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

Tuesday, November 30, 2021

November 2021 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for November 2021. The reported stories reflect at least 3 new Ponzi schemes worldwide, 1 guilty plea, more than 116 years of prison sentences, and an average age of approximately 45 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. 

Erez Baver, 41, of Illinois, pleaded guilty to charges relating to a Ponzi scheme that defrauded at least 75 investors out of at least $22 million. The scheme targeted the Orthodox Jewish community and was run through FNR Healthcare, along with Zvi Feiner. Feiner created FNR to supposedly buy and sell assisted living communities and nursing homes.

Joseph W. Bayliss, 46, was sentenced to three years in prison and ordered to pay about $481 million in restitution for his role in the DC Solar Ponzi scheme. Bayliss played a key role in covering up the fact that no new generators were being built as he shuffled vehicle identification numbers between generators, and he destroyed at least 1,000 identification stickers.

Robert Blom, 59, of South Dakota, was sentenced to 91 months in prison and ordered to pay $24 million in restitution in connection with a cattle Ponzi scheme. The scheme involved 30,000 fake cows and $24 million in lost funds. Blom resold the same cattle to multiple investors and falsified invoices.

David Oscar Braeger, 54, of Wisconsin, was indicted on charges that he ran two separate schemes that fraudulent obtained over $5.5 million from his victims. Braeger mispresented the status and value of his customers’ investments to conceal that funds had been stolen. Customers were provided with fake quarterly statements which showed that their funds were invested in Rubicon, when in reality that company had been closed and liquidated.

Jeff Carpoff, 50, was sentenced to 30 years in prison and ordered to pay $790.6 million in restitution in connection with a Ponzi scheme run through DC Solar. The scheme defrauded victims out of about $1 billion in connection with a business that made solar generators to provide emergency power for cellphone companies or to provide lighting at sporting and other events. Carpoff’s wife, Paulette Carpoff, 47, faces up to 15 years in prison after pleading guilty. Co-conspirators Robert A. Karmann, 54, Ronald J. Roach, 54, Joseph W. Bayliss, 46, Ryan Guidry, 44, and Alan Hansen, 50, all pleaded guilty in separate indictments.

Natalie Cochran, 40, currently serving an 11-year prison sentence for running a Ponzi scheme, was indicted for first degree murder of her husband, Michael Cochran. 

William Neil “Doc” Gallagher, 80, of Texas, was sentenced to three life sentences in prison in connection with a Ponzi scheme that he ran through Gallaher Financial Group and W. Neil Gallagher, Ph.D. Agency. Gallagher advertised on Christian radio that he was selling securities. He defrauded at least 30 victims out of $32 million. He offered investors “guaranteed, risk-free returns” of 5% to 8% annually. He pleaded guilty in 2020 and was sentenced to 20 years in prison in Dallas County and was then indicted in Tarrant County.

Joshua Matthew Houchins, 38, of North Carolina, was sentenced to 10 years in prison in connection with a Ponzi scheme that defrauded investors out of $1.5 million. Houchins had pleaded guilty to a real estate scheme which he ran through shell companies. He destroyed is computer when facing a subpoena in 2018.

Adam Joiner, 43, of California, was sentenced to more than 8 years in prison and ordered to pay $14 million in restitution after pleading guilty to charges relating to a Ponzi scheme involving foreign investors and a supposed agreement with Netflix. Joiner persuaded investors to pay $14 million to fund a film written by his brother and told investors that Netflix had agreed to distribute the film.

Stephen P. LeProhon, 32, was sentenced to more than 12 years in prison in connection with a scheme that defrauded 20 customers of his Industrial Boulevard boat consignment business.

John Piccarreto, Jr., 38, of New York, was sentenced to 84 months in prison and ordered to pay almost $20 million in restitution for his role in a Ponzi scheme that defrauded hundreds of investors. Piccarreto conspired with Perry Santillo, Christopher Parris and others in the scheme run through Lucian Development.

James A. Seijas was barred by FINRA from the industry for his role in the alleged $30 million-plus cryptocurrency investment scheme. In a lawsuit filed in Florida, Seijas was accused along with Quan Tran and Michael Ackerman for running a Ponzi scheme called Q31. The scheme promised returns of 15%, but only about $10 million of the funds were actually invested.

Matthew Preston Taylor, 44, was sentenced to 17 years in prison in connection with charges that he operated a scheme through his business, Savage Yachts LLC, that caused losses more than $1.5 million. 

INTERNATIONAL PONZI SCHEME NEWS 

Australia

Tony Iervasi and Athan Papoulias were charged in connection with an alleged Ponzi scheme. They are accused of defrauding around 590 investors who paid over $196 million into the scheme. Iervasi was the sole director and shareholder of Courtenay House Pty Ltd. and Courtenay House Capital Trading Group Pty Ltd.

China

Authorities confiscated crypto assets worth $62.5 million in connection with an alleged Ponzi scheme run through Filecoin miner IPFSUnion. Chinese police have arrested 31 people in connection with the alleged scheme. IPFSUnion released a statement saying that those arrested in the case had procured equipment through illegal means.

India

Police arrested Raghavendra, Nagaraju and Shivamurthy in connection with a chain-link investing model rung through a firm named FOMOEX. The scheme promised 20% returns and offered a commission for bringing in new investors.

Karthika, 32, and Prabhu, 30, were sentenced to 10 years in prison for defrauding 99 investors in a chicken farm scheme run through Healthy Poultry Farms India Pvt Ltd. The scheme promised investors country chicks and other incentives. 

Nigeria

Francis Uju Adoms was declared wanted by authorities in connection with an alleged Ponzi  scheme that defrauded investors out of N52 million. Adoms ran the scheme through Addy Finance & Investment Limited, registered under the Fund Managers Association of Nigeria. 

Russia

Fugitives of Finiko are suspected of removing 750 bitcoin from a cryptocurrency wallet worth about $48 million. Zygmunt Zygmuntovich, Marat Sabirov, and Edward Sabirov, who are associates of the scheme’s founder Kirill Doronin, fled Russian as the crypto investment scheme collapsed earlier this year.

Singapore

Jaya Rethinasamy Ghandi, 54, was sentenced to 25 months in prison in connection with a $700,000 Ponzi scheme 

Thailand 

MBC Club was shut down and the principal arrested for a scheme that defrauded thousands of victims and caused 1 billion Baht in damages. Victims were promised large profits from foreign exchange market trading. MBC promised 40% average monthly returns and a year-end bonus of a Porsche luxury sports car.

Turkey

Faith Aydin was extradited to Turkey. Aydin and her brother, Mehmet Aydin, are founders of Ciftlik Bank (Farm Bank) and are accused of running a $110 million Ponzi scheme that defrauded more than 132,000 people. 

Sunday, October 31, 2021

October 2021 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for October 2021. The reported stories reflect at least 8 new Ponzi schemes worldwide, 1 guilty plea, more than 78 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. 

Mejdi Mahmoud Abousaoui, 37, was sentenced to 25 years in prison and was ordered to pay $2.8 million in restitution for his role in a $4 million that defrauded 70 victims. Abousaoui fraudulently promised monthly returns of 5% from the supposed purchase of equities, bonds, and other products. Abousaoui had previously pleaded guilty to charges.

Dean Alford, of Georgia, pleaded guilty and was sentenced to 8 years in prison in connection with a scheme involving energy projects. Alford raised at least $23 million selling fake accounts receivable invoices.  

Brent Reed Barber, 42, of California, was arrested on charges that he raised $13.8 million in an alleged Ponzi scheme. Barber is the co-owner of BNZ Capital One LLC along with Louis Alfonso Zimmerle, 62, who was also charged in connection with the alleged scheme and has agreed to a plea deal. The SEC also filed a parallel civil action. The scheme involved the buying and selling of real estate projects that promised investors “guaranteed” returns of between 8% and 10%. The scheme defrauded about 105 investors.

Eric V. Bartoli was sentenced to 20 years in prison in connection with a $42 million scheme. Bartoli was a securities broker accused of defrauding hundreds of investors and then of fleeing to Peru. At the resentencing hearing, Bartoli denied any wrongdoing during his sentencing and stated, “I can’t flee if no one is looking for me.” The 20-year sentence was more than double the penalty suggested in Bartoli’s plea agreement.

Storm Bryant and Elijah Bryant III, of North Carolina, were sued by the CFTC, along with their companies, CapitalStorm, LLC, GenerationBlack LLC, and NCome LLC. The charges relate to an alleged $1.05 million scheme in which they solicited funds to engage in off-exchange foreign currency on a leveraged, margined, or financed basis. The scheme took money from about 94 investors

Tochukwu Edeh, 31, was charged with operating an unlicensed money transfer business to launder the proceeds of online investment fraud schemes based in Nigeria. Edeh ran used-car dealerships and currency transfer services in Texas, Florida, and Nigeria.  The scheme offered trading and Bitcoin investing services, but investor money was not used for those purposes.

Victor Farias, 48, of Texas, was sentenced to 11 years in prison and ordered to pay more than $7.4 million in connection with a Ponzi scheme that defrauded police officers. Investors were promised returns of 10% to 12% per year from a scheme that was supposed to generate profits from aircraft engines and other parts that would then be leased or resold to major airlines. About 90 investors were defrauded out of their retirement savings.

Larry A. Holley, 64, or Michigan, was sentenced to 100 months in prison in connection with a scheme that defrauded more than 140 investors. Holley, a pastor, ran the scheme with Patricia E. Gray, 60, through a entity called Treasure Enterprise LLC and promised investors large returns. They defrauded investors out of about $9.3 million. The funds were used to pay themselves, however, and to transfer money to Abundant Life Ministries. Gray was sentenced to 42 months in prison.

Albert Rossini, 73, was sentenced to 11 years in prison in connection with $7 million Ponzi scheme that he ran through Devon Street Investments. Rossini was convicted along with Babajan Khoshabe and his son, Anthony Khoshabe, who are awaiting sentencing. Investors were told their funds would be used to buy mortgages of Chicago-area apartment buildings at or near foreclosure. In reality, there were no buildings, and Rossini created fictitious documents and filed a fake lawsuit to defraud the victims.

Abner Alejandro Tinoco and his company, Kikit & Mess Investments, LLC, were charged by the CFTC on allegations that they fraudulently solicited over $3.9 million from 61 clients. The clients had given their money to be managed in customized client portfolios for foreign exchange and crypto trading. Most of the money was instead used to pay Tinoco’s personal expenses such as chartering a private jet, renting a luxury mansion and cars, and buying real estate.

Ann M. Vick, 59, of Colorado, settled the SEC’s charges that she was running a $3.2 million Ponzi scheme through her company, AMV Investments. The scheme allegedly defrauded approximately two dozen investors by promising them “exorbitant” returns from options trading.  Vick and AMV promised monthly interest payments of 5% to 10%. Vick consented to a judgment enjoining her from future violations or selling securities, but she did not admit or deny the allegations.

INTERNATIONAL PONZI SCHEME NEWS 

India

Virithgopalan Nair, 76, and his wife Valsala were arrested in connection with an alleged Ponzi scheme run through VGN Jewellers, a well-known jewelry store. About 137 investors were defrauded in the scheme.

Harshul Kaushik and Gurmeet Sahni were arrested on charges that they were running a Ponzi scheme under the name E-Rickshaw on Rent. Complaints involving 1,100 victims have been received. The ran the scheme through a company called SOS Vehicle Service Pvt Ltd.

Israel

A bankruptcy court in Manhattan granted recognition of the Israeli insolvency proceeding against Michael David Greenfield aka Michael Ben-Ari. Greenfield has been dubbed “the Israeli Madoff” and is under criminal investigation for an alleged 15-year Ponzi scheme that may exceed $150 million.

Nigeria

Bamise Samson and Elizabeth Ajetunmobi are on the run after having been accused of defrauding thousands of investors out of 22 billion Naira through their business, Imagine Global Solutions Ltd. Rumors are that they obtained Antiguan and Barbudan passports, but authorities in those countries have stated that they will not serve as a refuge for criminals. Imagine Global was a micro lending service for small and medium business and offered investors 10% interest.

Philippines

Authorities charged Organico Agribusiness Ventures Corp. and its president, Cerrone Roial Posas, and officers Marve Subere Posas, Renato Subong, Anthony Butaslac, and Karen Maasin in connection with an alleged Ponzi scheme.