Posted by Kathy Bazoian Phelps
Below is a summary of the activity reported for November 2022. There were at least 7 new Ponzi schemes revealed this month. There were two guilty pleas and one ‘not guilty’ plea. There was also one criminal conviction this month and more than 64 years of prison sentences were imposed. The average age for the alleged Ponzi schemers was approximately 43. Please feel free to post comments about these or other Ponzi schemes that I may have missed.
Syed Arham Arbab, 25, was sued by the SEC along with five others in connection with a “free-riding” scheme in which they made more than $2 million in bogus deposits into brokerage accounts. Arbab is just set to begin a 5-year prison sentence after pleading guilty to running a Ponzi scheme from a fraternity house near the University of Georgia. The current scheme involves using “instant deposit” credit they obtained from the brokerage firms to buy and sell securities online and then to quickly withdraw profits before their accounts were frozen. Arnab’s co-defendants are Tomas Javier Jimenez, 24, Blake Douglas McKinney, 26, Mushfiqur Rahman, 21, John Ryan Shows, 25, and William Carl Spagnoli, 24.
BMO Harris Bank was hit with a jury verdict of $484 in actual damages and $79 million in punitive damages on charges that Marshall & Illsley Bank (M&I), which BMO Harris Bank had acquired in 2011, aiding and abetted Thomas Petters in the breach of his fiduciary duty to his firm, Petters Company Inc. Petters ran a massive Ponzi scheme through Petters Group Worldwide that stole more than $3.7 billion from victims.
David Bunevacz, 53, of California was sentenced to 17.5 years in prison in connection with a $35 million Ponzi scheme involving cannabis. He raised a total of $45.2 million from more than 100 investors. Bunevacz is an American Philippine citizen who is a former UCLA decathlete. He defrauded victims by promising returns from financing companies that marketed cannabis vape pens. Instead, he spent the money on a luxury home, vacations, jewelry, and other lavish expenses.
Tommie “Tom” Carter Jr, 64, was convicted and sentenced to 40 years in prison in connection with a scheme in which he took in over $1 million from investors. Carter promised returns from the buying and reselling of real property and distressed business equipment. Derrick R. Trussell is a co-defendant who pleaded guilty in connection with his role of fraudulently offering securities.
Marc Celello, 51, was sentenced to two years in prison in connection with this role in a $40 million Ponzi scheme. Celello, a former attorney, pleaded guilty in 2019. Celello was the vice president and general counsel of Credit National Capital LLC, a company run by James Torchia that purchases life insurance policies and subprime automobile loans.
Wynn A.D. Charlebois, 52, of North Carolina, was accused of running a Ponzi scheme and pleaded not guilty. The indictment alleges that Charlebois ran the scheme from 2015 through October 2022 and took in more than $6.9 million from more than 39 investors. The alleged scheme was through WC Private, Wilcox Hybrid and Damon Investments. Charlebois represented that he had stock options in certain companies and investors could purchase the options and make profits.
FTX owned by Sam Bankman-Fried, 30, filed bankruptcy. While no determination has yet been made that FTX was operating as a Ponzi scheme, the allegations of fraud and lack of any internal controls or accounting were substantial.
Rathnakishore Giri, 27, of Ohio, was arrested on charges that he was running a cryptocurrency investment scheme that raised at least $10 million from investors. The indictment states that Giri held himself out as an expert cryptocurrency trader with a specialty in bitcoin derivatives and promised investors profits with no risk to principal. In reality, Giri was allegedly using funds from new investors to pay off earlier investors. Giri was charged by the CFTC earlier in the year.
Brad Heinrichs, of Idaho, was sentenced to a year of house arrest and 10 years of probation for his role in a Ponzi scheme run by Stephen J. Hatch. The scheme defrauded over 100 investors and involved the use of Bible quotes and religion to prey on investors. Over $82 million was raised on promises of returns from real estate, but the real property was over-leveraged despite promises to investors that their investments were secured by deeds of trust.
Horizon Private Equity III LLC and Livingston Group Asset Management Co. dba Southport Capital were ordered to pay $60.9 million and $5 million, respectively, in connection with a Ponzi scheme that left investors with claims of $110 million. John J. Woods, the architect of the scheme, disputes the SEC’s allegations that he was running a Ponzi scheme.
Jebara Igbara, aka Jay Mazini, 27, of New Jersey, through his Instagram account, pleaded guilty to running a Ponzi scheme that targeted New York’s Muslim-American community. He solicited money in return for stock, electronics, and COVID-19 protective equipment and also created a bitcoin scheme promising high rates of return in a short period of time. Igbara allegedly stole at least $8 million. Igbara launched Halal Capital LLC in 2019 and claimed he was worth $33 million. In March, Igbara was sentenced to 5 years in prison for kidnapping and beating a rival who threatened to expose him.
Adrian John Kawuba, 33, of Massachusetts, was charged in connection with a sports venture in Africa. Kawuba promised returns to investors through supposedly lucrative “international sports and entertainment projects, principally in Africa.” He offered returns as high as 60% from the supposed finance of “short-term private financing solutions to soccer clubs for transfer market transactions and deals.”
Royce Newcomb, 60, of California, was indicted on charges that he ran a $4.2 million Ponzi scheme through Strategic Innovations LLC and that he took out fraudulent COVID-19 and other government loans of more than $260,000. Newcomb’s company supposedly made technology that was to fight package thefts and prevent weather damage to packages. The scheme ran for about 5 years.
Joshua David Nicholas was sentenced to 4 years and 3 months in prison in connection with the crypto platform, EmpiresX. Nicholas claimed that EmpiresX would make daily “guaranteed” returns using a trading bot that utilized “artificial and human intelligence” to maximize returns. Nicholas operated the scheme with Emerson Pires and Flavio Goncalves. The scheme run for two years.
Steven Parish and his company Premiere Global Corporation, of Kentucky, were sued by state securities commissions on allegations that they are running a Ponzi scheme. Parish and other owners raised about $100 million from at least 570 investors, using the money to buy real estate in Belize and Las Vegas. Parish is currently on the run.
Sergei Potapenko and Ivan Turõgin, both 37 and from Estonia, were arrested in Estonia following a joint investigation by U.S. and Estonian authorities. They are accused of running a series of cryptocurrency and money laundering scams that defrauded hundreds of thousands of victims out of $575 million. The scheme was running since 2013 under the business called HashCoins. The business purportedly manufactured and sold Bitcoin and other virtual-currency-mining hardware and equipment, requiring full payment when equipment was ordered. In reality, the company did not manufacture its own equipment and instead of providing refunds, the company promised a percentage of profits from a new mining operation called HashFlare. They also created another company called Polybius Bank that was to be funded through an initial coin offering that raised more than $25 million.
Jamie Thompson and William Logsdon were arrested and charged with running a scheme through National Royalty Group that involved the selling of oil and gas leases. The scheme defrauded investors out of nearly $1 million.
Douver Torres Braga, 45, Joff Paradise, 60, Keleionalani Akana Taylor, and Jonathan Tetreault were sued by the SEC for their roles in the Trade Coin Club Ponzi scheme that raised more than 82,000 Bitcoin valued at $295 million from more than 100,000 investors worldwide. The scheme promised returns from the trading activities of a purported crypto asset trading bot that supposedly made “millions of microtransactions every second” to assure minimum daily trading profits. The scheme promised .35% daily. Tetreault agreed to pay about $781,000 to settle an SEC complaint that he had run a Ponzi scheme that raised $295 million in Bitcoin..
INTERNATIONAL PONZI SCHEME NEWS
Australia
Tony Iervasi pleaded guilty to charges relating to a $180 million Ponzi scheme run through Courtenay House and Courtenay House Capital Trading Group, both of which are now in liquidation.
India
Two individuals were accused of running two Ponzi schemes through Aryan Pratidin Fund and Aryan Reserve Fund.
Malta
Authorities warned that QuickX Ltd. is a Ponzi scheme involving cryptocurrency. QuickX was launched in 2018 by brothers Vaibhav Adhlakha and Kshitij Adhlakha.
South Korea
Two suspects were wanted in connection with an international scheme that defrauded thousands of victims in South Korea. The Polish suspect, 49, and the German suspect, 61, were arrested in Greece and Italy.
Authorities are investigating a crypto mining firm names Btbank aka OK-Bit, which has failed to pay back investors after promising monthly returns of up to 12%.
Thailand
Authorities are seeking extradition of two individuals, one Hungarian, Eddy Polgari, and another Singaporean, Daryl Cai Younghui, in connection with the Forex-3d scam. They are among 16 suspects in connection with the Forex-3D scheme and believed to be close friends of Apiruk Kothi, the owner of Forex-3D.
Trinidad and Tobago
New regulations make it a crime to “establish, operate, advertise or participate in ‘prohibited schemes’” which includes Ponzi and pyramid schemes. The regulations also criminalize activity of inviting people to join a prohibited scheme – “For knowingly advertising or inviting another person to join a prohibited scheme a person is liable, if convicted, to pay $2,000,000 or to imprisonment for 3 years.”
