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

Friday, December 31, 2021

December 2021 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for December 2021. The reported stories reflect at least 2 new Ponzi schemes worldwide, 4 guilty pleas, more than 48 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. 

Glen Arcaro, 45, had a judgment entered against him in connection with the BitConnect Ponzi scheme. Arcaro was a lead promoter of the scheme and used his company, Future Money Ltd., to promote the lending program. 

Erez Baver, 42, pleaded guilty to charges relating to a Ponzi scheme run with rabbi Zvi Feiner, 51. The scheme defrauded investors in a series of limited liability companies under FNR Healthcare LLC. Baver admitted that they misled investors about the cost of nursing homes and assisted living facilities.

Denny T. Bhakta, 39, of California, and his two companies, Fusion Hotel Management LLC and Fusion Hospitality Corp., were accused by the SEC of running a $15 million Ponzi scheme. Bhakta claimed that investments would be used to purchase hotel room reservation blocks from major chains and resell them to corporate clients. 

Vicki Boser, 58, of Washington, was sentenced to 2 years in prison in connection with a scheme that she ran through InsuranceTek, Inc. Boser supposedly assisted small businesses that work in high-risk fields in securing insurance policies to cover their business operations.

Jennifer Wee Cifuentes, 40, and her husband, Alcibiades Cifuentes, 39, were each sentenced to 71 months in prison in connection with a Ponzi scheme that defrauded about 30 investors out of more than $400,000. They induced investors to invest in foreign currency and commodity markets through Cifuentes Fund Management.

John Marques, of California, and Lifeline Innovations & Insurance Solutions LLC, were sued by the SEC in connection with their solicitation of 50 investors into the EquiAlt Ponzi scheme.

Dane Roseman, 38, and Ivan Acevedo, 44, pleaded guilty to charges relating to the Woodbridge Group of Companies LLC and reached a settlement with the SEC for about $3.7 million. 

Gaylen Rust, 62, of Utah, pleaded guilty to running a $200 million Ponzi scheme that involved silver trading and more than 500 victims. Rust’s ex-wife, Denise Gunderson Rust, 62, is already serving 18 months in prison after pleading guilty. Rust ran the scheme through Rust Rare Coin, Inc., R Legacy Entertainment LLC, and R Legacy Racing.

Richard K. Sears, 73, of Colorado, was sentenced to nearly 3½ years in connection with a cattle Ponzi scheme. Sears was to use investors’ cash to purchase Angus cows he would then lease back to mate with Romagnola bulls and to pay investors 10% returns with a right to either reclaim cows or receive the return of their full investment. Sears raised around $7 million and misappropriated about $5 million of that through his company, Trophy Outfitters, Inc. The scheme defrauded more than 100 investors.

Jeremy Spence, 25, pleaded guilty to running a $5 million online Ponzi-like scheme called Coin Signals. Spence misrepresented the returns he was supposedly generating by trading cryptocurrencies, promising monthly returns as high as 148%. The scheme defrauded 170 investors.

Michael Tomaszewski, 49, was sentenced to 2 to 6 years and ordered to pay $570,000 in restitution in connection with a Ponzi scheme

INTERNATIONAL PONZI SCHEME NEWS 

Australia

Bill Vlahos was sentenced to 9 years in connection with a $17.5 million scheme that defrauded 1,800 investors. Vlahos promised investors a secret advantage in connection with a club called The Edge.

India

Brijesh Gadiyali and Kiran Panchasara were arrested and Dhaval Laheri and Hitexh Gupta remain at large in connection with a cryptocurrency scheme. Investors were directed to a portal called cybertron.live to invest in a digital currency called Tron. They were promised returns of 2% per day. 

Chandrakant Bhargav Gole and Suresh Chandra Padhi were sentenced to 8 years in jail in connection with a scheme run through Sriram Electro Finance Ltd.

Manish Singh, 47, was arrested in connection with a scheme that allegedly defrauded 39 investors,

Nigeria

Authorities alerted the public to a Ponzi scheme run through Poyoyo Investment (Pilvest) Nigeria Limited. The scheme promised investors annual returns up to 150%.

Authorities warned that FinAfrica Investment Ltd. is not accredited and is operating as a Ponzi scheme.

South Africa

TKL-online Revenue is under investigation after hundreds of investors lost thousands of rand. 


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.