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

Sunday, May 31, 2020

May 2020 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for May 2020. The reported stories reflect at least 5 new Ponzi schemes worldwide; at least 2 guilty pleas and convictions; and an average age of approximately 59 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed.
   
Neil Burkholz, 82, and Frank Bianco, 70, of Florida, were ordered to pay $2.8 million in disgorgement and penalties in connection with a $6 million Ponzi scheme run through Palm Financial Management and Shore Management Systems. The scheme defrauded at least 55 investors and targeted elderly investors.
 
Damon Elliott and Piptastic Ltd. were accused by the SEC of raising around $9 million from at least 30 investors. Elliot is a U.K. citizen and falsely promised American investors that their funds would be invested in spread trading or spreadbet trading, which involves speculating on the price movement of a security or other financial instrument.
 
William S. Evans III was charged by the CFTC in connection with an alleged $10 million Ponzi-like scheme. The scheme was run through Turning Point Investments and took money from 15 investors to trade commodity futures.
Mark George, an Ohio lawyer, had his license suspended indefinitely by the Ohio Supreme Court. George spent 16 months in prison for his role in a Ponzi scheme that promised returns from oil and gas investments.
 
Todd H. Lahr, 60, of Pennsylvania, an attorney who pleaded guilty last month to participating in a $2.7 million Ponzi scheme, was disbarred. Lahr told investors and clients of his law practice that he would use their money to invest in business opportunities around the world, including mining companies in Papua New Guinea and properties in London and Barcelona. He gave some investors promissory notes with a 10% return and gave others shares of his company, THL Holdings.

Casper Mikkelson aka Carsten Nielson was charged by the CFTC with running a fraudulent foreign exchange firm. Mikkelson allegedly ran the scheme with Brian Thomson, Thomas Jensen and Casper Muller through a retail foreign currency exchange trading firm called GNTFX. Mikkelson issues false statements to investors showing up to 55% returns in less than one year.

Ronald J. Roach, 53, and Joseph W. Bayliss, 44, pleaded guilty to charges in connection with the $2 billion Ponzi scheme run through DC Solar. Roach provided accounting and tax services to the solar energy company and years of false financial statements. Bayliss was a general contractor and electrician who provided services to the company and who signed false reports and destroyed evidence.

Paul Horton Smith Sr., 56, of California was charged by the SEC in connection with an alleged $5.6 million Ponzi scheme run through his companies, Northstar Communications, eGate and Planning Services. Smith offered 75 people an investment that he represented was safer than the stock market, and he promised returns of between 3% and 10.5%.

Lee D. Weiss, 51, of Massachusetts, was charged in connection with a $10 million scheme. Weiss is an investment advisor. Weiss is an investment advisor and the principal of Family Endowment Partners, LP, and he purportedly defrauded his own clients by promising them returns from investments in a Florida tobacco company and private securities offerings.

INTERNATIONAL PONZI SCHEME NEWS 

Canada

Authorities have accused Monita Hung Mui Chan, Sabrina Ling Huei Wei, Justin Colin Villarin, Marie Joy Vincent, and James Bernard Law of raising money for and promoting a U.S. Ponzi scheme run through DFRF Enterprises LLC in Massachusetts and Florida. The scheme was orchestrated by Daniel Rojo Fernandes Filho, a Brazilian national. The scheme raised about $15 million from more than 1,400 investors around the world.

China

Wang Wenjun and 15 others were arrested in connection with alleged fraud run though a group of companies, including Eaton Corporation, Polylion platform, and E-tong mall.

Wotoken was revealed as a $1 billion cryptocurrency Ponzi scheme with links to PlusToken. The scheme took in funds from more than 715,000 victims.

England

Anthony Jon Domingo Armstrong-Emery, 41, defrauded 850 investors out of £23,000 through a scheme run by EcoHouse Developments Ltd. The scheme claimed to be selling affordable social housing in South America. EcoHouse claimed to be part of a legitimate government project called Minha Casa, Minha Vida (My House, My Life), aimed at moving families from shanty towns to homes with water and electricity.

Zimbabwe

Authorities believe that Ecocash, a subsidiary of Cassava Smrtech, is engaged in a Ponzi scheme.

Thursday, April 30, 2020

April 2020 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for April 2020. The reported stories reflect at least 5 new Ponzi schemes worldwide; at least 3 guilty pleas and convictions; new prison sentences of 39 years; and an average age of approximately 59 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed.
   
Blessing Loom, an alleged Ponzi scheme, has resurfaced in Utah. The scheme, promoted on social media, displays an octagon that must be filled with names of participants. It promises that if the investor pays $100 to get a spot and recruits other people, then the investor name makes it to the center of the octagon, and will be paid $800.

Barry R. Bekkedam, of Pennsylvania, the former owner of Ballamor Capital Management, settled charges by the SEC that he fraudulently solicited $100 million into the Ponzi scheme run by Scott Rothstein. Bekkedam was sentenced in 2017 to 11 months in prison.

Phillip Conley was charged by the SEC with running a Ponzi scheme that defrauded investors out of $5.2 million. Conley was associated with a registered broker-dealer but never invested clients’ funds as promised and instead delivered “materially false and misleading statements.”

William Neil “Doc” Gallagher, 79, or Texas, was sentenced to 25 years in prison and ordered to pay more than $10 million in restitution. Gallagher was a radio host and financial consultant who admitted to defrauding elderly investors in a Ponzi scheme. Gallagher targeted older, Christian listeners on his show called “The Money Doctor.” He guaranteed annual returns of 5% to nearly 9%. He received about $29.2 million from about 60 investors.

Karl Sebastian Greenwood was charged in connection with the OneCoin cryptocurrency scheme. Greenwood is a co-founder of the scheme that allegedly defrauded investors out of as much as $16 billion. The alleged mastermind of the scheme, Ruja Ignatova, is a fugitive and it is unknown whether she is alive.
 
Todd H. Lahr, 60, pleaded guilty to running a $2.7 million Ponzi scheme that targeted his law clients. Lahr practiced law for more than 30 years and persuaded his clients to invest in fictional companies, THL Holdings LLC and Ferran Global Holdings Inc. He promised returns from investments in mining operations in Papua New Guinea and residential leases in Spain and England.

Christopher A. Parris, 39, of Atlanta, an accused Ponzi scheme operator, was arrested on unrelated charges that he tried to defraud the Department of Veterans Affairs out of $750 million in connection with purchase orders for critical medical supplies during the coronavirus pandemic. Parris offered to sell millions of face masks and other personal protective equipment that did not exist. He promised that he could obtain millions of genuine 3M masks from domestic factories.

Benjamin Reynolds and Control Finance were the subject of a CFTC motion for default in connection with an alleged $147 million digital currency Ponzi scheme. Reynolds is the founder and operator of Control Finance which is believed to have defrauded 1,000 investors. Reynolds disappeared, along with 22,858 BTC, but the CFTC has been unable to locate him.
 
David Gilbert Saffron and Nevada-based Circle Society were charged by the CFTC with running a Ponzi scheme through a purported cryptocurrency and overseas alternate funding agency. Saffron provided binary choices on foreign exchange and cryptocurrency pairs and is alleged to have defrauded traders out of $11 million in dollars and bitcoin. At least 14 people invested and were promised returns of as much as 300%.

James Seijas, Michael Ackerman, and Quan Tran were sued by a group of investors accusing them of running a $35 million cryptocurrency Ponzi scheme known as Q3. Seijas worked as a financial advisor for Wells Fargo Advisors, Ackerman is a former New York Stock Exchange institutional broker, and Tran is a surgeon. The trio has already by accused of wrongful activity by the SEC and the CFTC. The scheme promised returns from trading cryptocurrency that would be successful using a proprietary algorithm developed by Ackerman.
  
Lee D. Weiss, 51, was charged with running a Ponzi scheme that defrauded clients out of $10 million. Weiss alleged ran the scheme through Family Endowment Partners, LP, a registered investment advisor, promising investors returns from a Florida tobacco company and private securities offering.
 
Kent R.E. Whitney, 38, agreed to plead guilty to one count relating to a Ponzi scheme run through the Church for the Healthy Self. The scheme solicited investments into CHS Trust and guaranteed annual returns of 12%. The scheme represented that the church’s traders had not lost money in 15 years and that the CHS Trust was federally insured. The scheme preyed upon the Vietnamese community and had at least 355 investors who invested more than $33 million. 

INTERNATIONAL PONZI SCHEME NEWS
 
Australia

Gunter Lang, 80, pleaded guilty in connection with a Ponzi scheme that defrauded investors out of about $6.5 million. Lang was an unlicensed financial trader who defrauded about 32 investors   lost about $7 million of investor funds. It is believed that 32 investors invested with Lang, who used the online platform, IG Markets, to defraud his victims.

China

A new alleged Ponzi scheme called Antimatter Kingdom has surfaced in China involving about $12 million in Bitcoin. The scheme promises large returns for users who deposit bitcoin into its “special” mining program. About 1,800 Bitcoin may have been deposited.

Nigeria

The SEC warned of the following suspected Ponzi schemes and advised against investing with these operators: Loom Nigeria Money; Box Value Trading Company Ltd; Now-Now Alert; Flip Cash Investment; Result Investment Nigeria Limited; Helping Hand and Investment; No Failure Development and Empowerment Nigeria Ltd.; MBA Forex and Investment Ltd; Federate Investors and Trading Company; Jamalife Helpers Global Ltd; Flexus Global Solutions and Investment Ltd; and United Capital Investment Company Limited.

Philippines

The SEC warned that Bitcoin Revolution is a Ponzi scheme promising exorbitant returns of 300% per day, or 9,000% per month. The program offers unregistered securities in the form of investment contracts, which is in violation of Philippine securities law. 

The SEC warned the public against dealing with 14 companies who have exploited the Covid-19 pandemic. Maginvestka.Online (MIK.O) purportedly trades bitcoin against the US dollar and is operated by “Mag Forex” and promises 2% returns daily. Azenzo-Online supposedly operates as an independent crowdfunding platform and promises a 30% return in 5, 10 or 15 days, and a 100% return after 20 days. Other entities flagged by the SEC included – Bitrade/Bitrade Bitcoin Trading Ltd/Bitrade Ltd PH; Bitcoin Revolution; E-Commerce/House of Entrepreneurs Inc, Fast Track Worldwide Inc, Narcfunds/Narcsfund, Munic Nation Inc., Munics Banks; Nextgen Global Alliance Corp (Nextgen), Nextgen Organic Farmers Cooperative (Naofaco); Fast Five System-United Phoenix Team; Non-stock Corporations, BIG500PH, and International VIP Financing/International VIP Financing PH.

Scotland

Alistair Greig, 66, was sentenced to 14 years in prison after he was found guilty of running an investment fraud through Midas Financial Solutions. The scheme defrauded 95 clients out of £13m. 

Solomon Islands

Police arrested Charles Dora, a director of the One Link Pacifica Ponzi scheme. The scheme promised a 300% return on investment within a month.

Thailand

Sitthanat Pho-ngern, 30, was arrested in connection with the Forex-3D Ponzi scheme for his role in luring investors into the scheme. It is believed that about 3,000 people invested 1.58 billion baht.

Vietnam 

Simon Le aka Le Quoc-Hung has reinvented the OneCoin Ponzi scheme under the new name, OneLink. Konstantin Ignatov, the leader of OneCoin was arrested last year, and his sister, Ruja Ignatova, escaped with over $500 million and is still at large. Simon Le positioned himself as the new leader of OneCoin and used the platform to promote his new scam, OneLink.