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

Saturday, February 29, 2020

February 2020 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for February 2020. The reported stories reflect at least 5 new Ponzi schemes worldwide; at least 5 guilty pleas and convictions; over 19 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.
   
Michael Douglas Billings, 59, and his company MDB Group LLC, were accused by the SEC of unlawfully selling unregistered securities in connection with the Madison Timber Properties, LLC Ponzi scheme. Arthur Lamar Adams was previously sentenced to 19½ years in prison for the $100 million scheme.

Robert L. Blom, 58, of South Dakota, pleaded guilty to one charge in connection with what is being called a “cattle Ponzi scheme.” The scheme appears to involve 30,000 missing cattle and 53 defrauded victims. First Dakota National Bank says it is owed more than $7 million, and Blom was charged with writing bad checks in the amount of $135,000.

Monique N. Brady, 45, of Rhode Island, was sentenced to 8 years in prison and ordered to pay $4.78 million in restitution for operating a Ponzi scheme through her company, MNB, that involved large-scale real estate projects. The projects cost less than she represented to investors and in some cases the projects didn’t exist. Of the 171 properties Brady represented she had for projects, 98 were for properties her company was never hired to preserve or no work was done. Brady asked her investors to delete all emails, texts and documents relating to the rehabilitation projects. The scheme brought in $10 million and defrauded 23 investors out of $4.8 million.

John Michael Caruso, 28, of Arizona, was arrested on charges that he was running a fraudulent scheme through Zima Digital Assets, a blockchain and cryptocurrency investment firm. Zachary Salter, 27, was also arrested in connection with the alleged scheme that took in more than $7.5 million from more than 100 investors. Caruso, who refers to himself as “Krypto King” has a criminal history, and he founded Zima following his release from prison in 2017. The Zima website claimed that the firm “operates various private funds focusing on investments in cutting-edge technologies, including crypto and other blockchain based assets.”

Breonna Clark aka Eliot Clark aka Alexander Pak, of Colorado, and his firm Venture Capital Investments Ltd. and The Life Group, were charged by the CFTC with running a cryptocurrency Ponzi scheme. Clark is a commodity pool operator and commodity trading adviser who allegedly defrauded investors. The scheme brought in over $500,000 and defrauded about 72 people.

Kenneth Courtright, 49, of Illinois, the owner of The Income Store aka Today’s Growth Consultant Inc., was arrested on criminal fraud charges in connection with an alleged Ponzi scheme that raised at least $75 million from more than 500 investors. Courtright promised annual returns of 20% in return for a six-figure upfront fee used to build and operate websites.

Brian Davison, Barry M. Rybicki, and EquiAlt LLC were sued by the SEC on allegations that they were running a $170 million Ponzi scheme that defrauded about 1,140 investors. EquiAlt promised investors returns of 8% to 10% from renting or flipping real estate purchased in distressed markets. The SEC alleges that the scheme was run through four funds - EquiAlt Fund LLC, EquiAlt Fund II LLC, EquiAlt Fund III LLC and EA SIP LLC.

Li Lin Hsu aka Yilin Hsu Lee, 42, of California, was sentenced to 11 years in prison and ordered to pay $5.3 million in restitution in connection with a Ponzi scheme that defrauded 20 investors out of more than $8.1 million. After Hsu was terminated from Ameriprise, she started her own companies, American Capital Trading Group and American Capital Republic, where she promised investors their funds would be invested in low-risk municipal bonds.

Leroy King pleaded guilty to taking bribes to hide the Stanford International Bank Ponzi scheme from U.S. and Antiguan investigators. King is the former chief of Antigua’s Financial Services Regulatory Commission and obstructed the SEC’s investigate into the companies operated by Allen Stanford. King had received more than $500,000 from Stanford along with gifts and trips on Stanford’s private jets.

Bernard Madoff, 81, requested a compassionate release from prison due to terminal kidney failure and other medical conditions. Madoff has served 11 of his 150-year prison sentence that he is serving after pleading guilty to his multi-billion Ponzi scheme.

Edward E. Matthes, 49, has been barred by the SEC from working in the securities industry for his role in a Ponzi scheme stealing $2.4 million from 26 customers.

Jeffrey Scott Nimmow of Chicago was barred from the securities industry by FINRA for selling more than $3.3 million in Woodbridge Group of Companies LLC promissory notes to 18 investors. Woodbridge was charged by the SEC with operating a Ponzi scheme.

Brett Pittsenbargar, 47, was arrested on charges that he was a “top revenue producer” for Woodbridge Group of Companies, LLC, a Ponzi scheme operated by Robert Shapiro. Shapiro was sentenced to 25 years in prison after pleading guilty last year. Pittsenbargar raised more than $18 million for the scheme from 43 clients.

Philip Elvin Riehl, 68, was charged in connection with an alleged $60 million Ponzi scheme that targeted members of the Mennonite and Amish communities in Pennsylvania. Riehl is an accountant who allegedly solicited funds into a bogus investment program and then diverted the funds to Tricking Springs Creamery LLC. Public filings from the prior year show that Riehl and co-owners Gerald Byers, Elvin Martin and Dale Martin were accused of defrauding more than 100 investors out of nearly $9 million.

Robert W. Russell, 60, was accused of running a Ponzi scheme through SMRB aka Green Acre Pharms. The scheme allegedly took in $4.85 million from at least 24 investors. Russell and his partner Guy Scott Griffithe, 40, allegedly spent $3.5 million on luxury items for themselves.

Gary Scheer, the managing member of Retirement Financial Advisors in New Jersey, had his registration as an investment advisor revoked by the New Jersey Bureau of Securities and he was assessed $750,000 in civil penalties. Scheer sold unregistered securities in seven investments to at least 50 investors in connection with the Woodbridge Group of Companies Ponzi scheme.

INTERNATIONAL PONZI SCHEME NEWS
China

Chinese exchange FCoin shut down according to FCoin’s founder, Zhang Jian. The company cannot pay back the 7,000 to 13,000 BTC that it owes, and investors fear that the company was operating a Ponzi scheme. The CEO claims that the loss of $125 million of customer funds was due to technical errors.

India

Dasarath Boora, Adi Ganesh, Fakruddin and Sandeep were arrested in connection with a Ponzi scheme that defrauded about 400 investors. The four confessed to operating a Ponzi scheme under the guise of an online gateway to casinos that would offer people outside of the state to be able to play and invest in the casinos.

New Zealand

David Ross has been released from prison, having been granted parole 4 years before the end of his 10-year, 10-month sentence. Ross was convicted for his role in a $115 million Ponzi scheme that defrauded more than 700 investors.

Philippines

Togachat Academy Philippines Inc. lost its corporate license on allegations that it was running a Ponzi-type investment program. Investors purchased Toga credits which they could use to buy shares in Toga Ltd. upon its supposed listing on NASDAQ.

Solomon Islands

The Central Bank of Solomon warned the public against putting money into One Link Pacifica, calling it a Ponzi scheme. One Link promised investors 300% returns within 30 days.

No comments:

Post a Comment