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

Sunday, April 30, 2017

April 2017 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for April 2017. The reported stories reflect: 8 guilty pleas or convictions in pending cases; over 65 years of newly imposed sentences for people involved in Ponzi schemes; at least 7 new Ponzi schemes worldwide; and an average age of approximately 54 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.

Connie Apostelos aka Connie Coleman, 51, pleaded guilty to a charge that she knowingly attempted to deposit a check for more than $224,000 that was from investors and was intended for illegal purposes. Although she pleaded guilty to this charge, she did not plead guilty to a charge that she knew of her husband’s, William Apostelos’, fraud. William ran a $70 million Ponzi scheme in which about 480 victims lost about $20 million. William Apostelos plead guilty in February, and Steven Scudder, 62, admitted in January to using his role as an attorney to help solicit funds from Apostelos’ firm, WMA Enterprises LLC.

Troy A. Barnes, 53, was sentenced to 33 months in prison in connection with a Ponzi scheme that he ran along with Kristine L. “Kristi” Johnson through his company Work with Troy Barnes, or WWTB, that did business on the internet under the name “The Achieve Community.” The program advised victims that it was “not an investment program” and cautioned them, “please don’t use that term when you speak or post about our re-purchase strategy.” There are more than 10,000 victims of the scheme. The scheme promised 700% returns. Johnson was previously sentenced to 21 months in prison for her role.

Carl Keith Battie, 60, was sentenced to 14 years in prison in connection with a Ponzi scheme to which he pleaded guilty last year. The scheme involved the supposed purchase of distressed properties that Battie would fix and flip, promising annual returns of 16% to 35%. At least 708 investors were defrauded out of about $9 million. Battie’s co-conspirator, Christopher Dannenfeldt, died in 2014. 

Jamie B. Campany, 53, has been ordered to pay $17.4 million in restitution to his victims. Campany is serving a 12 year prison sentence for running a Ponzi scheme through purported precious metals investment firm Global Bullion Exchange. The scheme defrauded more than 1,400 customers.

Chad R. Deucher, 43, pleaded guilty to charges relating to an alleged Ponzi scheme that defrauded investors in his real estate firm, Marquis Properties LLC, out of $16 million. Deucher defrauded nearly 200 investors out of $28 million, and about 170 of them are still owed $16 million. Deucher promised his victims returns of 22%.

Stephen S. Eubanks, 48, pleaded guilty to one charge in connection with a Ponzi scheme that defrauded 32 investors out of $435,000. Eubanks took in $529,000 into his Eubiquity Capital financial firm. He legitimately invested some of the money but spent $145,000 on himself for vacations and boat payments, among other things.

Alan Gold argued an appeal of his 6 year sentence to the Seventh Circuit, which did not appear inclined to reverse his sentence. In 2016, Gold pled guilty to 5 counts relating to a Ponzi scheme that defrauded 13 people out of more than $18 million. Judge Posner referred to Gold as “a little Madoff” and a “thorough crook,” noting at the hearing that the “The sentence was entirely appropriate.”

Robert Allen Helms, 52, and Jenniece Kaelin, 55, each pleaded guilty to charges that they defrauded at least 80 investors in an oil and gas scheme run through their firm, Vendetta Royalty Partners. They raised about $17.9 million and misappropriated funds for a separate firm called Vendetta Management, among other things.

John Hogan, 77, pleaded guilty to defrauding customers of his company, Hogan & Associates, out of $8.2 million. Hogan was an insurance agent who sold life insurance policies and convinced client to borrow against the cash value of the insurance products so he could supposedly make short term loans to others. In reality, he did not make the loans but he used the money to finance his 25 homes and investment properties.

Matthew Howell, a lawyer in Utah, has been accused of helping his client destroy evidence. Howell had previously been accused of assisting Chad R. Deucher in running a Ponzi scheme through Marquis Properties. Howell is accused of failing to preserve electronically stored information by turning it over to Deucher, his client.

Francis Illarramendi, 58, was ordered to pay almost $27 million in connection with a Ponzi scheme. Illarramendi pleaded guilty to criminal charges in 2011 related to the scheme for which he was sentenced to 13 years in prison. The scheme involved between $200 million and $723 million and was operated through numerous hedge funds including Michael Kenwood Asset Management, Michael Kenwood Energy and Infrastructure, Michael Kenwood EI Solar, Michael Kenwood Venezuela Fund and Short Term Liquidity Fund and Highview Point Partners.

Nemelee Liwanag Jiao, 47, was indicted and accused of running a $1 million Ponzi scheme that defrauded 35 investors. Jiao promised investors returns of 10% to 100% in relation to two nonprofit schools in the Philippines called Shepherd’s Light Learning Center and Lord of Peace. She used the money on personal expenses, including a country club membership.

Robert Leland Johnson IV and Marisa Elena Johnson were sued by the CFTC in an enforcement action alleging that they took in at least $1.73 million in a scheme involving commodity futures fraud, among other things. The alleged Ponzi scheme was run through Capitol Equity FX.

Mark Anderson Jones, 64, had a judgment entered against him in a case brought by the SEC for a Ponzi scheme. Jones solicited investors to provide loans to Jamaican businesses. Jones promised 15% to 20% interest on these bridge loans and provided investors promissory notes and personal guarantees. Jones pleaded guilty last year to the scheme.

Andrew D. Kelley, 41, pleaded guilty to charges relating to an alleged $3 million Ponzi scheme that he ran through Blackbird Capital Partners. Kelley falsely represented that he had developed an algorithmic software program that made up to 300% returns in his day-trading business. Kelley also lured investors by telling them that he was a faithful member of The Church of Jesus Christ Latter-Day Saints.

Matthew A. Krimm, 35, and his company, Krimm Financial Services, were charged by the SEC with defrauding at least 25 investors out of more than $1.69 million. Krimm was a mortgage loan officer who allegedly falsely claimed that he ran a “highly successful” mortgage loan business. The Delaware Department of Justice filed charges against Krimm, alleging that Krimm ran a Ponzi scheme.

Ronald Earl McCullough, 45, was sentenced to 10 years in prison in connection with a Ponzi scheme that he ran with his partner, David Christopher Mayhew, 44. Mayhew was sentenced to 26 years last year. McCullough had pretended to be a religious leader to convince people to invest at least $1 million in a foreign exchange group in which it promised returns in 30 days.

Mark Morrow, 55, is expected to plead guilty to charges that he participated in a $35 million Ponzi scheme run through Summit Wealth Management and Detroit Memorial Partners. The scheme was shut down in 2015 and Morrow’s partner, Angelo Alleca, 47, pleaded guilty last year.

Curtis A. Peterson was ordered to disgorge $569,250 in commissions that he received while selling securities in a $70 million Ponzi scheme. Peterson sold securities in the “Virtual Concierge” scheme run through JCS Enterprises Inc. and T.B.T.I. Inc. The principals of that scheme, Joseph Signore and Paul L. Schumack II, promised investors returns of up to 500%. Signore, Schumack, Signore’s wife, Laura Grande-Signore, and Craig Allen Hipp were sentenced to 20 years, 12 years, 7 years and 7 years, respectively, over the scheme.

Bonnie Lynn Recinos, 56, was sentenced to 4 years and 7 months in prison and ordered to pay more than $1.5 million in restitution in connection with a Ponzi scheme that she ran through her business, Farr and Associates. Recinos and alleged co-conspirator, Julie Ochoa, offered investors returns from investments in Arizona real estate, and promised that the investments were secured by Farr assets. The schemed caused losses of $1.5 million to more than 10 victims.

Cheskel Strulowitz was accused by a group of investors of running a Ponzi scheme in which they invested $20 million. The investors have alleged damages of $90 million in connection with the real estate scheme.

C. George Tate, 48, an ex-NBA player, lost his appeal of his conviction and 9 year prison sentence on wire fraud charges in a $2 million real estate Ponzi scheme run through The George Group. The Third Circuit denied his appeal finding that the “new” evidence the court was asked to review did more to incriminate him than exonerate him.

Roger Williams was indicted on charges relating to an alleged Ponzi scheme. Williams withdrew his guilty plea last month and has now been indicted in connection with an investment program.  Williams is accused of misrepresenting the earnings on his clients’ investments with Dash Holdings and Open Door Investment. Nearly 100 people invested with Williams, who was the pastor of a church and lost $1 million.

Scott Wolas aka Eugene Grathwohl aka Frank Amolsch aka Drew Prescott aka Allen Hengst aka Endicott Asquith aka  Cameron Sturge, 67, was arrested and charged in connection with an alleged Ponzi-like scheme that defrauded more than a dozen people out of $1.5 million. Wolas operated a real estate business known as Increasing Fortune Inc. under his Grathwohl alias. He collected more than $1.5 million from at least 19 investors and promised to pay out at least 125% of the profits from home construction. The real Eugene Grathwohl is a friend of Wolas’ ex-wife. Wolas is a former Hunton & Williams partner who disappeared nearly 20 years ago when fleeing from other charges relating to a $100 million fraudulent liquor-exporting scheme.

INTERNATIONAL PONZI SCHEME NEWS

Canada

Milowe Brost, 63, had his appeal of his conviction a 12 year sentence denied. Brost was convicted, along with Gary Sorenson, in 2015, in connection with a Ponzi scheme in which more than 2,400 investors lost between $100 million to $400 million.

Virginia Mary Tan, 65, has admitted to fraudulently raising at least $30 million in a Ponzi scheme. Tan defrauded about 50 investors, promising them 12% to 24% returns, and ran a business called Letan Investments Management. Tan raised the money for short-term high-interest loans to be used for short-term financing, but did not actually invest the money in real business.  Tan filed bankruptcy and the bankruptcy trustee’s website reports that 177 investors are owed more than $40 million.

China

Shaved-head men and women promoted what is alleged to be a Ponzi scheme that involves a virtual currently called “wuxingbi” or “five phases money.” Investors can buy into the program in levels priced at 500, 2,500 and 5,000 yuan, and they are encouraged to find additional investors for which they would receive rewards.

Dubai

A Dubai court ordered Exential chief, Sydney Lemos, and his companies to pay back investors who had lost money in a Dh1.1 billion Ponzi scheme. The scheme was disguised as a foreign currency trading program and promised returns of up to 120%.

India

Shekhar Chandrashekhar aka Sukesh Chandrasekhar was arrested on charges that he defrauded investors out of Rs 19 crore in a Ponzi scheme.

The 18 organizers of OneCoin were arrested on allegations that they were running a Ponzi scheme.

Bijay Kumar Rout, the managing director of Adarsh Group, was sentenced to 4 years in prison in connection with a Ponzi scheme. Adarsh Stalfed Farms and Adarsh Wealth Ventures Pvt were also found guilty in connection with the Ponzi scheme.

Malaysia
An alleged scheme run through JJPTR is being investigated. The scheme allegedly defrauded at least 500 investors and was operated as a foreign exchange trading company. JJPRT is an acronym that can either stand for Jie Jiu Pu Tong Ren in Chinese (salvation for the common people), or JJ Poor to Rich. JJPTR stopped paying investors their promised 20% returns and founder Johnson Lee reported that over $50 million was lost.

South Africa

A curator was appointed to oversee the distribution of funds in the case of Colin Davids, 49. Davids is a pastor who ran a foreign exchange trader alleged to be a Ponzi scheme through Platinum Forex Group. Platinum had promised investors up to 84% returns on foreign exchange investments.  An auditor’s report stated that a total sum of R329m came in from over 2,000 investors.

Thailand

450 victims filed complaints with police relating to the WealthEver Co. Ltd. scheme. The managing director of WealthEver, Ms Pasit Arinchalapit alias Sinsae Shogun, 30, was arrested and detained for questioning. About 2,000 people may have been defrauded, believing they had bought a package tour to Japan during Songkran festival.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

Victims of Blue Mountain Consumer Discount Co. were award $6 million against the company and Walter “Buddy” Lambert, 75.  Lambert was sentenced in 2015 to two years in prison for running a Ponzi scheme.

A court stayed the SEC’s case against Joseph Meli and Matthew Harriton over their alleged fraudulent scheme in soliciting investor funds for “Hamilton” and other popular show tickets. The SEC has accused the men of raising more than $97 million from at least 138 investors, promising large returns. The SEC case is stayed while criminal charges against Meli are proceeding.

The Fifth Circuit held that the Foreign Sovereign Immunities Act bars the victims of Stanford International Bank Ltd. from bringing claims against Antigua and Barbuda. The Fifth Circuit reversed the lower courts finding that Antigua and Barbuda had waived sovereign immunity. The victims had claims that Antigua and Barbuda acted as a participant in Allen Stanford’s scheme and provided Stanford and his businesses a safe harbor from regulatory scrutiny. 

Friday, March 31, 2017

March 2017 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for March 2017. The reported stories reflect: 6 guilty pleas or convictions in pending cases; over 100 years of newly imposed sentences for people involved in Ponzi schemes; at least 7 new Ponzi schemes worldwide; and an average age of approximately 52 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.

Gino Accettola, 49, was charged on allegations that he was running a $4 million Ponzi scheme. Accettola operated five Miami Tan locations. He and other defendants were sued last year by 11 plaintiffs who accused him of inducing them to loan him about $4.7 million for “various commercial construction jobs and related transactions in Michigan.”

Will D. Allen, 38, a former NFL player, was sentenced to 6 years in prison for his operation of a Ponzi scheme with Susan Daub through Capital Financial Partners. Daub also received a 6 year sentence. The scheme defrauded professional athletes and took in more than $35 million, with losses to investors of about $17 million.

Richard Brandt was convicted of operating a Ponzi scheme that exploited elderly investors. Brandt deceived 18 people into investing more than $1.9 million into his “house flipping” company.

Wes Brown, 54, was sentenced to 7.5 years in prison following his conviction in January for defrauding members of his former church and others in a $2 million Ponzi scheme. The scheme was run through Maverick International Inc., in which Brown’s brother-in-law, Edward Rubin, was president. Brown was the pastor of the church, and the Assistant State Attorney noted that “He used his position of power, used his position of friendship, to steal and lie from people in his church.”

John T. Burns III, 58, had his prison sentence reduced from 84 months to 72 months following remand from the Seventh Circuit that was asked to re-examine whether Burns knew that the $33 million he solicited from investors in the USA Retirement Management Services scheme was going to be stolen by the principals of the company, Robert C. Pribilski, 59, and Mahmut Erhan Durmaz aka  Francois E. Durmaz, 47. Pribilski and Durmaz were accused of stealing over $28 million in investor money through failed restaurant and real estate ventures. Pribilski died before his sentencing and Durmaz fled the country in 2010.

George Bussanich Sr., 57, his wife, Wilma Bussanich, and their son, George Bussanich Jr., 36, were indicted on allegations that they stole more than $7 million from elderly investors “in classic Ponzi-scheme fashion.” The scheme sold unregistered investment notes for a bogus surgical center. Others indicted in connection with the scheme are Heidi Francavilla, 58; attorney Bryan Nazor, 45; Robert G. Schooley, 65; Brendan M. Byrne, 45; and Christopher Hanna, 35. George Jr.’s wife, Cheryl Bussanich, was also indicted on lesser tax fraud charges.

Joseph Castellano, 59, was sentenced to 5 years and 8 months in prison for his role in defrauding 18 investors out of $1.5 million. Through is company, Casbo Investments, Castellano had represented that he would use investor funds to provide capital to fund businesses or real estate projects where those businesses were unable to secure funding from traditional sources. He promised investors annual returns of 6% to 8%.

Patrick Churchville, 48, was sentenced to 7 years in prison after pleading guilty to a scheme that he ran through ClearPath Wealth Management. Churchville used $2.5 million of the $21 million from investors to buy a waterfront home in Barrington, Rhode Island. The scheme involved more than 100 investors and promised returns of 30% over 16 months. Churchville was an adviser for 16 years, having worked at Oppenheimer & Co. and Morgan Stanley, before going independent in 2009.

Mark Feathers, 53, had his bail revoked after sending a threatening email to officers of the court involved in his case. Feathers is accused of defrauding investors out of approximately $50 million through his company, Small Business Capital, but strenuously objects to the use of the word “Ponzi” in connection with this matter. Feathers is not scheduled to go to trial until January 2018 so will spend the next 10 months in prison while awaiting trial.

Catherine Ann Finberg was sentenced to 40 years in prison with 30 years suspended for her role in operating a Ponzi scheme that defrauded 28 people out of more than $1.5 million. She previously pleaded guilty to the scheme. Finberg is the assistant coach of a high school’s girls’ basketball team, but defrauded mostly elderly people who expected Finberg to invest their funds on their behalf. 

Roberto Trinidad Del Carpio Frescas, 40, was sentenced to 19 years and 7 months in prison in connection with a $14 million Ponzi scheme that defrauded more than 100 investors. Del Carpio ran SMI aka (Stock Market Investments) International Institute Corp. and Del Carpio Trading Institute LLC. He also set up Del Carpio Holdings in the Cayman Islands. David Brian Binder, 61, pleaded guilty this month to one count relating to his assistance in helping Del Carpi keep the profits from the scam.

Edwin Yoshirhiro Fujinaga, 69, lost his request to dismiss the charges against him relating to the Ponzi scheme run through MRI International Inc. The scheme involved $1.5 billion and defrauded thousands of Japanese investors. They were told that their investments would be held by a third party escrow agent in Nevada. Investors were promised that their money would be used to purchase medical accounts receivable.

Daniel H. Glick, 64, and is unregistered investment advisory firm, Financial Management Strategies, were the subject of an asset freeze and restraining order at the request of the SEC. Glick raised over $6 million from investors, mostly elderly clients, promising them he would pay their bills, handle their taxes and invest on their behalf. Instead, he diverted funds for his personal use and used new funds to repay other investors. The SEC complaint also names Glick Accounting Services, Glick’s business partner David B. Slagter, and Edward H. Forte as relief defendants, seeking to recover more than $1.5 million paid to them.

David Gray, Joseph Vitale, and LottoNet Operating Corp., were the subject of an emergency order at the request of the SEC to freeze their assets. The SEC alleged that LottoNet had raised about $4.8 million in a “Ponzi-like fashion” and used at least 13 unregistered sales agents to place cold calls to potential investors nationwide. It is believed that at least 35% of investor proceeds were paid to boiler room sales agents as commissions.

David William Johnson, 57, has been sentenced to up to 20 years in prison and ordered to repay more than $330,000 that he took from 7 people who trusted him because he was supposedly a man of faith. He convinced clients that he had access to a safe high-yielding foreign bank investment that would yield returns. Instead, however, he used the investors’ money to support his wife and 10 children.

Keith B. Laggos was sued by the SEC in connection with his role as an alleged promoter of the ZeekRewards Ponzi scheme. The SEC alleges that Laggos committed securities fraud when he continued to serve as a consultant for ZeekRewards after the company failed to act on legal compliance requirements. Laggos allegedly told Paul Burks, the owner of ZeekRewards, to change the wording on the website to dodge regulatory attention, including removal of any reference to “investment.” Laggos agreed to pay $79,190.68 to settle the SEC’s claims for at least $64,000 that he had received for publishing several editorials that helped to publicize the ZeekRewards’ scheme.

Lee Loomis, 59, was not permitted to withdraw a guilty plea that he entered a year ago. Loomis was accused of defrauding investors out of as much as $100 million through his company, Loomis Wealth Solutions. He promised investors returns of 12% and that he would cover the investors’ mortgages, taxes, and insurance. Loomis argued that he did not believe he was guilty saying, “This was an act of capitulation, not one of confession.”

James MacCallum, 46, was convicted in connection with a $3.4 million scheme that defrauded investors. MacCallum, a former New York attorney, claimed that his investments were secured by real estate and life insurance policies. 

Anna Meli, the mother of Joe Meli, 42, was named as a co-defendant in the case involving the alleged Ponzi scheme run by Joe Meli and Matthew Harriton, 52. The scheme involved 497 million, and it is alleged that Joe Meli and Harriton stole $75 million. Joe Meli, his mother, his wife, Jessica Ingber Meli, and Harriton are all being sued by the SEC. It is believed that Anna Meli received money from the scheme in the amount of at least $405,000 through transfers from Advance Entertainment and 127 Holdings.

James Merrill, 55, was sentenced to 6 years in prison in connection with the TelexFree Ponzi scheme. Fifteen others were linked to the scheme: Carlos Nathaniel Wanzeler; Carlos Roberto Costa; Katia Helia Wanzeler, wife of Carlos Wanzeler; Jozélia Miriam Sangali, wife of Carlos Costa; Danny Fabricio Cabral Gomes; Febe Wanzeler de Almeida e Souza, sister of Carlos Wanzeler; Marisa Machado Wanzeler Salgado, sister of Carlos Wanzeler; Roberta Rosa de Jesus;  Draco Vaz de Oliveira; Alex Gomes; Diorgeney William of Assisi; Lelio Celso Ramires Farias; Rhalff Junio de Almeida Coutinho; Leide Januaria de Araújo; and Elizabeth Cerqueira Costa Alves, sister of Carlos Costa. Merrill pleaded guilty in 2016 and has agreed to forfeit about $140 million and other assets. It is believed that the scheme stole more than $3 billion from investors in more than 240 countries.

Mark Moskowitz, 48, pleaded guilty to charges relating to his operation of a $675,000 Ponzi scheme. Moskowitz ran the scheme through his companies, Edge Trading LLC and Edge Trading Partners, L.P., representing that he was investing in equities and contracts.

Aaron R. Parthemer reached an agreement with the SEC that he is barred indefinitely from acting as an investment advisor or participating in penny stock offerings. He did not admit or deny the SEC’s claims that he participated in selling more than $5 million in unregistered, illiquid securities.

John Quadrino, 51, was charged with running a Ponzi scheme that allegedly defrauded investors out of $6.3 million. The indictment alleges that Quadrino promised 84 investors profits on their investments from his precious metal businesses, Princess Cut Industries, Inc., and Golden Glitter Trading, Inc. Quadrino is also one of three partners in Sassy Jewelry Buyer Inc. The companies collected a total of $13.1 million from investors. 

Randall Rye, 26, was accused of defrauding investors out of $1.5 million. Rye owns the brokerage firm Faster Than Light Trading and “falsely represented to investors that their investment would be traded using his proprietary trading program and invested in options and futures and contracts.” He allegedly would fake account statements to look like the investments were paying off. More than 63,000 accounts follow Rye on Twitter for his takes on futures and options trading.

David W. Schwarz, 60, was found guilty for conspiracy to commit bank fraud in connection with the Cay Clubs Resorts and Marinas scheme. The alleged Ponzi scheme involved $300 million and about 1,400 investors. The owner of the scheme, Fred “Dave” Clark Davis, was previously sentenced to 40 years in prison and his wife Cristal Clark Coleman was acquitted. Barry J. Graham, 59, and Ricky Lynn Stokes, 54, previously pleaded guilty and were sentenced to 60 months and 30 months, respectively. Both defendants were former executives in Cay Clubs Resorts and Marinas, which ran a $300 million scheme involving sales of vacation rental units. 

James VanBlaricum, 77, got his plea agreement approved, which resulted in a 7 year prison sentence. His scheme defrauded investors out of more than $2 million in an oil and gas scheme.

Roger Harvey Wagner, 52, and Rodney Lee Wagner, 52, who are twin brothers, were sentenced to four years each in prison and ordered to pay nearly $1.9 million in restitution for operating a Ponzi scheme. Investors understood that they money was being used in foreign currency trading and that they would be paid a fixed rate of return plus their principal.

Roger Williams was given 14 days to consider whether he wants to withdraw his guilty plea after the court rejected the proposed plea agreement. Williams was accused of misrepresenting the earnings on his clients’ investments with Dash Holdings and Open Door Investment. Nearly 100 people invested with Williams, who was the pastor of a church and lost $1 million.

Troy Wragg, 35, pleaded guilty to running a $54 million Ponzi scheme through his company, Mantria Corp. The company was supposedly building a revolutionary real estate and energy firm. Wragg’s college girlfriend and Mantria co-founder, Amanda Knorr, 33, pleaded guilty last year. Co-defendant, Wayde McKelvy, 54, is scheduled to stand trial later this year. Wragg held seminars called “Speed of Wealth” clubs promising yields as high as 484%.

Chris Young Yoo, 44, was charged in connection with accusations that he ran a Ponzi scheme when he was head of the wealth management firm Summit Asset Strategies. He pleaded guilty to the charges which include allegations that he defrauded investors out of $3.6 million. He previously reached a $1 million settlement with the SEC related to the fraud. 

INTERNATIONAL PONZI SCHEME NEWS 

Australia

Six companies affiliated with real estate developer Veronica Macpherson were put into liquidation in connection with an alleged $200 million Ponzi scheme. The companies include: Macro Realty Developments Pty Ltd; Macro Realty Developments AFSL Pty Ltd; Macro All State Investments and Securities Ltd; Pilbara Property Developments Pty Ltd; Macro Realty Pty Ltd; and 511 GTN Pty Ltd. The scheme has taken in funds from investors in Australia, Malaysia, Singapore and the UK.

Quintis, an Australian sandalwood grower, has been accused of having a “Ponzi-like structure.” Quintis was previously known as TFS Corporation and says that it is the world’s biggest manager of commercial sandalwood plantations. Critics note that sandalwood trees take between 15 and 20 years to grow, so generating cash flow takes a long time. However, Quintis promises investors cash dividends within two years of investing as well as full repayment of the principal within 7 years.

Michael Christopher Samra, 57, pleaded guilty to charges relating to a $2 million Ponzi scheme. Samra was initially charged with defrauding investors out of $12 million but he admitted to crimes totaling $1,902,000. Samra persuaded victims to loan him cash which he would then lend to fake property developers. He also misrepresented that he would use investor funds to provide to clients who needed finance bridging or to buy a block of land.

Canada

The trustee is the bankruptcy case of Rashida Samji, who was sentenced to 6 years in prison, has filed a claim against Samji’s “romantic partner” Rajesh Gajjar. Samji operated a Ponzi scheme that defrauded more than 200 investors in a $100 million scheme. Gajjar received approximately $600,000.

England

Peter Plimley, 68, was accused of running a Ponzi-style betting scheme that defrauded victims out of £230,000. Plimley used spread betting to place bets on the currency markets on conversion rates of the US dollar against the Euro, saying that had a trading strategy which allowed him to predict fluctuations in the market.

Germany

Stephan Christoph Schaefer and Jonas Koeller were sentenced to 8 years each in connection with a Ponzi scheme that they ran through S & K and about 150 affiliated companies. They defrauded about 11,000 investors out of $258 million and used much of the money to throw lavish parties and buy luxury vehicles.

Hong Kong

The Securities Futures Commission obtained an interim order to freeze approximately $2.66 million in the bank accounts of Heriberto C. Perez Valdes in connection with a suspected Ponzi scheme. It is alleged that Valdes is involved in the scheme operated by DFRF Enterprises and DFRF Enterprises LLC and their founder, Daniel Fernandes Rojo Filho.

India

Basudeb Bagchi, the chairman of Prayag Group, and his son Avik Bagchi, were arrested in connection with an alleged Ponzi scheme run through Prayag Group of Companies. The company’s website says "Our businesses range from real estate and construction, fishery, biotechnology, hotels and resorts, solid waste management, cement, food processing, organic farming, media, FMCG and of course the prestigious Prayag Film City."

Webwork Trade Links Pvt Ltd, and its directors, Anurag Garg and Sandesh Verma were accused of running a Ponzi scheme. The scheme allegedly defrauded 40,000 investors.

Nigeria
The Nigeria Deposit Insurance Corporation reported that 3 million Nigerians lost N18 billion in the Ponzi scheme known as Mavrodi Mundial Movement (MMM).

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

A court tentatively ordered MetLife Inc. to pay $6.2 million in attorneys’ fees on top of a $7.2 million judgment in connection with the Diversified Lending Group scheme that involved about $216 million. Investor Ramirez claims that MetLife and its agent had sold unregistered securities to her alongside her insurance policy.

The Birmingham Water Works has retained counsel to pursue its losses from investment with Jason Galanis and his father John Galanis. Jason Galanis had purchased Hughes Capital Management, which had worked with Water Works, and then changed the company name to Atlantic Asset Management. He purported to use investor funds to by $43 million in bonds using clients’ money, but then spent it as he pleased. Atlantic Asset Management was placed in receivership in January. 

The bankruptcy trustee for LLS America LLC filed 11 notices of civil claim in BC Supreme Court seeking to recover money transferred in that scheme. The scheme was run by Doris Nelson who ran a short-terms payday loan business.

A California court approved a $20.2 million settlement with Stanley Chais and the Lambeth Company in connection with the Bernard Madoff scheme.

A proposed $64.8 billion class action brought by customers of Bernard L Madoff Investment Securities LLC against the estate of Jeffry Picower was dismissed.

Securities America will pay over $1 million as part of a settlement of a case in connection with the Medical Capital Holdings. The firm had been ordered to pay $2.8 million to about 60 investors who were deemed not sophisticated enough for such investments. Medical Capital had sold $1.7 billion of the notes in the Ponzi scheme, and Securities America sold the bulk of them. Securities America had been paid $26 million in fees from the notes and had solicited investors at dinner seminars with up to 100 people at a time.

The SEC amended it complaint against Joseph Meli and Matthew Harriton, alleging that the scheme also involved the upcoming Broadway show, Harry Potter and the Cursed Child, in addition to Hamilton and Adele concerts. The amended complaint also alleges that the scheme took in more than $97 million from at least 138 investors in 17 states, as revised from the original allegations that the scam took in more than $81 million from 125 investors.

The SEC won a judgment for $74 million in fines against Gemcoin, Steven Chen, and US Fine Investment Arts Inc. (USFIA).

Criminal securities fraud charges were dropped against filmmaker, Dror Soref, 66, who had been accused of working with Michelle Seward, an insurance saleswoman, in operating a $21.5 million Ponzi scheme. The court previously found that 70 charges were untimely and dismissed the last two charges by finding that the 140 investors had “exclusive contact” with Seward or her agents, not Soref. Soref had been under arrest since September 2015 after bail was set at $2.7 million.

A court denied the request of Charles Scoville and Traffic Monsoon to set aside the Traffic Monsoon receivership and granted the SEC’s motion for preliminary injunction. The court found that the scheme was a Ponzi scheme and was driven by members continually reinvesting in the scheme by purchasing and repurchasing AdPacks and rolling over profit from matured AdPacks to purchase new AdPacks. SEC v. Traffic Monsoon LLC, 2017 U.S. Dist. LEXIS 45908 (D. Utah Mar. 28, 2017). 

Attorney Vincent Messina cannot keep $5 million that was transferred to him from his client, “Phil” Ming Xu, who ran a Ponzi scheme through WCM777. Messina was named as a relief defendant in the case brought by the SEC against Xu and WCM777, in which it was alleged that a worldwide scheme defrauded investors out of $57 million. The Ninth Circuit held that a relief defendant must establish a lawful and factually valid claim of ownership in the disputed funds. “Otherwise, any third party with a custodial claim to the proceeds of securities violations committed by others would be able to defeat relief defendant jurisdiction ‘simply by stating a claim of ownership, however specious.’” SEC v. World Capital Market Inc., 2017 U.S. App. LEXIS 4998 (9th Cir. Mar. 22, 2017).

The ZeekRewards receiver made a third round of disbursements to victims. He distributed $67.75 million, which will bring the rate of recovery to 75% for victims. Those who have already received 75% will not qualify for the third distribution.