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, October 31, 2020

October 2020 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for October 2020. The reported stories reflect at least 9 new Ponzi schemes worldwide, 6 guilty pleas, 202 years of prison sentences, 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.   

Steven F. Brown, 52, an accountant in California, agreed to plead guilty to charges that he ran a $3.3 million Ponzi scheme that promised investors returns from foreign exchange currency. Brown ran the scheme through Alpha Trade Analytics Inc. and promised investors monthly returns of around 10%.

Christopher W. Burns, 37, and his company Matson Money, Inc., were sued in a class-action suit alleging that he defrauded 100 investors in a Ponzi scheme. 

Jason T. Castenir was sentenced to 53 months in prison for his role in a $2.4 million Ponzi scheme run through Maverick Asset Management LLC. Castenir ran the scheme with Rodney Scott Phelps, who was found guilty last year and sentenced to 108 months in prison. 

Garrison Courtney was sentenced to 7 years on prison in connection with a Ponzi scheme in which he posed as a covert CIA operative. His false identity defrauded investors to pay for either a special operations forces program operating covertly in Africa or a separate program aimed at enhancing the United States’ intelligence collection abilities.

Edison Denizard, 40, pleaded guilty to a $7 million investment fraud that mispresented that investors were investing in specific music concerts through companies owned by Denizard and Andres Fernandez. The companies, Kadaae, LLC and Kadaae Entertainment Corp. raised $20.7 million from at least 56 investors. Denizard and his company, Ahead of the Game, LLC, raised approximately $10.4 million from at least 78 investors through an unregistered offering of securities. 

Thomas J. Gity was sued by the SEC for allegedly operating a $6.8 million cryptocurrency Ponzi scheme. Gity was previously convicted for operating fraudulent fund-raising campaigns with his son. Gity set up a digital asset trading firm even though he had no industry experience and raised funds from at least 18 investors. Only $970,000 of the $68 million raised was used in trading accounts. Gity provided investors fake account statements that misrepresented that he managed as much as $100 million in assets and generated returns greater than 46% in a week.

Suzette Hart, 54, of New Jersey, was charged with running an alleged Ponzi scheme that defrauded investors out of $300,000. Hart is a high school teacher who defrauded friends and co-workers. She had promised returns to investors in “high-yield, well-known” investment opportunities, knowing the investments were fraudulent.

Benny Judah, 61, was denied his request to reduce his 25-year prison sentence. 

Rand Heckler, 55, was charged in connection with an alleged Ponzi scheme that he ran through a hedge fund of stocks and securities that he managed. Heckler allegedly defrauded at least 4 friends out of about $1 million through his corporation, Rand Heckler, Inc. Heckler pleaded not guilty.

Marc Lawrence, 66, of New York, pleaded guilty charges that he was operating as a Ponzi-like scheme through a venture capital firm called Downing. Lawrence’s co-defendant, David Wagner, pleaded guilty in September. The two defrauded employee-investors of their purported venture capital firm out of $8 million. After some employees filed lawsuits, Lawrence recruited investors in a new company called Cliniflow Technologies, LLC.

Gary Pryor, of Arizona, and his companies, ZipRemit, Inc. and Lendaily Inc., were charged by the SEC and accused of running an alleged $2.9 million Ponzi scheme. Pryor claimed to offer merchant branded consumer credit at the point of sale and misrepresented that he had developed proprietary software. Pryor diverted $1.4 million of the investor funds for his personal use.

Keith Raniere was sentenced to 120 years in prison in connection with a Ponzi scheme that he ran through NXIVM. Raniere was convicted in 2019 on conspiracy and sex trafficking charges and the self-help organization he created was exposed as a Ponzi scheme. 

Paul Rinfret, 71, pleaded guilty to charges in connection with his role in a $19 million Ponzi scheme run through Plandome Partners L.P. Rinfret failed to invest investors’ funds as promised but instead diverted the majority of investor funds to his personal use or to make Ponzi-like payments to investors. He falsely represented that he would use investment funds to trade future contracts tied to the S&P 500 index using a purportedly proprietary trading algorithm and took a fee of 25%. Rinfret was sentenced to more 63 months in prison for participating in the scheme.

Ken Rossman and Phil Wasserman were charged in connection with an alleged Ponzi scheme that defrauded investors out of at least $6.3 million. The two have pleaded not guilty.

Alexander S. Rowland, 29, of Pennsylvania, was accused of running a $2 million scam through his firm, Roaring Investments LLC. An estimated 122 victims were defrauded through promises of a minimum return of 25% on investments in stock and cryptocurrencies.

David Smith was released from prison in Turks and Caicos where he served 6½ years of his 10- year prison sentence. However, the U.S. is trying to have him extradited to the U.S. to serve a 20-year prison imposed in the U.S. Shortly after his release for good behavior, he was arrested and taken into custody to face extradition to the U.S. in connection with a $220 million scheme that was first launched in Jamaica. 

Paul Horton Smith Sr., 56, of California, and his companies, Northstar Communications LLC, Planning Services Inc., and eGate LLC were ordered to pay $8.9 million in connection with a Ponzi scheme. Smith, a financial planner, duped mostly senior citizens into investing in fake securities and defrauded at least 35 investors.

Leo Vaccarelli, 43, was sentenced to 7½ years in prison following his conviction in connection with a Ponzi scheme that defrauded investors out of more than $1 million. 

Giuseppe Valentino, 52, was captured while he was on federal probation on charges that he defrauded investors through his company Rhineau LLC. Valentino alleged defrauded investors out of $500,000 by representing that he had developed a proprietary algorithm for the execution of binary options. 

Lewis Wallach, 64, of California, was charged in connection with an alleged $330 million Ponzi scheme run through Professional Financial Investors Inc. and its associated fund, Professional Investors Security Fund Inc. PFI owns about 70 properties and Wallach helped manage the firm with the late Kenneth Casey. Wallach allegedly misappropriated more than $26 million from 1,300 investors for his own benefit and knew that the revenue from the properties was insufficient to pay investors. Wallach is expected to plead guilty to criminal charges and has already plead in response to SEC civil charges. 

Howard L. Young, 75, of Nashville, was charged in an alleged Ponzi scheme that defrauded investors out of $700,000. Young founded Integrative Medical Services, purportedly a holistic wellness business. He solicited cancer patients, investors and employees and claimed he had been awarded a grant to study cancer.

Craig Zabala, 68, the CEO of Concorde Group Holdings Inc., pleaded guilty to charges that he defrauded 17 investors out of at least $4.38 million. Zabala misrepresented that Concorde was a merchant banking firm that was investing in and buying other financial service companies. Zabala also ran the scheme through the following other financial service companies: Concorde Group, Inc., Blackhawk Capital Group BDC, Inc., DBL Holdings, LLC, d/b/a Drexel Burnham Lambert, Concorde Investment Managers, LLC, and Concorde Europe, Ltd.

INTERNATIONAL PONZI SCHEME NEWS 

Australia

Matthew Alan Beresford was arrested, and the websites and bank accounts of Maxwell Financial Services and Asset Capital Holdings were frozen by authorities.

Harpreet Singh Sahni, 45, confessed to running a $50 million cryptocurrency scheme. Sahni claimed his program promoting the Plus Gold Union Coin was “the safest investment on Earth right now.”

Canada

Jason Gaurana, 37, was arrested and charged in connection with an alleged multi-million Ponzi scheme known as Project Cosmo that targeted the Filipino community in Toronto. Authorities are also looking into Infy Trading Inc., D-Con Design and Construct Solutions Inc. and the church, The Vessels of Hope International Community Church, as allegedly being involved in the scheme.  The scheme alleged defrauded investors out of more than $3.5 million. Glenda Estevez, 45, and Teddy Lee Estevs, 44, have previously been charged in connection with the scheme.

China

Gao Yudong, Li Qibing, Wang Xiaoying, and Tian Bo were sentenced in connection with a $1 billion Ponzi scheme run through WoToken. The scheme is believed to have defrauded over 715,000 investors. 

England

Joseph Lewis was sentenced to over 5 years in prison for his role in a $26.7 million fraudulent scheme. Lewis solicited clients into a foreign exchange trading scheme that he ran through Joe Lewis Trading.

Stephen Allen was criminally charged in connection with an alleged scheme run by Renwick Haddow through Bar Works. The scheme had 800 victims who invested more than $50 million in the scheme. Allen is accused of conspiring with Haddow to prevent an Haddow’s interest in a London property from being available as an asset to satisfy an order.

India

Authorities convicted 8 people and sentenced them to life imprisonment in connection with the Pincon Group Ponzi scheme. Manoranjan Roy is the head of the scheme and is currently hospitalized with health issues. His wife, Mousumi Roy, has absconded. 

Nishad K., 36, was arrested in connection with a three-pronged cryptocurrency Ponzi scheme. The alleged scheme was run through Long Reach Global, Long Reach Technologies, and Morris Trading Solutions. Nishad offered “Morris Coins” and promised returns of about $3.70 per day, or about 1.85% of the minimum investment. The scheme also offered a 10% to 40% commission to investors for bringing in new investors. 

Sachin Bhati, 35, Pawan Bhati, 33, and Ganga Nagar, 50, were arrested in connection with the Bike Bot Ponzi scheme. The arrest brings the total to 14 for people arrested in connection with the app-based motorcycle taxi company. Pawin and Sachin were directors of Garvit Innovative Promoters Limited which first floated the Bike Bot scheme. 

Anugrah Stock and Broking Pvt was accused of running a Ponzi scheme that defrauded about 40,000 investors. Investors were promised returns up to 20% from stock trading.

Nigeria

Umanah Umanah, 62, was arraigned on charges that he defrauded investors through his company, No Burn Global Limited, through false promises of returns of 50% weekly. Umanah pleaded not guilty.

Philippines

The SEC ordered Forsage and Forsage Philippines to stop soliciting investments through a crowdfunding platform based on Ethereum blockchain technology. The order also covers Forsage’s operators, agents, and sales people, including Rich Alex Apuntar, Vhellpoe Forlares Garves, Yuka   Kuroyanagi, Christopher Doroliat, Iam Kim, Jairra Fab Teoxon, Mark Nicole Escabarte Valeria, Myra Cris Sapar, Romnick MelaƱez, and Vel Cabalza.

John Garcia was arrested on charges that he masterminded a Ponzi scheme through Rigen Marketing that took in P8 billion from victims. Rigen offered 400% returns on investors. Paul Auditor was arrested last year in connection with the scheme.

South Africa

Authorities raided the homes of two principal members, Clynton and Cheri Marks, of Mirror Trading International, an alleged bitcoin Ponzi scheme. 

Spain

Santiago Fuentes, the founder and CEO of Arbicorp, was arrested on charges that he was operating a Ponzi scheme through Arbicorp that developed Abistar 2.0, a bitcoin trading platform. Authorities began investing allegations that about $1 billion of investor funds were missing. The firm froze all accounts last month, citing a trading bot malfunction that caused the system to pay excess profits. Fuentes has denied the claims. About 32,000 investors were allegedly defrauded.