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

Saturday, July 31, 2021

July 2021 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for July 2021. The reported stories reflect at least 5 new Ponzi schemes worldwide, 5 guilty pleas, more than 72 years of prison sentences, and an average age of approximately 52 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed.  

George S. Blankenbaker Jr., 56, was sentenced to 5 years in prison in connection with a fraudulent scheme run through his companies, three business entities, Stargrower Commercial Bridge Loan Fund 1 LLC, Stargrower Asset Management LLC and EDU Holding Trust. More than 100 individuals invested more than $10 million in the scheme that supposedly needed funds to finance the use of shipping containers of food. 

Thomas F. Casey and Dennis R. Di Ricco, the founder and CFO of Golden Genesis, Inc., respectively, were ordered to pay $1.6 million in connection with a scheme that defrauded seven Missouri investors. They utilized an unregistered Las Vegas broker-dealer, Retire Happy, LLC, to sell more than $9 million in investments. 

Manuel Chavez, 30, of Florida, and Mark Oman, 36, of Washington, were convicted on charges relating to a sweepstakes scheme that took $4.5 million from victims. The two defendants falsely told victims they had won a sweepstakes prize but requiring investors to pay a fee to collect their reward for supposed taxes and fees.

David deBarardinis, 59, of Louisiana, pleaded guilty to running a Ponzi scheme that defrauded more than 20 investors. Prosecutors allege that the fraud exceeded $100 million. deBarardinis convinced investors to loan him money to act as a middleman in energy trades.

Allen Roy Duquet, 70, was sentenced to 25 years in prison and ordered to pay over $5 million in restitution in connection with a Ponzi scheme that defrauded 26 investors. Duquet solicited money from investors for real estate investments but instead mismanaged and misused the funds. Joseph Bernard Charde has also been accused of acting as a broker to the transactions made by Duquet as a part of its investment program called "The Commission Resource Program."

Richard E. Geaerhart, 71, of Indiana, was sentenced to 5 years in prison and ordered to pay $5.3 million in restitution in a securities Ponzi-like scheme. Gearhart was a licensed insurance agent from 2008-2013 operating out of Gearhart & Associates. He was also CEO of Asset Preservation Specialists Inc. He sold unregistered securities to his insurance clients and promised them that there was no risk to their principal and returns of 6% to 8%.

Craig Harbaugh of Nebraska was found dead on the day he was to be sentenced following his conviction for running a Ponzi scheme. Harbough was a former deputy sheriff and was convicted of defrauding a bank and several individuals out of nearly $11 million. He provided false purchase orders and service contracts for his business which sold tactical gear for law enforcement.

Bernard Ross Hansen aka Ross B. Hansen, 60, of Washington, was convicted on charges that he defrauded investors in a scheme run through Northwest Territorial Mint. Vault manager, Diane Renee Erdmann, 48, was also convicted.  They ran both a custom business that manufactured medallions and other awards, as well as a bullion business that involved the selling, buying, exchanging, storing, and leasing of gold, silver, and other precious metals.  

George Heckler, 65, was sentenced to 5 years and 3 months in prison and was ordered to pay restitution in the amount of $19.25 million in connection with a scheme that defrauded investors out of about $20 million. Heckler ran the scheme through multiple investment funds, including Conestoga Partner Holdings, Cassatt Short Term Trading Fund LP, and CV Special Opportunity Fund LP.

Joshua Heppensen, Laura Mascola, Ryan Maasen, and Michael Noble settled with the SEC in connection with their role as promoters of the BitConnect scheme. The Bitcoin scheme raised over $2 billion before shutting down.

Naim Ismail, 60, pleaded guilty to running a $15 million Ponzi scheme that involved supposed real estate investments. Ismail defrauded both individual and corporate victims.

Roger Nils-Jonas Karlsson, 47, a Swedish citizen, was sentenced to 15 years in prison and ordered to pay over $16 million in restitution in connection with a cryptocurrency scheme. Karlsson had pleaded guilty to running the scheme through a business called “Eastern Metal Securities.”

Joy Kovar, 86, and her son Brent Kovar, 54, were sued by the SEC on allegations that they were running a $12 million Ponzi scheme that defrauded 277 investors. The alleged scheme was run through their Las Vegas based company, Profit Connect Wealth Services. The Kovars represented that supercomputer and artificial intelligence could generate 20%-30% fixed returns per year with monthly compounding interest.

Dane Roseman, 38, and Ivan Acevado, 44, of California, pleaded guilty in connection with the Woodbridge Group of Companies Ponzi scheme. They worked as sales agents for Woodbridge and falsely claimed that Woodbridge was profitable and promised high rates of return. The scheme defrauded more than 9,000 investors out of more than $1.29 billion. 

Alexander S. Rowland, 30, of New Jersey, was sentenced to 9 years in prison and ordered to pay more than $3.1 million in restitution. Rowland defrauded more than 120 clients who thought they were investing in Rowland’s company, Roaring Investments, Inc., for purposes of investing in stocks and cryptocurrency. He promised a minimum return of 25% with potential returns of 50% or higher.

Lambert Vander Tuig and Ben Schachtshneider were sued by the SEC on allegations that they ran a $50 million Ponzi scheme through Biosynetics and Biosynetics Management. Investors were told that the funds would be used for research and development. Additionally, the sum of $763,500 was raised from 28 investors through the nonexistent pharmaceutical company that supposedly had secured distribution agreements with major retailers.

Howard L. Young, 75, was sentenced to 8 years on prison. Young solicited cancer patients to invest in his company, Integrative Medical Services, telling them he had received a $2 million grant from Vanderbilt University to study cancer. Participants had to pay $10,000 up front, but he did not hold the money in escrow as he promised. Patients also did not routinely receive the nutritional supplements, exercising, coaching or gym memberships promised by Young.

INTERNATIONAL PONZI SCHEME NEWS 

Australia

Michael Gu, whereabouts unknown, is the founder of the property group iProsperity and is accused of running a $245 million Ponzi scheme. The scheme collapsed last year when authorities accused of him of defrauding clients by claiming he was buying a portfolio of commercial property in Australia. Harry Huang, the CFO, was also accused of misappropriating investor funds. Gu allegedly passed $8 million though the Crown Melbourne Casino.

Mirror Trading International, a collapsed cryptocurrency trading firm, was placed into final liquidation. An additional 8,000 bitcoin, valued at about $268 million, were traced and added to the 1,281 bitcoin previously recovered.

Chris Marco, 63, is under investigation for running a Ponzi scheme that allegedly defrauded as many as 340 investors for 16 years. The fraud is alleged to have defrauded investors out of $250 million.

Joe Papalia, an accountant, is being investigated in connection with an alleged Ponzi scheme.

United World Enterprise is accused of running a Ponzi scheme through the cattle farm at Currabubula Station. UWE is Chinese-owned and lured more than 900 retirees into investing up to $46 million for fake agritourism and aged-care village schemes. 

Brazil

Claudio Oliveira was arrested in connection with an alleged $300 million cryptocurrency scheme run through the Bitcoin Banco Group. 

England

Stephen Allen pleaded guilty in connection with his role in the Renwick Haddow Ponzi scheme. Allen forged information regarding Haddow’s assets.

Ghana

Authorities sought to shut down Q-NET Company Limited, Q-NET Investments Limited, and Q-NET Limited on allegations that they were operating a Ponzi scheme. The directors of the companies are identified as Mbun Mbabugri Kazani and Braimah Suraju.

India

Syed Fakruddin, 47, Miran Mohideen, 48, and Mohammad Manas, 32, were arrested in connection with a scheme allegedly run through a mobile app called “Share me.”

Chetan Dand, 42, was arrested on allegations that he was running a Ponzi scheme that defrauded over 100 investors out of Rs 16 crore. Dand’s accomplice, Kelvin Kenia, 23, left for Africa with the money but his family claim he died during the pandemic. 

Mir Sahimat alias Kalu and Mir Jamiruddin were arrested in connection with an alleged Ponzi scheme run through Green Ray International.

Pratap Kumar Biswal was arrested on charges that he was running a Ponzi scheme through Mass Infra Reality

Dillip Kumar Jain, one of the directors of Ocean Videsh Limited, was arrested in connection with a scheme that defrauded investors by promising returns from long-terms loans at low rates of interest. The company was shut down in 2013 and two other directors had been arrested.  Jain had been on the run.

Turkey

Mehmet Aydin, 29, is being extradited to Turkey to face charges that he was running a $130 million Ponzi scheme. Aydin is the developer of the Farm Bank online game also known as Cliftlik Bank. Aydin turned himself in in Brazil out of fear for his life. He faces 75,000 years on prison for running the scheme that defrauded over 130,000 people. Fatih Aydin, the brother of Mehmet, was detained in Uruguay and is expected to be extradited to Turkey.

A real estate company called Gerçek Evim (My Real Home) operating under SAS Holding has been found to be part of a Ponzi scheme that grossed $69.2 million. The company promised 10% returns to its 13,000 customers.


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.