who operated an investment firm called Gershwin Financial Inc., which did business as Alternative Wealth Solutions. He had been sued by the SEC last year. Lindemann used over $2.5 million of the $4.3 million that he raised from investors for personal expenses and to pay promised returns to investors.

    Christopher Maguire, 33, pleaded not guilty to charges that he ran a $13.4 million Ponzi scheme.  Maguire is accused of defrauding people associated with several churches and religious organizations and promising them returns of 20% for a “proof of funds” loan business.

    Steven Andrew McKinlay, 58, and his wife, Krista B. McKinlay aka Kristi Kindred, 56, were arrested and charged with operating a $3 million Ponzi scheme through their company, God’s Sports Company. The company offered a prototype baseball bat that offered “leading performance and durability.” They are accused of defrauding more than 10 individuals and using much of the money on personal expenditures such as $10,000 per month rent for their home, their daughter’s wedding, and cars.

    Frederick Monroe, 59, pleaded guilty to charges that he defrauded at least 20 victims of more than $1 million. Monroe solicited funds from investors by promising that he would invest in bonds for their retirement.

    Paul Moore IV, 51, was sentenced to 5 years in prison in connection with a Ponzi scheme he ran through his alleged hedge fund, Coast Capital Management LLC.  Moore took in more than $2.8 million and spent about $1.7 million on himself.

    Wayne Palmer, 60, and his company, National Note of Utah LLC, lost the trial brought by the SEC against them in an enforcement action accusing them of running a Ponzi scheme. The court found that National Note had raised about $100 million from over 600 investors, promising them returns of 12% in a real estate scheme.

    Sann Rodrigues was found in contempt of court in connection with the TelexFree Ponzi scheme case. The SEC alleged that Rodrigues violated a freeze order and transferred more than $334,000 and real estate in violation of the asset freeze.

    Martin Shkreli, 32, was arrested for allegedly running a Ponzi scheme through his company, Retrophin. Shkreli has also been sharply criticized for raising the price of a live-saving drug more than fiftyfold through his other company, Turing Pharmaceuticals. Shkreli has pleaded not guilty. Shkreli resigned from Turing and was terminated as CEO of KaloBios Pharmaceuticals following his arrest.  Evan Greenbel, 42, a New York lawyer, is alleged to have helped Shkreli in his schemes. Both Shkreli and Greenbel pleaded not guilty.

    Joseph Signore, 51, his soon-to-be ex-wife, Laura Grand-Signore, 41, and his business partner, Paul Schumack, 57, were found guilty in connection with an $80 million Ponzi scheme that defrauded investors in a virtual concierge business run through JCS Enterprises. A fourth defendant, Craig Hipp, 54, was previously found guilty and is serving 7 years in prison. Investors would purchase a virtual concierge machine for a fee ranging from $2,600 to $4,500 and were promised returns ranging from 80% to 120% annually.

    Frank Spinosa, 54, was sentenced to 2½ years in prison for his role in the Scott Rothstein $1.2 billion Ponzi scheme. Spinosa used his position at TD Bank to falsely assure some of Rothstein’s investors that their money was safe.

    Marcello Trebitsch, 37, was sentenced to 2 years in prison and ordered to pay nearly $6 million in restitution for his role in defrauding 4 investors out of $5.9 million in a Ponzi scheme that he ran through Allese Capital LLC. The investment supposedly generated annual returns of 14% to 16% through a day trading of large cap stocks. Trebitsch is the son-in-law of Sheldon Silver, the former New York Assembly speaker, who was convicted recently in an unrelated corruption case.

    William Donnelly Yotty, 69, was sentenced to 4 years and 9 months in prison and ordered to pay more than $15 million in restitution to 240 investors who were defrauded in Yotty’s two Ponzi schemes. Yotty operated his schemes through companies including The Money People Inc. and Fortuno Millionaire Club. The schemes involved the purchase of debt instruments for a promise of 25% returns, and a real estate flipping scheme that promised returns of 200% to 300%.

INTERNATIONAL PONZI SCHEME NEWS

Australia

    Maureen Gael Johnston and Douglas Gordon Johnston were charged in connection with a fraudulent scheme run though Investman Nominees (USA) Pty Ltd. and Small Business Management Pty Ltd. Investors were defrauded into investing $1.5 million into property developments in the United States and Australia.

India

    M Srivivas, 63, and has wife, B G Pushpalatha, 55, were arrested in connection with an alleged scheme run through their financial company, Shreyas Groups. Shreyas Groups is an umbrella company associated with Shreyas Finance & Investments, Shreyas Chits, and Shreyas Souharda Co-operative Limited.

    Balasaheb Bhapkar, 56, was arrested in connection with an alleged scheme run through Sai Prasad Group of Companies. The company has interests in real estate, infrastructure, energy, food and films.

    Bijay Ketan Das, the director of High-tech Regional Cooperative Limited, was arrested for allegedly defrauded 5,000 investors.

    At least 18 different locations of Ramel Group of Industries were searched in connection with an alleged Ponzi scheme that raised over Rs 97 crore from investors.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

    The SEC prevailed on its request to get emails of Steve H Karroum, the president of FX & Beyond Corp. Karroum had asserted that the Fourth Amendment and the marital privilege barred the production of his emails.

    The Trustee of the Bernard Madoff Ponzi scheme sent out checks in the sixth distribution made in the case. The distribution raises the recoveries to victims to $9.16 billion so far, which is about 57% of the cash that they lost.

    A federal judge denied the request of Kingate Global Fund for a quick appeal of a ruling that left intact most of a lawsuit of the Madoff trustee’s clawback lawsuit for $825 million against the feeder fund.

    The Second Circuit declined to reinstate a lawsuit by The R.W. Grand Lodge of Free and Accepted Masons of Pennsylvania against Meridian Capital Partners Inc. relating to losses suffered in the Madoff scheme.

    The Madoff trustee sought to block a lawsuit by investors against Madoff investor Jeffery Picower, whom the trustee had settled with in 2011 in a $7.2 billion settlement.

    The receiver in the Arthur Nadel Ponzi scheme made an additional distribution totaling $3 million to about 350 investors, which brings the recoveries to nearly 47% of their losses.

    Investors in the Martin Sigillito Ponzi scheme lost their claims against two banks in connection with the scheme. 56 victims had sued St. Louis Bank and 91 victims had sued PNC Bank, but the court found that neither bank knew about the fraud being committed in the bank accounts controlled by Sigillito.

    Kroll LLC has agreed to pay a $24 million settlement in connection with the Allen Stanford $7 billion Ponzi scheme. A lawsuit had alleged that Kroll was grossly negligent in submitting a falsely positive report about Stanford.