Kathy Bazoian Phelps
Senior Counsel in Ponzi Scheme Litigation
and Bankruptcy Matters

Kathy is a senior business trial attorney with more than 30 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. She also handles SEC and CFTC whistleblower claims. 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
Whistleblowers
Debtors in Bankruptcy
Secured and Unsecured Creditors

Monday, May 31, 2021

May 2021 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for May 2021. The reported stories reflect at least 4 new Ponzi schemes worldwide, 1 guilty plea, about 77 years of prison sentences, 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.  

Ted Brent Alexander, 55, and Jon Darrell Seawright, 49, of Mississippi, were indicted on charges relating to the $100 million scheme run through Madison Timber Properties LLC that was owned by Arthur Lamar Adams. The two solicited over $20 million from more than 50 investors in connection with the scheme. The scheme promised guaranteed returns to investors who thought they were lending money to a broker enterprise purchasing timber that was then to be marketed to multiple lumber mills.

Dean Alford of Georgia was indicted on charges that he ran a Ponzi scheme that defrauded investors out of several million dollars. Prosecutors allege that Alford created fake invoices, contracts and other documents purportedly showing that his company was owed money from state agencies. Alford was a member of the Regents, a 19-member board appointed by the governor, to oversee operations at the University System of Georgia. Last month Alford was ordered to pay about $10.8 million to 100 investors in a civil suit.

Jeremy Anderson, 50, of Florida was sentenced to 12 years and 7 months in connection with a scheme he ran through Tri-Med Corp. The scheme defrauded over 200 people out of more than $10.3 million by promising returns from an investment program that would purchase medical receivables backed by a letter of protection. Of the $17 million raised from investors, only $2.7 million was deposited into a trust account, $6.5 million when to salespeople and for personal use, and $2.3 million was paid to investors. Anderson had pleaded guilty earlier this year.

Cameron Banks aka Reggie Staggers aka Roy Hamilton, 36, of South Carolina, was sentenced to 9 years in prison. While Banks was out on bond for alleged fraudulent schemes relating to dental work and commercial vehicles, he operated a Ponzi scheme in which he promised returns to investors who thought there were investing in the operation of a commercial trucking business. There were at least 32 victims in the scheme. 

Trevon Brown aka Trevon James, Craig Grant, Ryan Maasen, and Michael Noble aka Michael Crypto were charged by the SEC in connection with the $2 billion Bitconnect Ponzi scheme. The scheme collapsed in 2018. The SEC alleges that the co-defendants unlawfully sold unregistered digital assets securities by promoting the Bitconnect lending program to retail investors. 

Jeffrey Carley, of Ohio, was charged with running a Ponzi scheme that involved about $100,000. Carley is the owner of Carley Financial Group and also owned all or part of Prosperity Partners and Main Street Solutions. The indictment alleges that Carley advised his clients to move money from their traditional retirement accounts to self-directed IRAs in which Carley would control.

Gina Champion-Cain, 57, of California was sentenced to 15 years in prison in connection with a $400 million Ponzi scheme. Champion-Cain had previously admitted that she raised more than $350 million from investors who were told she was making loans to business owners who were attempting to acquire liquor licenses.

Leonard J. Cipolla was ordered to pay restitution of over $5 million in connection with a CFTC action pending against Cipolla and his company, Tate Street Trading Inc. Cipolla admitted that he fraudulently received about $7 million in connection with futures and options pooled trading with Tate Street. He was previously sentenced to 121 months in prison.

Daryl Davis, 48, was sentenced to 13 years and 4 months in connection with a Ponzi scheme run through Financial Assurance Corp and Affluent Advisory Group LLC. Davis represented that some of the investments would be backed by a well-known multinational life insurance company, but the funds were not invested as promised. More than 25 victims were defrauded out of more than $5.1 million. 

Zacharay Horowitz aka Zach Avery, 34, was arrested in connection with the alleged scheme run through 1inMM Capital. Horowitz raised more than $690 million by representing that his company would buy film distribution rights and license them to Netflix and HBO, but the SEC says that he actually had “no business relationship with either company.” Money was used to fund Horowitz’s lavish lifestyle and to make Ponzi scheme payments to earlier investors. Investors are still owed $227 million. Horowitz pleaded not guilty.

Patrick O. Howard, 50, was sentenced to 5 years in prison and ordered to pay $13 million in restitution in connection with a Ponzi scheme run through Liquidity Partners CGF I, Insured Liquidity Partners CGF II, and Capital Ventures LLC. Howard pleaded guilty last year to running a Ponzi-type scheme that recruited about 119 investors to purchase $13 million in membership units. The companies promised 12% to 20% annual returns and Howard promised that investors could not lose money due to insurance that offset poor performance. 

Mark Johnson and his companies, the Owings Group entities, were ordered to pay the SEC $2.1 million for their role in a $5 million Ponzi-type scheme. 

Jonathan P. Maroney of Florida was charged by the SEC with running a Ponzi scheme through his companies, including Harbor City Capital Corp. The scheme allegedly raised at least $17.1 million from more than 100 investors. Investors were told that their funds would be used to finance the defendants’ online customer lead generation campaigns. Investors were promised returns ranging from 10% to 60% from the supposed resale of those leads to other businesses. The SEC alleges that Maroney misappropriated at least $4.48 million on her personal expenses and to purchase a waterfront home and a Mercedes, among other things. The SEC also names Maroney’s wife, Tonya Maroney, and Celtic Enterprises LLC as relief defendants.

Larry Ramos Mendoza was charged on allegations that he was running a $21.9 million Ponzi scheme through The W Trading Group. The scheme allegedly defrauded 235 investors by claiming that an algorithm made commodities trades that returns up to 4% per trade but that would stop trading if they lost 2% over a period. Investors were told that their money would sit in a TD Ameritrade brokerage account to be used exclusively for trades. 

Regine Norman aka Regine Ellis, 66, was charged with stealing more than $1.3 million from 14 victims in a fraudulent real estate scheme. The investor funds were supposed to be used to purchase discounted Brooklyn properties at a private auction but it is alleged that no properties were ever purchased. Norman allegedly provided victims fraudulent contracts for sale, forging the signature of the actual property owner. 

Shehzad Peermahomed, 50, of California, was arrested on charges that he stole millions of dollars from at least nine victims in a Ponzi scheme. Authorities allege that he defrauded victims into believing that they were investing in real estate from which they would receive monthly interest payments. The victims were mainly senior citizens and used their retirement savings to invest in the scheme. The losses are believed to be about $2.8 million.

Ruless Pierre, 51, of New York, was found guilty of running a Ponzi-style scheme that targeted the Haitian community. Pierre stole more than $2 million from about 100 investors. Pierre lost investor funds in unprofitable trading and spending on his own expenses, and falsely promising returns from the purchase of a fast-food franchise. 

Daniel Rivera, 51, of New Jersey, was sentenced to 6½ years in prison and ordered to pay $1.47 million in restitution in connection with a $2 million Ponzi scheme that targeted elderly investors. Rivera previously pleaded guilty to the scheme run through Robbins Lane Properties Inc. Rivera was the principal of Rivera & Associates and Strategic Wealth Partners, and he represented that Robins Lane invested in real estate ventures that were secure and guaranteed monthly returns. Robbins Lane, however, had no employees and no real estate portfolio.

Reva Joyce Stachniw, 69, of Illinois, and Ron Throgmartin, 57, of Georgia, were charged with running a Ponzi scheme. A third co-conspirator, Mark Ray, was previously charged. Authorities alleged that the defendants raised more than $650 million from investors, promising investors that their investments were backed by short-term investments in cattle. Ray had set up MR Cattle Production Services LLC in Colorado to help solicit investors. The defendants also solicited funds for a Colorado-based marijuana business, Universal Herbs LLC. Investors were promised returns of 10% to 20% over periods as short as a few weeks.

Marc Tager, 55, Jonathon Shoucair, 69, Matthew Mangrum, 51, and Kenneth Gross, 75 were sentenced in connection with a Ponzi scheme that defrauded 140 victims out of more than $8 million. Tager was sentenced to 43 months in prison, Shoucair to 6 years in prison, Mangum to 4 years in prison, and Gross to 2 years of probation. The four represented that they had created a plan to make money by extracting gold from dirt using a revolutionary process that used environmentally friendly means to recovery microscopic particles of gold from dirt. They ran the fraud through Jersey Consulting LLC.

INTERNATIONAL PONZI SCHEME NEWS 

Bulgaria

Mystery continues to surround the OneCoin scheme. Ruja Ignatova, the self-appointed “CryptoQueen” and her firm OneCoin was found in default after failing to respond to a case alleging $4 billion in losses. It is believed that Ignatova may have $500 million and 230,000 bitcoin.

Kenya

An app called “Amazon Web Worker” was called out as a Ponzi scheme before the app disappeared from the Google Play Store. People had deposited large sums of money on the platform based on promised returns of up to 38.5% for a deposit of seven days. It is not clear whether Google deleted the app or whether the developers intentionally removed it.  Stacey Marie Parker, 50, was arrested in connection with the alleged scheme.

Scotland

Alistair Greig, 67, had his 14 year jail terms but by four years. Greig had defrauded 165 investors by misrepresenting that he would place their money in a short-terms deposit scheme with the Royal Bank of Scotland for fixed periods of time.

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