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, June 30, 2020

June 2020 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for June 2020. The reported stories reflect at least 8 new Ponzi schemes worldwide and an average age of approximately 55 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed.

Timothy J. Allcott, 58, and Thomas D. Renison, were charged in connection with an alleged Ponzi scheme run through ARO Equity LLC. In a parallel proceeding commenced by the SEC, it was alleged that Allcott and Renison raised more than $6 million from at least 15 investors, promising interest payments between 8% and 12% per year.

Dee Dee Brooks aka Doris Takooshian accepted a determination from FINRA that she be barred from association with any FINRA member as a result of her participation in unapproved private securities transactions totaling more than $1.77 million, including investments related to Woodbridge Group of Companies and Future Income Payments. Brooks did not admit or deny the allegations but agreed to FINRA’s sanction.

Rhoda Burkholz had a final judgment against her in connection with an options trading Ponzi scheme conducted by her husband that defrauded at least 55 investors.

Craig Carton, 51, was released from prison after serving only 14 months of his 42-month sentence. Carton, a popular radio host, used his position to defraud investors in an event ticket scheme that involved $5.6 million.

Craig L. Clavin, 61, was charged in connection with an alleged $500,000 Ponzi scheme run through Lighthouse Futures Ltd. Clavin solicited investments into a fund known as Lighthouse Futures Commodity Pool that guaranteed returns from the commodities market.

William S. Evans of Kentucky was charged by the CFTC on allegations that he was running a Ponzi scheme through Turning Point Investments. The scheme allegedly solicited at least $10 million from investors and promised returns from a commodity fund that traded S&P futures.

Vincent P. Falci, 60, was denied his request for a compassionate release due to the coronavirus. He has only served one of a 15-year prison term. Falci had been convicted or running a Ponzi scheme through his investment vehicles, Saber Funds and Vicor Tax Receivables LLP.

Maurice Fayne aka Arkansas Mo, 37, of Georgia was indicted on charges that he used funds received from the Payback Protection Program that were intended to help small businesses survive the COVID-19 pandemic to help fund a Ponzi scheme and his lavish lifestyle. He used some of the PPP loan proceeds to assist him with the alleged scheme that had allegedly been running for 5 years. Over 20 individuals invested over $5 million in his company, Flame Trucking

Erik Hass was charged in connection with a $2.1 million scheme that defrauded at least 21 investors out of about $1 million. The CFTC is seeking an injunction against Hass and his company, Simply Gains.

Todd H. Lahr, 59, of Pennsylvania, agreed to settle with the SEC and pay more than $1.14 million on charges that he defrauded at 10 of his law firm clients. Lahr ran the scheme with Thomas Megas and they promised returns in business ventures included mining operations in Papua New Guinea and real estate investments in Barcelona and London.

Robert Cortez Marshall must pay the SEC more than $3.2 million in disgorgement and fines for a mobile advertising scheme he ran through R.B.J. Generational Wealth Management LLC which did business as Adz on Wheelz.

Jialin Niu and Troy McBride of Washington were sued on allegations that they defrauded investors in a Ponzi scheme based in China. The scheme promised returns through a company called Golden Sun Finance Education that was supposedly to finance expansion of a Seattle-area commercial real estate empire.

Modern Money Team was charged by the SEC for running a Ponzi-like cryptocurrency scheme. That raised over $12 million. The SEC sought to freeze the assets of Daniel Putnam, Jean Paul Ramirez Rico, and Anges A. Rodriguez. The scheme was run through MMT Distribution LLC and R&D Global LLC.

Nathan Ward Pyles and his real estate company, Shiloh Management Services, of Idaho had a judgment entered against him for his role in the Ponzi scheme that raised over $28 million from 55 investors.

Nevin Shapiro, 51, was released from prison due to COVID-19 and will be allowed to serve the rest of his 20-year sentence at home. He was scheduled for release in 2027. Shapiro was convicted in connection with a $930 million Ponzi scheme.

Brenda Smith, 59, of Philadelphia, was charged on allegations that she was running a Ponzi scheme. The scheme took in more than $68 million from about 40 investors and promised returns as high as 33%. Smith transferred tens of millions of dollars out of Broad Reach Capital to entities she controlled.

Paul Horton Smith, 56, of California was charged by the SEC on allegations that he defrauded senior citizens out of millions of dollars in a Ponzi scheme. Smith allegedly ran the scheme through Northstar Communications and promoted advisory, tax and financial planning services to create a trusting relationship used to solicit investors.

Phillip Roy Wasserman, 62, and Kenneth Murry Rossman, 62, were indicted on charges that they were running an alleged “fraudulent insurance venture” that included Ponzi-style payments to investors. Wasserman is a former lawyer and licensed insurance agent, and Rossman is a certified public accountant and licensed insurance agent. They defrauded victims out of at least $6.3 million. Wasserman is the self-described “Annuity King” and ran other investment businesses through Phillip Roy Financial Consultants and Phillip Roy Financial Services.

INTERNATIONAL PONZI SCHEME NEWS

Australia

Stephen John Anderson, 32, pleaded guilty to charged related to an automatic teller machine fraud. Anderson falsely stated that OneCash had purchased 143 ATMs, and 11 investors lost over $1.2 million in the scheme.

Gunter Lang, 80, was imprisoned in connection with a $6.5 million Ponzi scheme through the online platform, IG Markets. Lang was an unlicensed financial trader who defrauded about 32 investors.

Canada

The Ontario Securities Commission reports that QuadrigaCX is essentially a Ponzi scheme and that the firm collapsed due to fraud by the company’s co-founder and CEO, Gerald Cotten. The firm lost about $115 million from Cotten’s fraudulent trading. The scheme had about 76,000 clients. Cotten died in India in December 2018 at the age of 30.

Det. Sgt. Larry Renton, 56, is being investigated for an alleged Ponzi scheme that promised investors 21% to 26% returns. The scheme targeted fellow officers and about 40 officers and other civilians invested between $15 million and $20 million.

China

Chinese authorities are investigating the disappearance of the Iranian-based crypto exchanged called Bitisis. It is believed that the cryptocurrency exchange platform that targeted Chinese investors is a Ponzi scheme.

India

Authorities filed charges against 12 people in connection with an alleged Ponzi scheme run through Gold Sukh Trade India Limited.

Indonesia

Russ Albert Medlin was arrested as the suspected head of the $722 million Bitcoin Ponzi scheme known as BitClub Network. Medlin was arrested on sex charges and faces extradition to the U.S.

Taiwan

Ronald Aai was accused of defrauding 1,000 Taiwanese out of $30.32 million in an alleged cryptocurrency scheme known as Cloud Token.

Litigation News

The Eighth Circuit revived a hedge funds lawsuit against JP Morgan Chase & Co. in connection with the Thomas Petters Ponzi scheme. Ritchie Capital Mgmt. v. JP Morgan Chase & Co., 2020 U.S. App. LEXIS 17471 (8th Cir. June 3, 2020)

The Eleventh Circuit affirmed the dismissal of the Receiver’s lawsuit against JP Morgan Chase Bank NA in connection with the Coravca Distributions LLC and Timeline Trading Corp.

The U.S. Supreme Court declined to stop lawsuits by the trustee of the Bernie Madoff Ponzi scheme against foreign banks and investors. The claims are for about $3 billion that was paid out to them before the collapse of the Madoff scheme.