Kathy Bazoian Phelps
Senior Counsel in Ponzi Scheme Litigation
and Bankruptcy Matters

Kathy is a senior business trial attorney with more than 30 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, May 31, 2022

May 2022 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for May 2022. The reported stories reflect at least 12 new Ponzi schemes worldwide, 3 convictions, 2 guilty pleas, more than 64 years of prison sentences, and an average age of approximately 54 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. 

Eddy Alexandre, 50, of New York, and EminiFX, Inc. were sued by the SEC and were the subject of an asset freeze in connection with an alleged crypto and foreign exchange trading scheme. The scheme involved at least $59 million, and investors were promised 5% to 9.99% weekly returns. Alexandre was also arrested in connection with the alleged scheme, and the FBI complaint alleged that the weekly earnings promises were false.

Jeremy Arrington, 44, of Wisconsin, was convicted in connection with a $2.4 million investment scheme that defrauded 20 victims. The scheme was run through Wisconsin Home Buyers Network, which promised returns to investors ranging from 12% to 36% from real estate investments.  Joe Nemeth intends to plead guilty in connection with the scheme. They used investor funds to pay off their debt and delinquent taxes.

Luiz Capuci Jr., 44, of Florida, was charged in connection with an alleged scheme run through Mining Capital Coin. Investors were promised returns from crypto mining but instead their funds ended up on wallets that Capuci owned. Capuci also promised returns from “Trading Bots” which were to trade at a high volume for significant returns, but instead the funds were diverted to Capuci and his co-conspirators. Capuci also touted his own cryptocurrency, Capital Coin. Approximately $62 million was paid into the scheme.

Wynn Charlebois, of North Carolina, and his company, WC Private LLC, were accused by the SEC of operating a $7.1 million that allegedly defrauded 75 investors. Charlebois offered investors bogus investment opportunities, including investments in fake option contracts. Charlebois represented that he supposedly had provided consulting services for companies that had compensated him with stock options.

Alexandra H. Cock and her company Wealth Plus were barred from the securities industry after the SEC charged her in connection with the Ponzi scheme run through Professional Financial Investors and Professional Investors Security Fund.  Cock raised more than $2.5 million for the $26 million real estate-based Ponzi scheme. Cock had been promised a referral fee from Kenneth Casey, now deceased, who ran the scheme.

Michael J. DaCorta, 57, of Florida, was found guilty of running the $80 million Ponzi scheme through Oasis International Group. The scheme defrauded 700 victims and promised huge returns from foreign currency exchange trades.

Bernard Ross Hansen, 61, and Diane Renee Erdmann, 49, of Washington, failed to show up at their sentencing hearing and were on the run after being charged with running a Ponzi scheme through Northwest Territorial Mint. The scheme allegedly defrauded 3,000 investors out of more than $30 million in connection with a gold and silver bullion scheme. Hansen and Erdmann were later arrested after a hotel employee recognized them.

Marlin Hershey, 52, and Dana Bradley, 52, of North Carolina, were indicted on charges relating to an alleged scheme run by Gary Dragul. They allegedly induced dozens of investors to invest millions of dollars in their entities, Performance Retire on Rentals, LLC, Distressed Lending Fund, LCC, Moteng Funding, LLC and Southeast Lot Acquisitions, LLC, among others. 

Sam Ikkurty aka Sreenivas I Rao, of Oregon, and Ravishankar Avadhanam, of Illinois, and Jafia LLC were charged by the CFTC in connection with an alleged $44 million Ponzi scheme that collected funds from 170 investors. The scheme involved cryptocurrency and digital assets and was run through Ikkurty Capital dba Rose City Income Fund, Roe City Income Fund II LLP, and Seneca Ventures LLC. Investors were promised profits as high as 62% annually on the website and through YouTube videos. The two defendants allegedly kept $18 million for themselves and transferred funds to other participants and to offshore entities under their control. 

Mark Marchi, of New Jersey, was charged in connection with a $2.8 million Ponzi scheme run through Precipio Capital. Marchi claimed he was trading securities, and even though he had a loss on his trading activity, he paid out a total of $1.4 million to early investors. Marchi had previously pleaded guilty to other charges in 1998 and had been barred by the New York Stock Exchange. 

Sven Eric Marshall, 64, of Indiana, was sentenced to 10 years and one month in prison and ordered to pay back $1.94 million in restitution. Marshall, an attorney, pleaded guilty to mail fraud, securities fraud, and bank fraud in connection with a scheme that defraud elderly victims. He took money from the estates of his clients who hired him to administer their wills. He started the scheme in 1998 and promised returns of 4% to 8% per year. More than $730,000 was taken from 16 investors over a 14-year period. Marshall used his law practice to embezzle more than $1.3 million from clients in finalizing their estates and wills.

Brian K. Martinsen, Michael A. Castillero, Francine A. Lanaia, and Eric D. Lachow, of Florida, were sued by the SEC in connection with an alleged scheme run through StraightPath Venture Partners LLC and StraightPath Management LLC. The scheme involved the selling of pre-initial public offering shares that they did not own. At least $410 million was raised from more than 2,200 investors. The defendants paid themselves more than $75 million and sales agents about $48 million.

George R. McKown, 71, of Indiana, was sentenced to 7 years in prison in connection with a Ponzi-like scheme that defrauded more than two dozen investors. McKown and co-defendant, Richard E. Gearhart, solicited investments into their company, Asset Preservation Specialists, and promised returns of 6% to 8%. The scheme involved at least 25 victims and involved more than $5 million. 

Andrew M. Middlebrooks, of Michigan, and his company, EIA All Weather Alpha Fund Partners I LLC, was sued by the SEC on fraud charges that they were operating a Ponzi scheme causing losses of nearly $39 million. Middlebrooks operate a hedge fund, EIA All Weather Alpha Fund I LP, and allegedly misled investors by making false and misleading statements regarding the fund’s performance. The scheme defrauded over 100 investors and represented that the fund “had extremely successful trading performance, with cumulative returns upwards of 2,500% from the fund’s inception” when in reality the fund had lost approximately $27 million. The SEC also named EIA All Weather Alpha Fund Partners II LLC; and Shop Style Shark LLC, Middlebrook’s wife’s business.

Casper Mikkelsen was permanently banned by the CFTC from trading commodity interests, and he was ordered to pay about $1.2 million in restitution. Mikkelson misappropriated his clients’ funds rather than using them from foreign exchange trading and made Ponzi-like payments to his clients as purported forex trading profits.

Robert Narvett, 57, of Wisconsin, was sentenced to 15 years in prison in connection with a scheme that defrauded nearly 70 investors out of over $2 million. 

Eshaq M. Nawabi and his companies Nawabi Enterprise and Hyperion Consulting Inc. were charged by the CFTC in connection with an alleged Ponzi scheme involving off-exchange Forex trading. They solicited funds totaling at least $543,000 from at least 7 investors and promised returns of 8% to 25% per month. The investors could supposedly withdraw their funds at any time.

James Nix, 73, of Texas, was found guilty in connection with a Ponzi scheme he ran with his son, Bradley Nix. Bradley Nix pleaded guilty and was sentenced to 54 months in prison. They operated an accounting firm out of a home and defrauded more than 40 victims out of at least $6 million. 

Inigo Philbrick, 34, was sentenced to 7 years in prison and ordered to pay more than $86.6 million in restitution in connection with a Ponzi-like scheme involving more than $86 million. The scheme was uncovered in 2019 and his partner, Victoria Baker-Harber, 33, was previously sentenced to 7 years. The scheme involved an art dealing fraud and Philbrick was dubbed the “Mini Madoff of the art world.” He misrepresented that he owned certain artworks and sometimes sold more than 100% ownership to multiple individuals and entities.

Ruless Pierre, 52, of New York, was sentenced to 7 years in prison and ordered to pay $2.03 in restitution in connection with a Ponzi-like scheme that targeted the Haitian community and brought in more than $2 million. The scheme was run through Ruless Pierre Consulting Group and investors were promised 20% returns every 60 days. Pierre deposited the investors' money into his personal bank accounts or his company's bank accounts and then transferred the money to trading accounts, where he engaged in unprofitable day trading. Pierre had offered investors returns from silent partnership agreements in fast-food locations, among other things.

Richard Dow Rockwell, 62, of California, and his company Dow Rockwell, LLC were charged by the SEC in connection with the PFI scheme run by Ken Casey.

Brenda Smith, 61, a Philadelphia investment manager, was sentenced to 109 months in prison and ordered to pay $47.2 million in restitution in connection with a $105 million Ponzi scheme run through Broad Reach Capital LP. Smith ran a pooled investment fund and claimed returns of more than 35%. In reality, the accounts lost about 50% of their value. Smith instead used the funds for a mineral mining operation and to pay her expenses, including $2 million for American Express credit card bills.

Jeremy Spence, 25, was sentenced to 42 months in prison in connection with a cryptocurrency Ponzi scheme that defrauded 170 investors out of $5 million. Spence solicited the funds through Coin Signals, promising investors profits from crypto trading that was in reality unprofitable.

INTERNATIONAL PONZI SCHEME NEWS 

Australia

Roger Munro, 72, was sentenced to 4½ years in prison in connection with a $60 million scheme. Munro represented that the funds were sitting in a blind trust in the U.S. He has not been charged in connection with the missing $60 million, but pleaded guilty to a scheme involving three investors who had been promised returns of 30% to 50%.

England

Michael Strubel was sentenced to 6 years and 7 months in prison for his failure to pay back £1.4m of illicit profits. Strubel was originally jailed in 2015 in connection with a Ponzi-style scheme in which he claimed he was supplying services to the London 2012 Olympic village and large hotels. He defrauded investors out of £75.5 million and spent the money on yachts, luxury cars and property. Strubel was ordered to return more than £2.1m to victims, but more than £1.4m is outstanding. Jolan Saunders and Spencer Steinberg have also been charged in connection with the scheme.

India

Pallavi Hota, the director of Purple Qualves Financial Services Private Limited, was arrested on charges that he defrauded at least 43 investors. 

Nigeria 

86fb Football has been accused by investors of running a Ponzi scheme. Thousands of investors were promised returns of 3% and now claim that they have lost over N200 billion.

New Zealand

Quwiex Limited is being investigated by authorities as running a fraudulent cryptocurrency investment scheme. 

Papua New Guinea

A 46-year old Chinese national was arrested on charges relating to a scheme that defrauded nearly 24,000 victims out of 34 million euro. 

Philippines

Authorities warned about a possible Ponzi scheme run through Multi Fortune Stake, which has been soliciting investments without registration. The scheme is run by Ricky Galon, who guarantees returns of 100% in 30 days.

Authorities issued an order of revocation to Wealth on Web Company aka WOW Company, which was operating without a license. WOW Company had characteristics of a Ponzi scheme. WOW was supposedly engaged in the direct selling of goods to consumers and retail trading, and the promoters promised returns of 3% to 6% daily.


Saturday, April 30, 2022

April 2022 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for April 2022. The reported stories reflect at least 8 new Ponzi schemes worldwide, 3 guilty pleas, more than 39 years of prison sentences, and an average age of approximately 49 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. 

Matthew Beasley, 49, was accused by the SEC of running an alleged $449,000 Ponzi scheme that operated in Nevada, Utah, and California that defrauded over 600 investors. Beasley confessed to running a Ponzi scheme after he was shot by an FBI agent who had come to his house to investigate and was shot at himself. Investors were told that their money would be used to make advance payments to plaintiffs who had settled tort claims and were willing to pay a premium to be paid on the settlements in advance. Investors were promised returns of 50% or more. Beasley admitted that he did not have relationships with settlement plaintiffs and that he used the investor funds to pay off gambling debts and for luxury items. Jeffrey Judd, the main promoter of the scheme, was also named in the SEC suit. The entities charged with fraud in this action are J&J Consulting Services, Inc. (Nevada), J&J Consulting Services Inc. (Alaska), J and J Purchasing LLC, Beasley Law Group PC, PAJ Consulting Inc, BJ Holdings LLC, Stirling Consulting L.L.C., CJ Investments, LLC, Rocking Horse Properties LLC, Triple Threat Basketball, LLC, ACAC LLC, Anthony Michael Alberto, Jr., and Monty Crew LLC. Other individuals charged with acting as unregistered brokers are Humphries, Shane Jager, Jason Jongeward, Denny Seybert, and Roland Tanner

Vania May Bell, 57, pleaded guilty to running a Ponzi scheme with her father, Hector May, through Executive Compensation Planners. Hector May was sentenced to 13 years in prison and ordered to pay $8 million in restitution. 

David Joseph Bunevacz, 53, Mary Hayca Bunevacz, of California, and CaesarBrutus LLC, Brutuz California Ventures Corp., and CB Holding Group Corp., were charged by the SEC with running a cannabidiol oil vape Ponzi scheme. The SEC alleges that the scheme raised over $35 million from at least 40 investors who were promised returns from the production and sale of cannabis products, including vape pens. 

Shawn E. Good, 55, of North Carolina, was charged by the SEC on allegations that he ran a $4.8 million Ponzi scheme defrauding clients in his position as a Morgan Stanley financial advisor. Good is no longer employed with the firm. Good allegedly had his clients transfer money to his personal bank account so he could make investments in real estate development projects and government bonds on their behalf and promised them returns of 6% to 10%. 

Marlin Hershey, 52, and Dana Bradley, 52, were charged on allegations that they were running a $4 million Ponzi scheme through Performance Holdings. 

David Hu, 64, of New Jersey, was sentenced to 12 years in prison in connection with a Ponzi-like scheme run through International Investment Group that involved more than $120 million. Hu had previously pleaded guilty to the scheme that involved the selling of over-valued and fake loans and falsified documents to deceive auditors and investors. Hu ran the scheme with co-conspirator, Martin Silver, who also previously pleaded guilty. They operated three private funds known as the IIG Trade Opportunities Fund N.V., the IIG Global Trade Finance Fund, Ltd., and the IIG Structured Trade Finance Fund, Ltd.   

Robert A. Karmann, 55, was sentenced to 6 years in prison and was ordered to pay $624 million in restitution for his role as the chief financial officer in the $1 billion Ponzi scheme run through DC Solar. DC Solar defrauded investors by promising returns from trailer-mounted solar generators. DC Solar’s owner, Jeff Carpoff, was sentenced last November to 30 years in prison. Carpoff’s wife, Paulette Carpoff, pleaded guilty and is scheduled to be sentenced next month. Joseph W. Bayliss was sentenced to 3 years in prison, and other defendants have pleaded guilty and are scheduled for sentencing: Alan Hansen, 50, Ronald J. Roach, 54, and Ryan Guidry, 44.

John Law, 43, of New York, was sentenced to 10 years in prison and ordered to pay $1.3 million in restitution. Law previously pleaded guilty to charges in connection with a $115 million Ponzi scheme run by “King Perry” Santillo and Christopher Parris through Lucian Development that resulted in more than $70 million in losses. Santillo and Law sold securities to the public through various businesses including Advice and Life Group, Poconos Investments, First American Securities, and Financial Planners Group of America. Santillo was sentenced to 17 years in prison and Parris was also convicted but has yet to be sentenced.

Scott Merke and Eric Alexander of Florida have been sued by the SEC in connection with the $322 million fraudulent scheme run by 1 Global Capital LLC.

Casper Mikkelsen has been permanently banned by the CFTC from trading commodity interest in connection with a foreign exchange fraudulent scheme that purportedly paid forex trading profits to clients. The CFTC has coordinated with foreign regulators in Denmark on this case.

Robert T. Nicholas, 48, was indicted in connection with an alleged $150,000 Ponzi scheme. Nicholas defrauded his clients as an insurance agent. 

Charles Ochi, 27, of Texas, and Danielle Liggins, 32, or Arkansas, were arrested on allegations that they were running a Ponzi scheme using sham companies to transmit proceeds to Nigeria. They used Global Prime and Liggins Starflexx Commercial to receive money from investors.

Austin Delano Page, 26, and Brandon Alexander Teague, 26, of North Carolina pleaded guilty in connection with a scheme run through D&T Investment that took in $4.2 million from over 300 people. They represented that they were running a hedge fund that invested in securities, but there was no hedge fund and they did not hold any securities. They guaranteed 100% of the initial investment and promised 70% profits from trading.

Richard Dow Rockwell, of California, and Dow Rockwell LLC were charged by the SEC for undisclosed conflicts of interest related to a real estate Ponzi scheme run through Professional Financial Investors, Inc.  Rockwell and his company raised approximately $8 million for the scheme and earned approximately $400,000 in referral fees, which they failed to disclose to their clients.

William Stenger, 73, was sentenced to 18 months in prison and was ordered to pay $250,000 in restitution for his role in the Jay Peak EB-5 Ponzi scheme. Stenger pleaded guilty last year to submitting false information to the government. He raised more than $80 million from over 160 foreign investors through the EB-5 visa program, but the project known as AnC Bio VT failed, and Stenger and Jay Peak’s owner, Ariel Quiros, were accused of running a Ponzi scheme. Bill Kelly was also charged in connection with the scheme.

Junzo Suzuki, 73, and his son, Paul Suzuki, 43, were sentenced to 5 years in prison in connection with the Ponzi scheme run through MRI International Inc. out of Las Vegas. The two ran the scheme with Edwin Fujinaga, 75, who is serving a 50-year prison sentence. The scheme involved $1.5 billion and 10,000 investors, most of whom were Japanese. 

Abner Alejandro Tinoco and his company, Kikit & Mess Investments, LLC, were the subject of a consent order obtained by the CFTC. They had been charged by the CFTC and fraudulently solicited over $7.2 million from 322 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.

INTERNATIONAL PONZI SCHEME NEWS 

Brazil

Authorities are searching for the creators of Alpha Consultoria, Sadraqui de Freitas and Nathan Assis de Oliveira, who they believe defrauded more than 2,000 people on promises of 30% returns per month on investments in cryptocurrencies.

Canada

Mark E. Cohen, 42, was arrested in connection with an alleged $12 million pandemic-related Ponzi scheme. The scheme promised 13% from the supposed purchase and resale of used vehicles from rental companies.

England

Andrew Fuller aka James Wellesley, 55, and Stephen Burton, 57, are accused of defrauding wine collectors in a £76 million ($99 million) Ponzi scheme. They offered investors large returns on loans that were supposedly collateralized by valuable bottles of fine wines. The scheme was run through Bordeaux Cellars London and Hong Kong-based Bordeaux Cellars.

Kenya

Authorities report that Bitstream Circle is targeting investors in a Ponzi scheme across seven countries. The cryptocurrency scheme has targeting 11,000 people and promises returns between 5% and 8% on daily investments.

Lagos

Chinyere Emeka-Atu was accused of running a Ponzi scheme through her company, Family Food Support Association, that defrauded investors out of N600m. 

Nigeria 

The mother of Ovaioza Yunusa was arrested in connection with an alleged fraudulent scheme run through Ovaioza Farm Goods Storage Business. The scheme promised investors 70% to 80% returns and supposedly involved the buying, selling, and storage of certain commodities.

Philippines

ScentokoWorld Corp. and Brendahl Cruz Holdings had their corporate registration revoked by the SEC due to illegal solicitations from the public. The companies are both affiliated with Brendahl Cruz, the president and CEO and were promising investors 400% returns within 30 days from the purchase of perfume and beauty product packages.

Singapore

Authorities arrested a 29-year old man in connection with an alleged Ponzi-like scam run through Moviitech, a job platform. Job seekers received unsolicited messages on Telegram, Facebook, Instagram and YouTube, promoting a money-making opportunity through watching move trailers. People were promised payment from watching movie trailers and more money for recruiting more people. They were required to purchase a membership plan before they started earning commissions, but stopped receiving commissions and were unable to withdraw from their member accounts.