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

Tuesday, December 31, 2019

December 2019 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for December 2019. The reported stories reflect at least 7 new Ponzi schemes worldwide; at least 4 guilty pleas and convictions, over 34 years of newly imposed sentences for people involved in Ponzi schemes; and an average age of approximately 51 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed.
   
Matthew Brent Goettsche, 37, Iovadiah Sinclair Weeks, 38, and Joseph Franks Abel, 49, were charged in connection with an alleged high-tech Ponzi scheme run through BitClub Network. A fourth man, Silviu Catalin Balaci, was arrested in Germany in connection with the scheme. The scheme defrauded investors out of $722 million and took funds from investors to purportedly purchase shares of cryptocurrency mining pools. Internal chat messages intercepted by authorities state that the internal business model was built “on the back s of idiots” by targeting the “typical dumb MLM investor” who will convince other “morons” to join.
   
Lester Burroughs, 60, of Connecticut, pleaded guilty to charges that he ran a $575,000 Ponzi scheme through Burroughs Investment Group, a financial consulting firm. Burroughs was registered as an investment adviser and broker and guaranteed returns to his clients of 4% or 7%. He used investor funds to pay his own expenses and to pay the guaranteed returns to other clients.

Joey Stanton Dodson, 55, was indicted on charges relating to a $15 million Ponzi scheme involving about 50 victims. The scheme was run through Citadel Energy LLC, in which he solicited investments in three limited partnerships that were supposedly providing water-related services to oil and gas companies in North Dakota.

Edward Espinal, of New Jersey, and his company, Cash Flow Partners LLC, were charged by the SEC in connection with a $5 million Ponzi scheme that defrauded at least 90 investors. Many of the investors were members of the Hispanic community. Investors believed they were investing in a pooled fund that would purchase and renovate houses and they were promised guaranteed returns of between 1.25% and 4% per month.
 
Richard E. Gearhart, 69, pleaded guilty to charges that he ran a Ponzi scheme through Asset Preservation Specialists that took more than $6 million from more than 25 investors, resulting in losses of $3.5 million. Gearhart ran the scheme with George R. McKown, 66. They promised returns of 6% to 8% and persuaded investors to invest their existing retirement funds into the scheme.

International Investment Group lost its license due to “a string of frauds” in connection with its investment program in diversified trade finance portfolios. IIG was charged with concealing defaulted loans in its hedge fund and selling at least $60 million in fake loan assets to other clients.
 
Samuel Israel, 60, lost his bid for an early release from his 22-year prison sentence due to medical issues. Israel orchestrated the Bayou Group Ponzi scheme that defrauded investors out of $450 million.

Robert A. Karmann, 53, pleaded guilty to charges relating to his participation in the $960 million Ponzi scheme run though DC Solar that involved the sale and leaseback of mobile solar electrical generators. Investors would supposedly buy mobile solar electrical generators but did not take possession of them. Karmann was the CFO and disseminated false financial information to investors. Ronald J. Roach, 53, of California, pleaded guilty in October and was barred by the SEC this month. Joseph Bayliss, 44, also pleaded guilty to the scheme in October.

Perry Santillo aka King Perry, 39, pleaded guilty to charges in Pennsylvania that he defrauded 1,000 investors out of $113 million. Perry pleaded guilty last month to charges brought in New York.
 
Jamie Smith, 42, of Wisconsin was sentenced to 4 ½ years in prison for defrauding elderly people out of more than $1 million. Smith ran the scheme through American Platinum Gold & Silver Inc. aka American Independent Gold & Silver Inc.
 
Kari Sonovich, 48, was sentenced to 2 years and 3 months in prison in connection with a Ponzi scheme that promised returns of 500% every 90 days. Sonovich told investors their funds would be invested through her Las Vegas company, B&B Consulting Group LLC, by an international trader who would produce high returns.

Randy Wayne Sprinkle, 54, was sentenced to 15 years in prison for defrauding investors out of more than $300,000 in a scheme that misappropriated funds in connection with remodeling projects.

Robert C. Walberg, 58, was charged with running a Ponzi scheme that defrauded more than 20 investors out of more than $5.5 million.
 
Susan Margaret Werth, 58, of California, was sentenced to 5 years and 10 months in prison and ordered to pay $6.3 million in restitution for operating a $6 million Ponzi scheme through Commercial Exchange Solutions Inc. and Exchange Solutions Company Inc. Investors were promised returns  of 15% from purported short-terms construction loans.

Alvin Wilkinson, 61, was sentenced to 7 years in prison and ordered to pay $8 million in restitution in connection with a Ponzi scheme that spanned two decades. Wilkinson is an investment manager who pleaded guilty to defrauding friends, family members and others in a $13.5 million scheme that he ran through Chicago Index Partners LP and Wilkinson Financial Opportunity Fund LP. He promised returns from investments in options and futures.

INTERNATIONAL PONZI SCHEME NEWS 

Australia

Tanya Pluckhahn, 41, and Aaron Parsons, 44, were charged with running a $900,000 scam that took money from investors under the pretense of kickstarting the career of country music singer Alys Ffion, who knew nothing of the scheme. The pair defrauded investors and then paid some money back so investors believed they were getting their money back.

China

Seventy-two people were arrested in connection with an alleged cryptocurrency scheme called CloudToken on charges that they defrauded more than 300 victims out of over $4 million. CloudToken promised 10% to 15% returns on investments. The scheme started in China but was also promoted in Korea, Japan, Indonesia, Malaysia and some countries in Africa.

India

Ajay Chakraborty and Sanjit Chakraborty were arrested in connection with an alleged Ponzi scheme run through Jugantor Realty and Jugantor Gold and Jewellery.

Nanda Chanda, the director of Amanat Group of Companies, was arrested after it was found that the companies were running a Ponzi scheme.

South Korea

Lime Asset Management is facing an investigation over suspicions that it continued to sell investments despite knowledge that certain fund options were invested with a U.S. hedge fund engaged in fraud. The SEC had revoked the registration of International Investment Group in November.
 
Uganda

Samson Lwanga was arrested in connection with an alleged scheme run through Dunamiscoins Resources Limited. The company is allegedly a cryptocurrency scam that defrauded over 10,000 people out of $2.7 million.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

The Texas Supreme Court found that a Stanford International Bank Ltd. investor could not claim good faith in response to a fraudulent transfer claim seeking recovery of $79 million. The court found that investor Gary Magness suspected fraud and had a duty to investigate that something fraudulent was happening. The court held that a defendant on inquiry notice who does not investigate is not entitled to the good faith defense even if inquiry would have been futile.

Saturday, November 30, 2019

November 2019 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for November 2019. The reported stories reflect at least 12 new Ponzi schemes worldwide; at least 8 guilty pleas and convictions, over 81 years of newly imposed sentences for people involved in Ponzi schemes; and an average age of approximately 48 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed.
   
Mark Alan Blankespoor, 49, was sentenced to 80 months in prison and ordered to pay more than $8.4 million in restitution to more than 100 victims who were defrauded in a $15 million Ponzi scheme. The scheme promised 40% returns in the development of “medically oriented gyms.”
  
Morgan Bullock, 33, was sentenced to one year in prison in connection with a Ponzi-like scheme that defrauded 6 families buying homes out of about $400,000. Through his companies Bullock Building and Development LLC and Silver8 LLC, Bullock took deposits for new homes but did not deliver the homes to the victims.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Canada

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

Dubai

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

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

Germany

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

India

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

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

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

Ireland

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

Malta

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

South Korea

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

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

Thursday, October 31, 2019

October 2019 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

India

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

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

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

Poland

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

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

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

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

Monday, September 30, 2019

September 2019 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for September 2019. The reported stories reflect at least 17 new Ponzi schemes worldwide; at least 4 guilty pleas, over 52 years of newly imposed sentences for people involved in Ponzi schemes; 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.
   
Joseph S. Anile II has agreed to plead guilty in connection with a scheme run through the Oasis International Group Ltd. Anile is the co-founder of Oasis, which ran a $75 million trading scheme that defrauded 700 investors. The scheme promised investors a minimum of 12% per year returns and was shut down by the CFTC in April. Other defendants named in the CFTC case are Oasis Management, LLC, Satellite Holdings Company, Michael J. DaCorta, Raymond P. Montie, III, Francisco "Frank" L. Duran, and John J. Haas.

Jan Douglas Atlas was accused of aiding the 1 Global Capital LLC Ponzi scheme. Meanwhile, a liquidation plan was approved in 1 Global’s bankruptcy case in Florida. The company was involved in a $330 million Ponzi scheme.

Kevin Brody, 56, of Pennsylvania, was sentenced to more than 2 years in prison for a scheme that defrauded at least 50 people out of more than $12 million. The scheme was run with co-defendant Matthew Eckstein through Conmac Funding Corp.

Hal Herring Brown, 49, of North Carolina, was charged in connection with an alleged $10 million Ponzi scheme run through “Oodles Company.” Brown claimed that his company was selling intellectual property to large companies like Disney and Apple. He claimed that he owned, produced and distributed family entertainment shows and movies worth hundreds of millions of dollars. The FBI alleges that Brown did not sell any shows or entertainment at all.

Brian R. Callahan, 50, was again denied bail when the Second Circuit affirmed the denial of bail to the former investment fund manager. Callahan was convicted in a $96 million Ponzi scheme and is seeking to overturn his sentence.

Jin K. Chung, 56, a South Korean citizen, is due for sentencing in connection with a scheme run through SNC Asset Management, Inc. that targeted Korean-Americans. His co-conspirator, Peter C. Son, 47, is currently serving a 15-year sentence in connection with their role in a scheme that caused more than 400 victims to lose $60,300,000. The scheme promised returns of up to 36% per year.

Natalie Cochran, 38, was arrested on charges that she ran a Ponzi scheme with her late husband, Michael Cochran. Cochran allegedly defrauded 11 people out of more than $2.5 million. The alleged scheme was run through Tactical Solutions Group and Technology Management Systems, which were government contractors. Cochran filed bankruptcy following the fraud charges.

David L. Downey, 50, of Indiana, pleaded guilty to running a scheme that caused $9.4 million in losses to clients of his payroll service business. Downey ran his payroll service business through Time Payroll, bringing in about $20 million but only returning $11 million of those funds to the IRS for employment taxes.

Gary Dragul and his businesses, GDA Real Estate Services and GDA Real Estate Management, were labeled as a Ponzi scheme by the receiver assigned to administering the assets. The accounting reveals that Dragul used funds to pay gambling debts of almost $9 million, he paid off more than $8.3 million in charges on his wife’s credit cards, and he bought a condo for his son.

Joseph Esposito, 43, and Salvatore Esposito, 47, two Florida brothers, pleaded guilty to charges in connection with an alleged $7.9 million Ponzi scheme run through U.S. Coin Bullion, LLC, a precious metals investment firm. They produced false account statements for customers who bought metals and stored them at U.S. Coin Bullion for “safekeeping.” More than 100 customers were defrauded and believed their purchased precious metals were safely held by U.S. Coin.

Zvi Feiner, 49, a Chicago rabbi, and his associate, Erez Baver, 39, settled charges with the SEC relating to an alleged $11.5 million nursing home scheme. Feiner, Baver and Feiner’s firm, FNR Healthcare, LLC, were accused of defrauding 62 or more investors in connection with the purchase of nursing homes and assisted-living facilities. Investors were promised returns around 15% from the operations of specific facilities. Baver’s company, Cedarbrook Management, Inc., and Feiner’s family investment company, Netzach Investments, were named as relief defendants.

Renwick Haddow entered a consent judgment with the SEC in connection with the charges that he ran a Ponzi scheme through Bar Works and Bitcoin Store, Inc.

Omar Khan of New York was sued by investors accusing him of running a fraudulent Ponzi scheme. Khan, an ex-NYPD cop and the head of Sensei International, is a business consultant. He allegedly defrauded investors through the International Business & Wine Society by luring investors to invest in his wine and dinner events businesses. Khan denies the allegations.

Scott A. Kohn, 65, was arrested in connection with criminal charges pending in South Carolina on charges that he and his partners ran a $1 billion Ponzi scheme through Future Income Payments LLC. The scheme targeted people receiving pensions and provided cash advances to veterans and others that would then be repaid by their pensions. The advances had interest rates at 240%, and the investors loaning the money were promised back 8%. Authorities believe that 2,600 people invested in Future Income Payments and lost more than $451 million. Kohn, of California, had been on the run since March.

Glenn C. Mueller, 72, was accused by the SEC of running a scheme through his company, Northridge Holdings. Mueller solicited investors to earn returns of 3% to 12% for investments in the purchase and renovation of apartment buildings. The scheme defrauded more than 300 investors out of at least $41.6 million.

Jack Nissen, 47, was sentenced to 2 years and 3 months in prison in connection with a $71 million Ponzi scheme run through National Event Co. Nissen had misrepresented that he would purchase and resell tickets to popular events such as the Broadway musical “Hamilton.” Craig Carton was sentenced to 3½ years in connection with the scheme.

Carol Ann Pedersen, 66, was sentenced to 97 months in prison. Pedersen, a Long Beach accountant, embezzled more than $27 million from clients who thought she was investing their money in low-risk securities. At least 56 people invested more than $40 million.

Stephen Condon Peters, 46, of North Carolina, was sentenced to 40 years in prison and ordered to pay back $15 million, for the scheme he ran through VisionQuest Wealth Management. Peters promised returns of 8% to 9% on low-risk investments that involved the sale of promissory notes.

Rodney Scott Phelps, 58, of Kentucky (no relation to the author), was convicted of running a Ponzi scheme that defrauded dozens of investors out of more than $2.2 million through their company, Maverick Asset Management. Phelps ran the scheme with Jason T. Castenir, in which they promised investors returns from an oil concession from the government of Belize. They promised investors royalties which were to be backed by a supposed multi-million trust, the Phelps Family Trust. The two also ran a scheme in which 3 victims were enticed to trade on commodities markets, and a third scheme in which they promised returns from the purchase of a casino in Mississippi. Castenir previously pleaded guilty.

Mark Ray, 59, of Colorado, was sued by the SEC on allegations that he was operating a cattle-flipping Ponzi scheme. Ray ran the scheme through multiple businesses including Custom Consulting and Product Services, LLC, RM Farm and Livestock, LLC, MR Cattle Production Services, LLC, Sunshine Enterprises, Universal Herbs, LLC, and DBC Limited, LLC. Ray promised returns of 10% to 20% over short periods of time from investors in his cattle-trading and marijuana businesses. Co-defendants Reva Stachniw, 67, and Ron Throgmartin, 55, are alleged to have substantially assisted Ray in the fraudulent scheme. The SEC alleges that, at the height of the scheme, more than $140 million per month was moving through the bank accounts controlled by Ray and Stachniw.

Matthew Taylor, 42, of Florida was arrested on charges that he was running a $1.5 million Ponzi scheme through his business, Savage Yachts, LLC. Taylor was a boat broker who was required to place deposits into an escrow account, but instead Taylor treated the account as a business operating and personal checking account. Authorities allege that Taylor operated the business as a Ponzi scheme, taking money from investors and promising a high return.

John F. Thomas, 74, and Thomas Becker, 72, were accused by the SEC of running a $29.5 million Ponzi scheme. The scheme allegedly defrauded more than 600 investors to put money in pooled investor funds to bet on sporting events. They used a network of at least 150 brokers and agents to solicit the investments and used the following six companies as part of the scheme:  Einstein Sports Advisory LLC, QSA LLC, Vegas Basketball Club LLC, Vegas Football Club LLC, Wellington Sports Club LLC, and Welscorp Inc.

Michael S. Young, Michael S. Stewart, Bryant E. Sewall, and Mediatrix Capital Inc. were the subject of an SEC action seeking an injunction and asset freeze to stop an allegedly fraudulent international trading program involving over $125 million. Investors were told that their money would be invested in an algorithmic trading strategy that had returned more than 1,600% since December 2013. The defendants diverted more than $35 million for their personal use and made “Ponzi-like” payments to investors. Mediatrix was awarded the Top Global Asset Manager Award in 2018.

INTERNATIONAL PONZI SCHEME NEWS 

Australia

Ralan Group, a developer, collapsed leaving 2,300 investors with almost $300 million in losses. Ralan asked homebuyers to release their deposits as loans to the company in return for 15% annual interest. The loans were not secured so the investors lost their deposits. Most of the investors targeted by the company are Chinese-Australians.

Canada

Steven Nowack, 56, was found guilty, sentenced to 9 years in prison, and ordered to pay $14.5 million in restitution in connection with a $20 million foreign exchange trading Ponzi scheme. Nowack had claimed that he had developed a “proprietary methodology” in which he would play on “dichotomies in the market” as between Asian, European and American investors.

England

Police are investigating Around The World Travel, owned by Hayley King, for running an alleged Ponzi scheme. Customers booked travel packages and substantially lower prices and would then learn that no rooms were available when they arrived at their hotels. It is alleged that newer customers who thought they were getting discounts were actually paying for other people’s flights and hotels.

India

Sanjeev Kumar, 37, was arrested on charges that he defrauded more than 500 people.

Sunil Kumar Choudhary, 36, Rijesh P, 36, and Rakesh K S, 41 were arrested on allegations that they were running a fraud through a funding firm named WAM Companies (OPC) Pvt Ltd
 
Garba Iliyasu and Umar Iliyasu were arrested on charges that they were running a scheme under the name, MGM Global Market. Mohammed Garba Iliyasu who is now on the run was the Managing Director of the company. Two of his brothers, Abubakar Garba Iliyasu and Ibrahim Garba Iliyasu, also part of the scheme, are equally on the run.

Charges have been brought against 8 people involved in an alleged Ponzi scheme run through Gold Express Pvt. Ltd., including directors Maajid Saliya and Amin Malpara. Investors were promised returns as high as 48% to 60% per year.

Assets of EBIZ.COM Pvt Ltd. and Pawan Malhan and Anita Malhan were attached on allegations that they were running a Ponzi scheme. Authorities allege that they defrauded investors with promises of quick returns from the sale of worthless products like free computer education packages.

Vikram Singh Rajput, 39, was arrested in connection with an alleged scheme run through ADG.

Asirbad Behera, the former honorary secretary of Odisha Cricket Association, was arrested on charges that he assisted Artha Tatwa Group in running a Ponzi scheme by boosting its credibility.

S. Sathiskkumar, 38, and S. Gunavathi, 36, were arrested on allegations that they were running a Ponzi scheme through an investment firm named Dream Makers Global Private Limited.

Mauritius

Authorities issues an investor alert regarding Cloud Token Mauritius and Cloud Token Indian Ocean and Africa, a cryptocurrency Ponzi scheme advertised on social media.

New Zealand

Tom Tanaka aka Masatomo Ashikaga, died, giving rise to claims of victims that he had been running a $45 million Ponzi scheme through East Winds Group. Tanaka had promised investors 8% returns on their investments into supposedly profitable foreign exchange trading businesses.

Nigeria

Operators of Bluekey Investment Club were arrested on allegations that they were running a Ponzi scheme promising 10% per week returns.
 
NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

Defendant law firm in a case brought by the receiver of Madison Timber, run by Arthur Lamar Adams, would not force the receiver into arbitration. A Mississippi federal judge held that the contract between the Ponzi scheme and the law firm was ambiguous as to the parties’ intent on how to resolve disputes.
 
FINRA arbitrators ordered UBS Financial Services to pay $555,000 to an elderly customer who claims she was defrauded by a former employee of UBS, William A. Hightower. Hightower had been accused of taking funds from clients through his company, Hightower Capital, and invested them in a Ponzi scheme run through Isospec Technologies and Reproductive Research Technologies. A 2018 indictment against Hightower alleged that Hightower took $10 million from clients to invest in a Ponzi scheme.

Saturday, August 31, 2019

August 2019 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for August 2019. The reported stories reflect at least 9 new Ponzi schemes worldwide; at least 2 guilty pleas, over 97 years of newly imposed sentences for people involved in Ponzi schemes; 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.

Deborah Ball, of Massachusetts, pleaded not guilty to charges that she ran a $100,000 scheme. Prosecutors allege that she used her position as a tax collector to embezzle real estate and excise taxes that were paid in cash. She then applied portions of check payments made by other taxpayers to try to cover the losses.

Dawn J. Bennett, 56, of Maryland, was sentenced to 20 years in prison for running a Ponzi scheme through her companies, DJB Holdings and DJBennett.com. Bennett was a financial advisor and radio personality on the show, Financial Myth Busting, who told investors that her company would become a sportswear empire that would rival Under Armour. More than $20 million was received from 46 investors. Bennett instead used the funds for her personal expenses and lavish lifestyle, including two penthouses in the wealthy suburb of Chevy Chase, a box suite at the Dallas Cowboys’ stadium worth about $500,000, and payment for priests in India to “perform religious ceremonies to ward off federal investigators.” Bennett has appealed the sentence.

Larry A. Carr, 84, of Florida, was sentenced to 4 years in prison and ordered to pay $8 million in restitution for orchestrating an $8.2 million Ponzi scheme. Carr ran the scheme through his companies, Cita Trust N.A. Inc., Cita Trust Company N.A., Cita Trust Company Ltd., and Cita Trust Company A.G., promising returns from the sale of securities.

Carl Chen, 75, of Delaware, was sentenced to 51 months in prison for his role in defrauding investors out of more than $3 million. Chen owned Chenmex Properties , Inc. and was a part owner of Re/Max Sunvest Realty Co. He solicited $6.6 million from investors and promised annual returns of 10% to 15%.

Thomas Dluca, Louis Gatto, Eric Pinkston, and Scott Chandler settled with the FTC in connection with the claims brought by the FTC in 2018 against the individuals, Bitcoin Funding Team and My7Network. They promoted cryptocurrency programs through websites, YouTube videos, social media and conference calls, promising investors as much as $80,000 per month on an initial investment of $100.

Shayeh Dov, 49, of Florida, was sentenced to 7 years, 3 months in prison and ordered to pay about $3 million in restitution in connection with a Ponzi scheme that targeted a South Florida Jewish community. More than 30 people invested with Dov. Dov sold investors fraudulent discounted real estate notes that he and his firms did not actually own.  The losses in the scheme were approximately $3 million. Dov used the funds on gambling, renting luxury cars and paying for trips to the Bahamas, Israel and New York. Dov pleaded guilty earlier this year.

David L. Downey, 50, of Indianapolis, pleaded guilty to charges stemming from an alleged $9.4 million Ponzi scheme. Downey ran a payroll service under the name Time Payroll and misdirected clients’ funds to his personal accounts. Downey misapplied about $20 million but returned about $11 million to the IRS for employment taxes.

Albert “Alex” Golant, of Wisconsin, was sentenced to 10 years and 6 months in prison for his role in a Ponzi scheme that obtained more than $30 million from at least 40 different victims. The scheme was run through Timeless Auto Group and involved the purchase of luxury vehicles in the U.S. and then selling them at a profit to foreign buyers overseas, usually in China. Golant sometimes did not purchase the vehicles and in other instances sold the same vehicle to multiple clients.

Khemraj Dave Hardat, 50, was sentenced to 7 years and 3 months for running a $7.5 million Ponzi scheme. Hardat held himself out as a successful investor and businessman in the performance beverage and water-bottling industries.

Tytus W. Harkins, 37, of Montana and his company, Hartman Wright Group LLC, were sued by the SEC in Colorado alleging that they were engaged in fraud. Harkins told investors that he would find distressed or undervalued mobile home parks, purchase them using investor money, make capital improvements, and then sell them for a profit. The scheme raised over $8 million and promised investors returns of 6 -8% per year. 

Tanmaya Kabra, 25, of New Jersey, was arrested on charges that he defrauded at least 4 investors out of more than $700,000 in an alleged Ponzi scheme. Kabra represented that he was an entrepreneur, venture capitalist and investor in start-up companies and he promised investors high rates of return through his companies, Vanguard Ventures Group and LaunchByte Ventures LLC. Kabra used the funds to pay his credit card debt and to buy a boat.

Terry Wayne Kelly Jr. of Mississippi, and Kelly Management LLC were charged by the SEC in connection with their role in selling promissory notes for the Madison Timber Properties LLC Ponzi scheme.

Thomas Lanzana, 51, of South Carolina, was indicted on allegations that he defrauded about 45 investors in a phony foreign currency Ponzi scheme involving $1.1 million. The scheme was run through Blackbox Purse (Unique Forex).  Lanzana allegedly posted bogus monthly account statements showing balances for forex trading accounts that didn’t exist. The CFTC had initiated a case against Lanzana in 2017.

Bradley Mascho, 53, was sentenced to 2½ years in prison for conspiracy related to the $20 million Ponzi scheme run by Dawn J. Bennett at Bennett Group Financial Services LLC. Bennett and Mascho solicited investors into a scheme run through DJB Holdings, offering them 15% returns.

Hector May, 78, of New York, was sentenced to 13 years in prison and ordered to pay $8.4 million in restitution in connection with a Ponzi scheme that defrauded 15 investors. May, the former president of Executive Compensation Planners, promised investors that he would use their money to purchase bonds and other investments on their behalf but instead used the money for personal and business expenses. May pleaded guilty last year to stealing $11.5 million from investors. May’s daughter, Vania May Bell, 54, has been named as a co-conspirator.

Robert Glen Mouritsen, 72, of Utah, had his hearing delayed in connection with an alleged $1.5 million Ponzi scheme. Mouritsen is a former stake president in The Church of Jesus Christ Latter-day Saints and is accused of cheating follow church members. 

Patrick O’Connor, 61, was sentenced to 7 years in prison in connection with a Ponzi scheme run through Madison Financial Services. O’Connor defrauded 6 investors out of about $10 million by represented he would put their funds into a TradeStation online brokerage account, promising average annual returns of 2% per month. O’Connor plead guilty to the scheme earlier in the year 

Robert Shapiro, 61, of California, pleaded guilty to charges that he orchestrated a $1.3 billion Ponzi scheme through Woodbridge Group of Companies, LLC. Woodbridge promised investors returns on investments in real estate loans. The scheme defrauded more than 9,000 victims, many of them senior citizens. Shapiro admitted that he misappropriated between $25 million and $95 million of investor funds. Shapiro had accumulated, and then lost to forfeiture, artworks by Pablo Picasso, Alberto Giacometti, Marc Chagall, and Pierre-August Renoir; 603 bottles of wine; numerous pieces of luxury jewelry; and a 1969 Mercury convertible. Two alleged co-conspirators, Dane Roseman and Ivan Acevedo, are scheduled for trial next year.

Brenda A. Smith, 59, was arrested and charged in connection with a $63 million Ponzi scheme. Smith ran a network of investment companies that included Broad Reach Capital, L.P., Broad Reach Partners, and Bristol Advisors, LLC. She solicited more than $105 million from high net worth individuals and promised 30% returns. The SEC also filed a lawsuit against Smith and her entities.

Troy Wragg, 37, of Philadelphia, was sentenced to 22 years in prison and order to pay $54 million in restitution in connection with the Ponzi scheme run through Mantria Corp. The scheme defrauded nearly 500 investors and promised returns of 50% or better from technology that would supposedly turn household waste into power – “trash for cash.” Investments came through Wragg’s co-defendant Wade McKelvy, who operated unlicensed investment clubs. McKelvey was convicted but has not yet been sentenced. Amanda Korr, 36, pleaded guilty to fraud in the green energy scheme and is serving a 30-month sentence.

INTERNATIONAL PONZI SCHEME NEWS 

China

The key suspects in the PlusToken scheme that solicited $3 billion from investors in a cryptocurrency scheme have been detained. The scheme allegedly defrauded 10 million investors. Reports state that the company might have been liquidating portions of the $3.5 billion in cryptocurrency via various crypto exchanges.

England

Richard Rufus, 44, was charged with running a Ponzi-style scheme that defrauded about 100 investors. Investors lost almost £9 million.

India

Dhavel Mavani was arrested for promoting a Ponzi scheme. Mavani developed Bitconnect’s website and was hired in 2017 by the head of Bitcoinnect in Asia to build a website for the $3.2 billion cryptocurrency scheme. 

Three additional directors, Harish Kumar, 43, Rajesh Singh, 39, Vishal Kumar, 35,  were arrested in connection with the Bike Bot taxi service scheme. So far 11 officials, including Sanjay Bhati, have been arrested. Bike Bot is a multi-level marketing scheme run by the Garvit Innovative Promoters Limited.

Indian police arrested Australian citizen, Harpreet Singh Sahni, in connection with an alleged crypto Ponzi scheme that defrauded about 1,500 investors out of $14 million. Sahni set up Plus Gold Union Coin through which the scheme was run. Three agents, Brijesh Raikwar, Seema Raikwar, and Rupesh Rai, were arrested earlier this year. 

Suraj Singh, 24, was arrested on allegations that he was running a Ponzi scheme related to renting cars. The scheme allegedly defrauded 50 investors involving more than 100 high end cars.

Israel

Ramon Kadri, a Mexican citizen residing in Israel, was indicted on charges that he ran a NIS 3 million Ponzi scheme.

Nigeria

Operators of the alleged Ponzi scheme run through Bluekey Investment Club have been arrested. The company was registered as a software development and general contracting firm but then started in engaging in an interest-yielding Ponzi scheme with promised returns of 10% weekly over 6 months.

South Africa

Authorities warned that Coin It Trading is “showing hallmarks of a Ponzi scheme.” Investors were promised as much as 200% on their investment in 3 years. It’s sister company, Commex Minerals, is also suspected to be operating a fraudulent scheme. Authorities have identified Michael Andrew Anthony de Beer as the director of Coin It and Patricia Ursula de Beer, who is allegedly Michael de Beer’s former wife, as a director of Commex Minerals.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

Investors in the MRI International Inc. Ponzi scheme reached a settlement for $441 million in connection with the $1.5 billion medical debt scheme.

Wednesday, July 31, 2019

July 2019 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for July 2019. The reported stories reflect at least 15 new Ponzi schemes worldwide; at least 2 guilty pleas, over 6 years of newly imposed sentences for people involved in Ponzi schemes; 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.
 
Jose Angel Aman, Harold Seigel and his son Jonathan Seigel, were sued by a group of Venezuelan nationals alleging that they were lured into a $30 million Ponzi scheme with promises of returns on investments in diamond-backed cryptocurrency, Argyle Coin. The scheme was run through two diamond companies, Natural Diamonds and Eagle Financial, and an associated cryptocurrency business. Over 300 investors were defrauded. The Seigels deny any wrongdoing.

Monica Brady, 44, of Rhode Island, pleaded guilty to charges relating to a $10 million real estate Ponzi scheme that she ran through MNB. Brady claimed to be overseeing renovations on foreclosed properties and she promised investors returns from the profits from the sale of the properties. Investors were promised returns of 50% of the profits from the projects.

Joseph Bernard Charde, 72, and Allen Roy Duquet, 68, of Florida were arrested in connection with an alleged real estate Ponzi scheme that defrauded 26 victims out of $6 million. The scheme was run through Oneir Sales and Rentals LLC and an investment program called The Commission Resource Program. The dollar amount allegedly stolen is more than $6 million.

Natalie Cochran was accused of running an investment fraud with her late husband, Michael Cochran. The alleged scheme was run through Tactical Solutions Group and Technology Management Systems, which were government contractors. Cochran filed bankruptcy following the fraud charges.

Myles Hannigan, 48, was charged with federal tax crimes in connection with an alleged Ponzi scheme run through Payroll Professionals, Inc. The company is a third-party payroll processor that assists clients by issuing payroll checks and forwarding tax payments to taxing agencies.
 
Hunter Hanson, 22, of North Dakota, pleaded guilty to charges relating to his grain business that was alleged to be a Ponzi scheme. The plea deal calls for Hanson to forfeit his assets and pay $11.4 million in restitution.

David Kaplan, 52, and his companies, Synchronized Organizational Solutions International Ltd. (SOSI), Synchronized Organizational Solutions LLC (SOS), and Manna International Enterprises Ltd., were charged in connection with an alleged Ponzi scheme. Kaplan allegedly used his role as an attorney to defraud investors in a scheme that netted more than $12 million from investors. Investors were promised returns of 10% per month.

Bernard Madoff, 81, asked President Trump to reduce his 105-year prison sentence. Madoff asked that his sentence be commuted and that he be released – a request that the prosecutor called “the very definition of chutzpah.”

William J. Milles and Donald J. Lutzko, co-founders of Capital Energy Group LLC, were sued by the SEC on allegations that they were running a $3.9 million Ponzi scheme. The scheme allegedly offered high returns on oil and gas offerings, guaranteeing 237% or 363%. The scheme allegedly defrauded approximately 70 investors.

Clayton Morris, a former co-host on Fox News’ Fox & Friends, and his wife, Natalie Morris, were accused of defrauding investors through their company, Morris Invests. They have denied the claims and moved to Portugal. Morris was a part owner of Oceanpointe, a company that sold turnkey landlord services in Indianapolis to investors. Morris and his partner, Bert Whalen, have both been sued and accused of doing substandard repairs to properties.
 
Mark Nordlicht and David Levy were convicted of fraud in connection with the Platinum Partners scheme.  They had been accused of defrauding investors in Black Elk Energy, an oil company that was one of Platinum’s largest assets.

Paul Andrews Rinfret, 70, was arrested in connection with an alleged $19 million Ponzi scheme. Rinfret allegedly ran the scheme through his investment fund, Plandome Partners LLC.

Landon M. Smith, 29, of Utah was charged by the SEC was running a $2.4 million Ponzi scheme through J&L Real Estate. The scheme promised returns of up to 100% on investments that would be used as “earnest money” down payments for real estate that Smith would buy and then sell. The scheme defrauded 50 investors.

Henry Wieniewitz, III and his Tennessee company, Wieniewitz Financial, were charged by the SEC with unlawfully offering and selling securities of Woodbridge Group of Companies LLC and 1 Global Capital. Woodbridge was previously charged by the SEC with operating a $1.2 billion Ponzi scheme. Wieniewitz and his company are alleged to have sold securities to more than 630 investors.

INTERNATIONAL PONZI SCHEME NEWS
 
Australia

An alleged Ponzi scheme defrauded victims through a website called Coinexx.org. The scheme promised returns of up to 15% weekly.
 
Richard Philip Lambe was banned from providing financial services for 3 years following his involvement in a $120 million Ponzi scheme run by Veronica Macpherson that defrauded nearly 2,000 people. Lambe was found to have failed in his duty to supervise Macro Group Company 511 GTN and Macpherson as director of Anquan Securities and Investment.

Kelvin Clive Wood was sentenced to 6 years and 3 months in prison for a Ponzi scheme run through his foreign exchange brokerage. The scheme defrauded 18 investors and more than $7 million was lost in the scheme.

Canada

John James Illidge, 66, and Vincent Phillips, 74 were charged in connection with an alleged $1 million Ponzi scheme. Illidge represented that he was an investor for different companies.

China

Justin Sun, the CEO of Tron, aka Wave Field, is accused of running a Ponzi scheme that defrauded thousands of investors out of at least $30 million. The scheme was run through Wave Field Super Community, and victims invested in Tron cryptocurrency, TRX.

England

Authorities seized $4.24 million from Samuel Golding, 42, and Shantell Deacon, 40, in connection with a China trade investment Ponzi scheme. The scheme was run through Digital Wealth and Outsourcing Express and defrauded 1,000 investors.

India

Sandeep Singh Dua was arrested in connection with a cryptocurrency scam involving Kashhcoin.
 
Vijay Prajapati, Dhiraj Patel, Kamruddin Syed, and Ashiq Shaikh, the alleged creators of the cryptocurrency, KBC Coin, were arrested.

Rajesh Khantwal was arrested on charges that he was running a scheme through Maple Innovative Promoters and MIP Bikes. Over 5,000 investors put money into the motorcycle sharing aggregator alleged Ponzi scheme.

Malta

Authorities have issued a warning that Emirate Coin Tech is not licensed or registered and has no authority to provide any investment, crypto or another type of financial services.

Philippines

The SEC ordered Alabel Maasim Mining (ALMANICO) Corp. and Alabel-Maasim Credit Corp. (ALAMCCO) to stop operations without a license.  The SEC alleged that the companies were running a Ponzi scheme that promised returns of 35% per month.

South Africa

A bitcoin scheme allegedly defrauded thousands of investors through a company called Bitcoin Wallet. The scheme promised returns of 100% in 15 days. Investors set fire to the home of Sphelele “Sgumza” Mbatha following the collapse of the scheme.

South Korea

The crypto firm, PlusToken, was accused of running a Ponzi scheme that stole $3 billion from customers. PlusToken had 3 million users and expected to have 10 million users by the end of 2019. The scheme promised returns of 6% to 18% per month.

Authorities believe that about 2.7 trillion won ($2.3 billion) has been lost to crimes in cryptocurrency in the last two years.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

Deloitte, EisnerAmper, Sidley Austin, TD Ameritrade, Integrity Bank & Trust of Colorado, Duff & Phelps agreed to pay $234.6 million for allegedly enabling the Ponzi scheme run by Aequitas Capital Management.

Kingate Management Ltd. agreed to pay back $860 million to the Bernard Madoff estate.