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

Wednesday, June 30, 2021

June 2021 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for June 2021. The reported stories reflect at least 9 new Ponzi schemes worldwide, 2 guilty pleas, more than 34 years of prison sentences, and an average age of approximately 46 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed.  

Lee Anglin, 50, was sentenced to 6 months in prison. He had been released from prison three years ago after serving 12 of his 15-year prison sentence for a $10 million real estate Ponzi scheme. He was sentenced again for after violating the terms of his probation by engaging in new money-making schemes that included providing legal services for inmates even though he isn’t a lawyer and negotiating to buy two businesses in Utah.

Robert Joseph Armijo and Joseph Financial Inc. were charged by the SEC in connection raising at least $4.85 million as part of the $170 million EquiAlt LLC Ponzi scheme. They sold securities to more than 50 investors and made about $1.1 million in commissions. The EquiAlt real estate scheme defrauded about 1,100 investors, many of whom were elderly.

Darrell Arnold Aviss, 63, of California, was indicted on allegations that he ran a $12 million Ponzi scheme. Aviss promised investors that their funds would be used to purchase annuities from Swiss insurance companies and that the annuities would pay interest rates ranging from 5% to 7%. Instead, Aviss used the funds to support his lavish lifestyle, including luxury car leases, expensive watches, trips to Monaco, and 20 tickets to a U2 concert and after-party.

Larry B. Brodman and Anthony Nicolosi aka Anthony Peluso agreed to pay disgorgement of ill-gotten gains in connection with an SEC action filed against them, without admitting or denying the allegations. The SEC alleged that Brodman and Property Income Investors LLC raised $9.06 million through 12 separate companies and that they defrauded 156 investors by promising returns from the purchase of residential real estate that would be turned into rental properties, but that they misappropriated about $1.12 million.

Steven F. Brown, 52, was sentenced to 4 years and 3 months in prison for running a $3.3 million Ponzi scheme. The scheme was run through Alpha Trade Analytics Inc., a financial consulting and investment company that Brown ran out of his house.

Phillip Wayne Conley, 38, of Florida, pleaded guilty to charges relating to a $5 million Ponzi scheme that defrauded 18 victims. Conley operated the scheme through Alpax and shell companies and represented that he managed multiple private investment funds. Conley issued false dividend statements claiming positive returns.

Larry Dela Cruz and Rick Rivera, along with 13 others, were charged by authorities accusing them of running a fraud through Pagudpud Sands Resort. The others named are: Louis Maser, Christopher Jaromay, Garry Gerardo, Bernard Campilan, Christela Balubar, Matt Rose, Marina Jaromay, Merito Jaromay, Gregory Pritchard, Juan Murillo, Thu Dang, Kristel Villar, and Nelson Manmano. The scheme recruited mostly elderly Filipinos and took in $5 million. Investors were promised returns from the supposed construction of the report when in reality the money went primarily to paying salaries and commissions to those who brought investors to the scheme.

Derline Cunningham, 60, of Greece, was charged in connection with a scheme run by Christopher Parris and Perry Santillo through Lucian Development. Cunningham was the branch manager of Bank of American and later of Citizen Bank and is accused of lying to another bank to allow millions of dollars in resolving credit to be extended. Lucian was accused of running a Ponzi scheme by selling fraudulent promissory notes to investors.  

Marc Lawrence, 55, of New York, was sentenced to 4 years and 7 months in prison in connection with a scheme run through a group of entities known as the Downing entities. Lawrence previously pleaded guilty to soliciting almost $10 million from approximately 40 investors through false and misleading statements. Lawrence ran the scheme with David Wagner, who was previously sentenced to 72 months in prison. The two promised returns from investments in healthcare start-ups referred to as “portfolio companies.” After lawsuits had been brought against the Downing companies, they started a new company called Cliniflow Technologies. Most of the $1.5 million raised by Cliniflow was transferred to other Downing entities.

Joseph Meli was sentenced to an additional 37 months in prison, but 25 of those will run concurrent to the 6 ½ year sentence he is currently serving in connection with the concert Ponzi scheme he previously ran. The scheme involved $104 million. 

Douglas A. Richardson, 47, of Missouri, was sentenced to 15 years and 8 months in prison without parole and ordered to pay about $8.8 million in restitution. Richardson ran a $12 million Ponzi scheme through Douglas A. Richardson, CPA, LLC. He was the former chief financial officer, treasurer and CPA of Smart Prong Technologies, Inc. and transferred at least $4.4 million from Smart Prong bank accounts to his personal and business bank accounts. Richardson also solicited funds from clients and induced them to make investments but in reality took some of the money for his own benefit.

William A. Sassman II, 53, of California, was indicted on charges that he was engaged in banking transactions with criminally derived property. In 2011, Sassman had been sentenced to 18 years in prison after he pleaded guilty to charges in connection with a Ponzi scheme that had defrauded at least 48 victims out of about $4.5 million.

Tyler Tysdal, 50, of Colorado, pleaded guilty to charges relating to a Ponzi scheme run with his business partner, Grant Carter, through Cobalt Sports Capital LLC. The scheme defrauded NFL quarterbacks and obtained more than $46 million from 77 investors. Tysdal also pleaded guilty to a second scheme in which he promised investors returns of 10 to 15 times their investment in connection with a private label wine scheme.

INTERNATIONAL PONZI SCHEME NEWS 

Australia

A smartphone App called the Hope Business App or the Hope Group Earning App is believed to be a Ponzi scheme that defrauded consumers out of $400,000.

Belgium

Authorities detained and searched the homes of 5 individuals who are believed to be engaged in the operation of a worldwide Ponzi scheme known as VITAE AG that defrauded 223,000 individuals in 177 countries. The alleged scheme was promoted under the website “Vitaetoken.io” and social media platform Vitae.co. Mendy Z. and Shrage P. were two of the arrested in connection with the cryptocurrency scheme.

Canada

Susan Elizabeth Way, 70, was sentenced to 3 years in prison for her role in a $27 million Ponzi scheme. Way previously pleaded guilty along with Arnold Breitkreutz in connection with their roles in their mortgage investment scam run through Base Financial.

Tyler William Young, 37, admitted that he defrauded investors out of more than $13 million and then funded a meth lab to try to pay them back. Bradley Wesley Oxby, 42, and Scott Riley Pring, 39, were previously charged in connection with the scheme.

England

Mitchell Mallin, 34, was banned for 14 years from acting as a director in the U.K. in connection with a £13 million Ponzi scheme.  Mallin promised returns from fixing and flipping dilapidated properties and ran the scheme through Essex and London Properties Limited

Guyana

Aubrey Norton and Martina Seepersaud were charged in connection with their role in a scheme run by Accelerated Capital Firm Inc. Cuban national Yuri Garcia Dominguez, 34, and Ateeka Ishmael, 32, were previously arrested in connection with the scheme.

India

Anand Konar, who is on the run, was accused of defrauding about 100 investors in an alleged Ponzi scheme.

Hemant Kumar Sinha was arrested in connection with an alleged scheme run though M.S.S. Ayurvedic Healthcare Trust. Rakesh Kumar Poddar and Mukesh Kumar Poddar were also accused in connection with the scheme.

Ranganath D S, 39, was arrested on charges that he defrauded over 2,000 investors in a cryptocurrency Ponzi scheme run through a website called Digitechmark

Nigeria

Benson Kufre John and Iraboh Joseph Eseosa were arrested in connection with an alleged N3.5 billion scheme run through Annexation Business Concept when United Bank of Africa filed a complaint regarding an account opened in the name of Annexation opened by Sunday Marcus. The account had a turnover of N3.5 billion in a six-month period. The scheme promised returns of between 30% and 200%.

Comedian Ogunleye Babatunde aka Oluwadolarz was arrested for endorsing and advertising a Ponzi scheme run through RackSterli at www.racksterli.org. The scheme was run by Chidi, known as Blackgold, and offered investors different packages. Investors are asking authorities to arrest other celebrities who endorsed the scheme.

Philippines

Reposco Trading aka Reposco.10 run by Benjamin Mari Limjap, has been flagged as running a Ponzi-like scheme. Investors were guaranteed returns of 20% within 90 days from investments in sports arbitrage, foreign exchange, and oil options.

Authorities warned that Xian Coin or XNC appeared to be a Ponzi scheme. The scheme is operated by “coffee date” scammer Xian Gaza aka Christian Albert Gaza. Investors were promised “a high range of price stability and appreciation of value due to the fact that it is taking advantage of a single, centralized supply chain” and is “independently controlled by virtual crypto currency bank of Xian Gaza with a limited global supply of 75 million XNCs.”

South Africa

Raees Cajee, 21, and Ameer Cajee, 18, two brothers, fled to the United Kingdom with 69,000 bitcoin (worth $3.6 billion) that they obtained through the platform known as AfriCrypt. Investors had been promised returns of 10% per day. The brothers told investors they were mining cryptocurrencies and had mined over 100,000 Ethereum coins using home-based computer systems. In April the brothers claimed that their investment platform had been hacked, advising their investors that this forced AfriCrypt to halt operations. Raees Cajee denied the allegations and says that the co-founders went into hiding after receiving death threats.

South Korea

V Global is being investigated as a cryptocurrency Ponzi scheme. About 70 employees have been booked, including the CEO, on allegations that the scheme defrauded about 69,000 people out of $3.6 billion. Victims are trying to slow down the investigation in the hope that they will triple their investments in 6 months.

Spain

Authorities recovered €6m that was lost in a Ponzi scheme run by Iban Juvanteny Gómez. Gómez has been in custody since 2019 on allegations that he was running a scheme that defrauded investors out of €15m by promising returns from investments in the stock market.


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.