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

Friday, April 30, 2021

April 2021 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for April 2021. The reported stories reflect at least 4 new Ponzi schemes worldwide, 3 guilty pleas, about 22 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.  

George S. Blankenbaker Jr., 54, of Indianapolis was charged and agreed to plead guilty in connection with an alleged Ponzi scheme run through Stargrower Commercial Bridge Loan Fund 1 LLC, Stargrower Asset Management LLC, and EDU Holding Trust. Blankenbaker is the president of Stevia Corp. About 109 people invested more than $11 million in the scheme and were told that their funds would be used to finance the use of shipping containers of food in the international consumer products market. Blankenbaker instead diverted funds for personal expenses and unrelated business ventures. A total of over $1.4 million was lost by 34 investors. 

Patrick Gallagher, 44, and Michael Dion, 49, were charged along with Dutch citizen Emade Echadi, in connection with an alleged scheme run through the foreign exchange company, Global Forex Management. They represented that investor funds would be used in an online trading platform, IB Capital. The scheme took $30 million from investors.

Tammy Lynn Hawk, 47, was sentenced to 10 years in prison in connection with a Ponzi-type scheme which flipped properties. Hawk was a real estate agent and defrauded at least 24 victims out of more than $500,000.

Zachary Joseph Horwitz aka Zach Avery, 34, was charged by the SEC on allegations that he was running a $690 million Ponzi scheme through his company, 1inMM Capital LLC. Horwitz allegedly misrepresented that investors were buying the rights to films that would be resold to Netflix and HBO, but no licensing deals for the movies existed. He promised returns in excess of 35% and showed investors falsified emails and agreements. Some of the investor funds were used to purchase a $5.7 million home, a $124,000 trip to Las Vegas, and $2.5 million for a celebrity interior designer. 

Steven LeProhon, 31, pleaded guilty to charges that he ran a Ponzi scheme through Steven LeProhon Marine and Motorsports.  LePhohon will serve 7 years of probation and 90 days in jail.

Douglas Lien, 79, of New Mexico was ordered to pay more than $10.3 million in connection with a Ponzi scheme that involved $14.2 million take from 45 investors. Lien admitted that he misappropriated client funds in a futures trading scheme that lasted almost 20 years. 

George Lindell, 73, was granted a compassionate release after serving about a third of his 17-year prison sentence. Lindell defrauded 166 people out of more than $25 million in a Ponzi scheme run through The Mortgage Store

Anthony Wayne March, 49, of North Carolina, was sentenced to 139 months in prison in connection with a scheme that was run through Asset Trader. March represented that Asset trader offered educational services to professionals and taxpayers and fraudulently induced investors to invest in Asset Trader. At least 22 investors invested over $8.1 million in charitable gift annuities and other products offered by Asset Trader. 

Bernard Madoff passed away in prison while serving a 150-year prison sentence. He was 82.  Madoff’s infamous Ponzi scheme defrauded investors out of more than $17 billion. 

Jonathan P. Maroney and Harbor City Capital Corp. were charged by the SEC who alleged that they raised at least $17.1 million from more than 100 investors in a series of fraudulent securities offerings. The SEC alleges that Maroney misappropriate at least $4.48 million of the funds. Maroney’s wife, Tonya Maroney, and Celtic Enterprises LLC were named as relief defendants. 

John Piccarreto Jr., 38, of New York, pleaded guilty to charges relating to his role in a Ponzi scheme run by Perry Santillo and Christopher Parris. The scheme defrauded victims out of more than $100 million. Investors were promised that their funds would be used to operate businesses such as financial services, insurance, real estate development and medical laboratories. They were issues fraudulent promissory notes from Lucian Development First Nationale Solutions, United RL Capital Services, and Percipience Global Corporation

David Gilbert Saffron was ordered to pay $32 million in connection with a cryptocurrency scheme that defrauded at least 179 investors.  The CFTC obtained a default judgment against Saffron and Circle Society, which was offering binary options on foreign exchange and cryptocurrency pairs. Investors were persuaded to invest in a commodity pool that promised returns as high as 300%.  

Scott Sands, 43, was charged in connection with a boat repair Ponzi scheme. Sands ran the scheme through Liberty Entrepreneurs, Inc. and Independent Salvage aka Hudson Marine Service, which ran a boat repair company. Sands took parts from one customer’s boat and used them on another, or he would sell their parts. Sands would delay returning customers’ boats while he stripped the boats of valuable parts. There were about 60 victims.  

INTERNATIONAL PONZI SCHEME NEWS 

Canada

Monita Hung Mui Chan and Marie-Joy Vincent were fined in connection with their admitted role in a Ponzi scheme run by Daniel Rojo Fernandes Filho, that raised about $15 million from more than 1,400 investors around the world. The pair raised more than $330,000 from 52 investors. The scheme sold memberships in two companies that claimed gold mines.

Philippines

The SEC revoked the certificate of incorporation of Eco Hatchery and Trading Corp. due to an authorized investment scheme run under the guise of a prawn, shrimp, crab, and fish farm. Investors were promised guaranteed profits of 15% every 15 days for 4 months. 

Wednesday, March 31, 2021

March 2021 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for March 2021. The reported stories reflect at least 5 new Ponzi schemes worldwide, 3 guilty pleas, about 50 years of prison sentences, and an average age of approximately 47 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed.  

Jose Angel Aman, 51, of Florida, the co-founder of Argyle Coin, was banned from the securities industry but also released from an obligation to pay a $4.5 million fine to the SEC after more than $23.8 million was paid to the SEC in restitution in a parallel case. Aman operated three successive Ponzi schemes and was sentenced to 7 years in prison in 2019.

Gina Champion-Cain, 57, of California was sentenced to 15 years in prison in connection with a Ponzi scheme run through American National Investments and ANI Development. The scheme took in at least $372 million from more than 490 investors and caused losses of $180 million. Champion-Cain promised high returns from supposed high-interest loans to license applicants who needed money while their applications were pending before the state Department of Alcoholic Beverage Control.

Natalie Cochran, 38, of West Virginia, was sentenced to 11 years and 3 months in prison in connection with a $2.5 million Ponzi scheme that she had run with her late husband, Michael Cochran. The scheme was run through Tactical Solutions Group and Technology Management Systems, and the pair said they had contracts to provide weapons to the U.S. Department of Defense.

Chris A. Dantin, Christopher D. Dantin, David P. Ortiz, and Andrew L. White were charged by the SEC for their involvement in the alleged $320 million scheme run through 1 Global Capital that defrauded 3,600 investors. The scheme was run by Carl Ruderman and promised returns from short terms loans to small and medium sized businesses. The four sales agents earned commissions in connection with the sales of the investments when they were not registered as broker-dealers.

Shawn C. Cutting, of Idaho, was the subject of an emergency enforcement action brought by the SEC. Cutting allegedly raised $6.9 million for a fraudulent digital asset investment pool and represented that he was an experienced financial advisor to raise funds from over 450 investors. His wife, Janine Cutting, and Crypto Traders Management and Golden Cross Investments are listed as relief defendants.

Damon Elliott and his company Piptastic Ltd, a London-based trading and investment firm, had default judgment entered against them in connection with an SEC complaint alleged they ran a speculative trading Ponzi scheme. Elliott solicited investors to engage in spread trading or spreadbet trading.  About $9 million was raised from investors. Piptastic must pay more than $7.7 as a civil fine on top of a $16.3 million judgment.

Andres Fernandez, 38, was sentenced to 10 years in prison and ordered to pay $31 million restitution. in connection with a scheme he ran through Kadaae Entertainment. Fernandez defrauded at least 81 people by telling them that his company produced events with top artists when, in reality, he had no affiliation with any major musicians. 

Tytus W. Harkins, 38, of Colorado, and his company, Hartman Wright Group LLC, lost against the SEC’s claims relating to an alleged $8 million Ponzi scheme. The scheme involved mobile home parks. 

Tanmaya Kabra, 27, reached a plea deal relating to a scheme that promised returns of up to 32% from supposed investments in startup companies. The scheme involved at least $250,000. 

Scott Kohn was ordered to pay $501 million in a case brought by the Consumer Financial Protection Bureau. Kohn and his companies bought and sold military veterans’ benefits and deceived veterans by promising them exorbitant interest rates associated with cash advances. They were ordered to pay $65 million in penalties and $436 million in restitution to thousands of veterans and pensioners.

Al Parish, 63, who spent over a decade in prison for his involvement in a Ponzi scheme, was granted a compassionate release. He served 153 months of his 249-month prison sentence. About 500 investors lost $64 million in connection with the scheme

Matthew R. Peterson, 51, of Missouri, was sentenced to 8 years and one month in prison and ordered to pay approximately $2.5 million in restitution in connection with a $6 million Ponzi scheme. Peterson previously pleaded guilty to running a sports betting fraudulent investment scheme in which he created fictitious spreadsheets, financial statements, and betting reports. The scheme defrauded at least 37 investors. 

Benjamin Reynolds was ordered to pay $572 million in penalties and restitution in connection a Bitcoin Ponzi scheme. Reynolds was the director of trading firm Control-Finance Ltd. and lured over 1,000 clients to deposit 22,858 bitcoins that were at the time worth $143 million and are now worth closer to $1.3 billion. Investors were promised 1.5% returns a day, or 45% per month.

Robert W. Walton Jr., of Ohio, was indicted in connection with an alleged Ponzi-like scheme run through Hadsell Chemical Processing, a chemical processing company. Walton raised $12 million by selling promissory notes to 65 investors with promised returns of 10% to 15%.

Anthony Zacharias, 49, was sentenced to 5 ½ years in prison in connection with a travel agent Ponzi scheme that left clients stranded overseas. Zacharias hid the fraud from his company by using false credit cards and separate phone numbers and by telling clients not to contact the business and deal with him directly. 

INTERNATIONAL PONZI SCHEME NEWS 

Canada

Arnold Breitreutz and Susan Elizabeth Way each pleaded guilty in connection with a scheme run through Base Financial Inc. They pleaded guilty in connection with the scheme that defrauded 107 people out of $27 million. Investors were promised returns from investments supposedly secured by first mortgages on residential properties. 

Brian Kitts, 65, and his wife, Shannon Kitts, 55, were charged in connection with an alleged $4.3 million Ponzi scheme run through Vesta Capcorp Inc. and Vesta Equity Partners. The scheme alleged defrauded 38 investors by promising returns at a monthly rate as high as 20% through what were supposedly real estate financing firms.

China

Seven people were taken into custody in connection with an alleged Ponzi scheme run through an automobile club. The suspects ran a car dealership called “Yuelong” and promised high returns for recruitment of new members. More than 3,700 people participated and over $1.5 million was collected. 

India

Niftech Global Private Limited is being investigated as a possible Ponzi scheme. Investors were promised monthly returns of 4%

Authorities warned about alleged fraudulent schemes run through Oksome.in and ‘Super like.’

G. Ramesh, the managing director of Universal Trading Solutions Pvt Ltd., was detained on allegations that he defrauded over 1,000 investors. 

Sudeer Muhammed Cheriya Vannarakkal was arrested in connection with a scheme called Forex Trade that promised investors 2% per month. 

Nigeria

Maryam Abu Shinga was convicted on charges that she ran a scheme promising 300% profit to investors. Investors were promised returns from a gold mining investment, but the funds never went into the investment.

Singapore

Ng Yu Zhi, 33, was charged in connection with a scheme run through Envy Asset Management and Envy Global Trading that involved at least $1 billion. About $300 million of the $1 billion invested was transferred to Zhi’s personal account, and about $100 million of his assets have been seized by authorities. 

Thailand

Sawika “Pinky” Chaidet, along with her mother Sarinya and brother Sarayut, were charged in connection with the Forex-3D scheme. The Forex-3D was run by Apiruk Kothi aka Apiruk Krub, and defrauded about 9,700 investors out of 1.9 billion baht (over $66 million). The scheme offered investors 60% to 80% returns in foreign currency investments.