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. She also handles SEC and CFTC whistleblower claims. 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, December 31, 2016

December 2016 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for December 2016. The reported stories reflect: 2 guilty pleas or convictions in pending cases; over 59 years of newly imposed sentences for people involved in Ponzi schemes; at least 10 new Ponzi schemes worldwide; and an average age of approximately 51 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it.

Brenda Ashcraft, 46, was sentenced to 8 years in prison for operating a Ponzi scheme that defrauded 34 people out of more than $4.2 million. Ashcraft had represented to investors that she had exclusive access to properties in foreclosure and could generate positive returns. She operated the scheme through her company, French Manor Properties, but did not use investment funds to buy any properties. Rather, she used the money for vacations to Cancun, spa treatments and Cincinnati Reds season tickets.

Joseph Francis Bartholomew, 77, pleaded guilty and was immediately sentenced to 10 years in prison for operating an $11.3 million Ponzi scheme through MBP Insurance Services Inc. The scheme targeted seniors and defrauded 27 victims. Co-defendant Wendy King-Jackson, 56, also pleaded guilty for her role in defrauding two victims in her capacity as Bartholomew’s office manager. The scheme involved selling life insurance policies on third parties, and it promised 15% to 24% annual returns.

Richard I. Booy, 48, was accused of running a $1 million Ponzi scheme that defrauded at least 15 clients. Booy ran the alleged scheme through Principal Financial Strategies LLC and the now defunct Safe Financial Strategies Inc. He claimed to be affiliated with Principal Financial Group, but had no actual relationship with that widely known investment firm. Instead of investing his clients’ funds, Booy spent the money on personal expenses, including credit card debt and purchases at Best Buy.

Richard Wyatt Davis, Jr., 40, was indicted on allegations that he defrauded more than 100 investors out of more than $19 million. Davis allegedly targeted clients who were “wary of the government and banking systems” and induced them to invest in his investment funds, DCG Commercial Fund I and DCG Real Assets. Davis falsely represented that his funds averaged a net rate of return of 32%.

Charles Caleb Fackrell, 37, was sentenced to 5 years and 3 months in prison for operating a Ponzi scheme that defrauded at least 20 investors out of about $1.4 million. Fackrell did business as Fackrell Trivette Wealth Management LLC and was a stockbroker who sold his clients into purported investors with Robin Hood, LLC, Robinhood LLC, Robin Hood Holdings, LLC, Robinhood Holdings, LLC, and related entities, all of which he owned. He guaranteed returns of 5% to 7% and represented that the investments were very safe. Fackrell spent most of the money on his personal expenses and used part of it to make Ponzi scheme payments to induce further investors.

Vincent P. Falci, 57, was charged on accusations that he was running a $5.3 million Ponzi scheme through Vicor Fund, which he controlled though his management entity, Vidon Capital Partners LLC. Most of the $5.3 million taken from investors was used to repay prior investors in The Saber Fund. Falci had previously been ordered to pay $6.7 million in restitution to 182 investors connection with that prior fraud. Falci lost investors’ money in risky ventures like day trading and real estate and promised investors 7% returns.

John Fox, 66, was sentenced to 6½ years in prison in connection with his wine Ponzi scheme that he ran through Premier Cru. Fox previously pleaded guilty to defrauding more than 4,500 customers out of between $20 million and $45 million. Fox falsified purchase orders for about $20 million worth of wine, and then sold that “phantom wine” to customers. He also used money from new customers to buy wine promised to earlier customers.

Bobby Eugene Guess was arrested on charges in connection with an alleged $6 million Ponzi scheme run through Texas First Financial LLC. Guess promoted himself through radio advertising and financial seminars and supposedly sold notes, stock certificates and investment contracts in internet company, StaMedia Inc. Funds raised from investors in StaMedia were used to repay investors in TenList, Inc., a company owned by two Guess associates, Timothy Booth and Shawn Sandifer. Guess is the author of “Robbed with a Pen Again: A Guide to Protecting Your Assets,” which is a book to supposedly help investors.

Pedro Jaramillo aka Enrique Jaramillo, 47, was arrested on charges that he defrauded more than 2 dozen investors from Peru and countries in Latin America, out of more than $1.2 million. Jaramillo represented that he was an accomplished commodities trader who partnered with well-known international investment bank, Global Investment Bank, to earn returns of 25% every 90 days. Jaramillo diverted more than $700,000 to his own use, including 3 vacations to Disney World for family and friends.

Andrew D. Kelley, 41, and Paul H. Shumway, 47, were the subject of a complaint filed by the SEC accusing them and their company, Blackbird Capital Partners, of running a $3.1 million investment scheme. Kelley was quoted as telling an investor, “I am delusional. I am a compulsive liar” and that he could “trade his way out of it” to repay the investor if the investor would not report him to authorities. Kelly represented that he had developed an algorithmic software program for Blackbird to invest its own funds to profit the company and investors and that the program made up to 300% returns.

George R. McKown, 65, and Richard E. Gearhart, 66, were charged in connection with an alleged Ponzi-like scheme that defrauded investors out of their retirement savings. The convinced investors to transfer their retirement accounts, pensions, annuities and 401(k)s to Asset Preservation Specialists Inc., a company owned by Gearhart.

Patricia Means, 70, was sentenced to 5 years in prison in connection with a Ponzi scheme she ran to purportedly develop a product called “Savvy Bag.” Means embezzled $1.1 million from more than a dozen investors and spent over $900,000 on housing, casino trips, vehicles and other personal items.

James A. Nickels was ordered to pay $3.6 million in restitution to investors for running a Ponzi scheme in which he sold promissory notes. Nickels ran the scheme through Fiscal Concierge LLC. At least 35 investors were defrauded out of the $4 million they spent to purchase promissory notes that were to pay 8% per year.

Mark Nordlicht, 48, David Levy, 31, and Uri Landesman, 55, were accused of running a Ponzi scheme through Platinum Partners. Landesman is the president of the $1.3 billion hedge fund. They are accused of falsely reporting the value of Platinum’s assets and using high-interest loans to move money between funds to pay some investors ahead of others. One example of misrepresentation relates to the value of Black Elk Energy, an oil and gas company controlled by Platinum, which was valued at $283 million after there had been an explosion on a Black Elk platform in the Gulf of Mexico that caused the death of 3 workers, other injuries and an oil spill. The alleged fraudulent activity also involves the funds dealings with Lafitte Energy Corp. and Golden Gate Oil LLC. Others charged in connection with the matter are Joseph Mann, 24, Daniel Small, 47, Jeffrey Schulse, 44, and Joseph Sanfilippo, 38. The Platinum Partners executives collected $100 million in fees as they offered investors annual returns of up to 17%.

Scott Richard Rookus, 45, pleaded no contest to charges that he was running a $1.5 million Ponzi scheme through his company, New Haven Holdings. He promised returns to investors from profits from his companies, but instead used their money to pay for his children’s private school and tax liens, and used some money to pay old investors. Many of Rookus’ victims were seniors on a fixed income.

Tobin Joseph Senefeld was banned by FINRA from the broker industry. This related to a 2015 civil suit filed by the SEC claiming that Senefeld, along with Matthew D. Haab and Jeffrey B. Risinger, had operated a Ponzi scheme through his company, Pin Financial LLC. The civil suit alleged that the trio had raised $15 million from 80 investors.

Richard Shusterman, 53, was sentenced to 18 years in prison and ordered to pay about $171 million in connection with a $242 million Ponzi scheme. Shusterman was the president and shareholder of International Portfolio, Inc., and co-conspirator Robert Feldman, 69, was a part owner of International Portfolio and also president of United Consulting, Inc. Together, they misrepresented that they were paying returns based on the purchase of medical accounts receivable. Jonathan Rosenberg, 48, and Douglas Kuber, 56, were also involved through their operations of Account Receivables LLC, through which they received in excess of $8 million in kickbacks. Feldman, Rosenberg, and Kuber each previously pleaded guilty and were sentenced to 46 months, 5 years, and 4 years in prison, respectively.

Michael Skupin, 54, was sentenced to one to four years in prison following his conviction in November for possessing child pornography. Skupin was also ordered to serve probation for financial crimes relating to a Ponzi scheme investigation, which is what led to the child pornography charges when investigators searched his laptop.

John Sposato, 64, was sentenced to 7 years in prison and ordered to pay nearly $2.6 million in restitution in connection with a Ponzi scheme that he ran through his companies, Pegasus Investment & Development Corporation, LLC; Pegasus Investments; Oil Eaters, LLC; Organic Miracle Incorporation; S&J Corporate Properties, LLC; Pegasus Demolition & Debris Removal Service, LLC; and Pegasus Truck Lines, Inc. He represented to potential investors that the companies were all investment entities that offered participants the chance to invest in various low-risk, high-reward investment vehicles, including international bank instruments, cutting edge oil remediation and recovery products, and real estate transactions. About 48 people invested about $800,000 with Sposato and his companies, but Sposato used the money to, among other things, buy his girlfriend a car and breast augmentation.

Derek Springfield, 53, was accused by the CFTC of running a Ponzi scheme through his company, Draven LLC. Springfield provided false account statement to commodity pool participants. The alleged scheme involved $1.46 million, and investors were told their funds were being invested in futures, foreign exchange and options markets. 

Alvin Guy Wilkinson and his entities, Chicago Index Partners and Wilkinson Financial Opportunity Fund, were hit with a $21.8 million default judgment in an action commenced by the CFTC. The commodity pool fraud defrauded 30 investors and involved over $11 million. Instead of trading financial instruments on their behalf as promised, he misused most if not all of the investor funds in a Ponzi scheme fashion. Wilkinson promised investors 10% to 30% returns.



Wang Baoqiang, 32, has been linked to a peer-to-peer lending scheme run through Jingjinlian. Wang is a celebrity in China, and there was a tacit understanding that Wang was directing a film project that was part of Jingjinlian’s investment portfolio. The film’s official account denied any involvement, stating they never raised any funds from any financial platform.


Prakash Chandra Panda was sentenced to 5 years in prison in connection with a Ponzi scheme he ran through Shirdi Sai Estate Private Limited. The company had defrauded over 100 investors by promising them land plots at cheap prices.

Siba Narayan Das, Jugal Gupta and Tushar Jana, the three directors of Silicon Project, were charged with running a Ponzi scheme.

Dipankar Ghosh, Malay Halder, Prasenjit Sil, Tirtha Halder and Malay Kumar Guha, who are directors of Real Tulip India Limited, were arrested on allegations that they are running a Ponzi scheme. 


The MMM scheme that has been flourishing in Nigeria suspended business. The scheme in Nigeria is believed to be operated by Pastor Ernest Chigozie Mbanefo, who is based in South Africa. Mbanefo registered the website, and it is now believed that MMM Nigeria is not affiliated with MMM Global, a Russian company run by Sergei Mavrodi. Mbanefo denies owning the MMM franchise in Nigeria. The MMM Nigeria scheme offered 30% returns annually. Access Bank warned its customer not to invest in the MMM scheme. Following its suspension in Nigeria, the MMM scheme was launched in Kenya and Ghana.

A new doubling scheme called NNN Nigeria appeared a few days after MMM froze the accounts of over 3 million members. NNN appears to be a copycat of MMM in almost every way.

An alleged Ponzi scheme call Ultimate Cycler that was also gaining popularity shut down. The website stated earlier in the month that is was being “worked on.” The website was relaunched and Peter Wolfing, the CEO of the scheme, announced that 50,000 Nigerians registered within 24 hours of the relaunch. It is believed that there are about 2 million users. Wolfing also runs anther scheme called “Easy 1 up.”

Givers Forum is reported to be another Ponzi scheme gaining popularity in Nigeria.

Nigeria was also hit with another alleged Ponzi scheme called I-Charity whose website was registered in October. It is already the 47th most visited site in Nigeria. Another alleged scheme, Zar Fund, is the 57th most visited website in Nigeria.

It is reported that internet usage increased from 95.37 million in August 2016 to 97.21 million by September 2016 due to the flood of internet users investing in the MMM, Ultimate Cycler, Givers Forum, I-Charity, Get Worldwide Help, and Zar Fund schemes.


The receiver over Creative Capital Consortium that was run by George Theodule obtained approval of a distribution plan that will distribute more than $4.6 million to 1,474 defrauded investors and creditors. Theodule had collected more than $68 million from more than 100 investment clubs formed by relative and friends. Theodule pleaded guilty and was sentenced to 12½ years in 2014.

The Second Circuit declined to revive an ERISA lawsuit by the pension fund for a New York engineers’ union seeking to obtain damages from Ivy Investment Management and Bank of New York Mellon Corp. The lawsuit sought damages for the alleged breach of fiduciary duties in failing to advise the fund to fully withdraw from investments with Bernard Madoff. Trustees of Upstate New York Engineers Pension Fund v. Ivy Asset Management, 2016 U.S. App. LEXIS 21823 (2nd Cir. Dec. 8, 2016).

The TelexFree trustee has asked the court to extend the deadline for filing claims. The deadline is set for December 31, 2016, and about 121,000 claims have already been filed. The trustee believes that the sentencing of James Merrill scheduled for next March and Merrill’s agreement to forfeit tens of millions of dollars might spur additional claimants to file claims.

The ZeekRewards receiver obtained judgments against the largest net winner investors. He is also working on a procedure to fix the amount of money owed from the members of a defendant class of net winners

Wednesday, November 30, 2016

November 2016 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for November 2016. The reported stories reflect: 6 guilty pleas or convictions in pending cases; over 37 years of newly imposed sentences for people involved in Ponzi schemes; at least 3 new Ponzi schemes worldwide; and an average age of approximately 50 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it.

Gino Franciesco Accettola, 49, was accused in a lawsuit of running a Ponzi scheme.  Accettola told clients that he was a builder who could provide large returns for investors in his construction projects. The lawsuit alleges that 11 victims lost more than $3.7 million.

Will Allen, 38, pleaded guilty to charges relating to his operation of a $35 million Ponzi scheme. Allen, who played for the New York Giants, Miami Dolphins and the New England Patriots, ran a scheme that involved high interest loans to athletes. Co-defendant, Susan C. Daub, 56, also pleaded guilty. Allen and Daub had set up Capital Financial Partners in 2012 and recruited investors by promising high returns. They took in more than $35 million and repaid less than $22 million.

Brenda Ashcraft had her preliminary hearing continued due to a recent change in lawyers. Ashcraft is a former real estate agent who was indicted earlier in the year on accusations that she defrauded investors out of $15 million. Ashcraft allegedly misrepresented that she was using investor funds to invest in real estate but instead used the money to support a lavish lifestyle, including buying a $50,000 package of Cincinnati Reds season tickets last year.

Eric Bartoli, 62, was sentenced to 20 years in prison and ordered to pay more than $47 million in restitution in connection with a $65 million Ponzi scheme that he ran through Cyprus Funds. Bartoli had fled to Peru for more than 10 years and was brought back to the U.S. last year. He pleaded guilty and as part of his plea agreement prosecutors agreed to seek a sentence of up to 10 years. The judge doubled the sentence after hearing from the victims. The scheme defrauded 800 investors by promising them high returns in conservative blue-chip stocks.

Stephen C. Browere, 57, was sentenced to 5 years in prison and was ordered to pay $3.7 million in restitution for a Ponzi scheme run through his company, Stephens Capital Management Inc. Browere promised guaranteed returns to investors in connection with the purchase of $1.66 million in promissory notes in Douglas Capital Corp., but failed to tell investors that his relative was the president of Douglas Capital and that Browere ran the day-to-day operations. Browere used investor funds to purchase a yacht and a BMW.

Andrew Capersen, 40, was sentenced to 4 years in prison in connection with his Ponzi scheme in which he stole nearly $40 million from family and friends and from a hedge fund foundation. Prosecutors sought a prison sentence of 15 years, but the court considered testimony from an expert on gambling addiction in reaching its conclusion. 

Clarence Counterman, 59, and Robert Lova, 52, were convicted in connection with a scheme that was run through their solar energy related companies, including Renewable Energy Consultant, Inc. (Nevada); EP Solar Technologies, Inc. (Nevada); LITTCE, Inc. (Texas); and Eco Global Corporation (Texas). About $2.1 million from more than 50 investors was used to pay earlier investors or for the personal use of Counterman, Lova and one other defendant, Leopoldo Parra, 54. Counterman is the owner of a Texas tax preparation business called Taxrite.

Stephen S. Eubanks was charged in connection with an alleged Ponzi scheme that took in at least $529,000 from investors. Eubanks held himself out as a successful hedge fund manager and operated through Eubiquity Capital LLC, promising to invest in stocks, options and other securities. Eubanks used $145,000 to pay for his personal expenses.

Claus C. Foerster, 56, was sentenced to 2 years in prison and ordered to pay $3.5 million in restitution in connection with a $3 million Ponzi scheme while employed as a financial adviser at Morgan Keegan & Co. Foerster advised clients to invest in SG Investment Management, a company wholly owned by Foerster that was “totally fictitious.”

Ronald Mason, 47, was sentenced to 6 years in prison in connection with a $650,000 Ponzi scheme. Mason had previously served 33 months in prison and used a fake last name, Budalucci, when released from prison to avoid federal supervision. Meanwhile, he solicited funds from more than 100 people who had been defrauded in the Financial Resources Management scheme run by Scott Farrar and Donald Dodge. Mason stole funds from the FRM victims and concealed his status as a fugitive.

Ash Narayan was barred by the Certified Financial Planner Board of Standards from using its certification. Narayan is the subject of an SEC action which accused him of transferring more than $33 million of his clients’ funds to an online sports and entertainment ticket business called The Ticket Reserve. Narayan was an investment adviser who worked for RGT Capital Management, and he failed to disclose that he was a member of Ticket Reserve’s board, owned millions of shares of the company, and received a $2 million finder’s fee for the investments. Narayan also falsely told investors that he was a CPA when he was not. Ticket Reserve’s chief executive, Richard Harmon, and its chief operating officer, John Kaptrosky, were also charged in connection with the scheme.

Aaron Olson, 42, was ordered to pay more than $22.8 million in restitution in connection with a $28 million Ponzi scheme that he ran through AEO Associates and KMO Associates LLC. Olson was not a licensed investment broker, and he defrauded about 100 investors. About $2.6 million of the investors’ funds were used by Olson on himself. In April, Olson was sentenced to 5 years in prison.

Maria Elena Perez, 44, was suspended by the Florida Supreme Court for ethics violations in connection with her representation of Nevin Shapiro in his Ponzi scheme case. Perez represented Shapiro in connection with his criminal case relating to the $930 million Ponzi scheme he ran through his business, Capitol Investments USA. Perez had worked with the NCAA during her tenure as Shapiro’s lawyer and provided information to the NCA that proved to be detrimental to Shapiro in the NCAA investigation. 

Sann Rodrigues, 44, was sentenced to time served (57 days) on an immigration charge that he presented a green card that he had obtained based on false statements to immigration officials. Rodrigues faces civil charges from the SEC in connection with the TelexFree Ponzi scheme. Rodrigues has also been involved in other schemes known as Universon Fone Club and IFreeX.

Michael Skupin, 54, who was being investigated for running an alleged Ponzi scheme, was convicted for possession of child pornography that was found on his laptop during the Ponzi scheme investigation. A few days after the conviction, Skupin admitted to running a Ponzi scheme and pleaded guilty to one count of larceny. The scheme was called “Pay it Forward.” Victims would invest $10,000 and were eventually paid back from new investors’ money.

R. Allen Stanford, 66, lost his appeal to the Supreme Court seeking to overturn his 2012 conviction and 110 year prison sentence for running a $7.2 billion Ponzi scheme. The Supreme Court rejected the appeal without comment, leaving in place the Fifth Circuit’s decision upholding Stanford’s conviction and sentence.

The Blessing Loom was labeled a Ponzi scheme by the Better Business Bureau. The Blessing Loom had a social media site that promised large returns. Participants who sent $100 to a PayPal account would obtain a spot on the “Blessing Loom” and would then recruit others to hopefully receive an $800 return on their investments.

David P. Thomas, 56, was arrested on allegations that he was running a Ponzi scheme that defrauded at least 17 victims. The scheme involved more than $500,000 in his financial planning firm. Thomas represented that he was an adviser for Thomas & Company Wealth Management. He was licensed through his insurance company, originally Thomas & Company, now Insured Solutions on Magnolia Street



Twenty-two employees of Ezubao were indicted in connection with an illegal international border crossing into Myanmar. Last year, Ezubao, a P2P service, was shut down by police in multiple Chinese jurisdictions on allegations that it had defrauded about 900,000 investors out of more than 50 billion yuan ($7.4 billion) in a Ponzi scheme. Ezubao also has operations in Myanmar. Ding Ning, the chairman of Yucheng International Holdings Group Ltd., Ezubo’s parent company, and Zhang Min, Ezubao’s president, were accused of financial fraud, and Ding was suspected of possessing guns and attempting to arrange for others to flee to Myanmar. It is reported that nearly 1,000 P2P platforms have been closed so far this year after failing to repay investors. 


Some of the more than 6,000 victims of the $300 million Ponzi scheme run by Exential Group have hired a private consulting and financial fraud company to assist them in recovering their money. Most of the victims are from the cabin crew of the Emirates Airline and were promised returns of 120% on investments in “forex managed accounts.” Exential’s parent company, FCI Markets, is a forex brokerage based in the British Virgin Islands.


Prakash Panda of M/s Siridi Sai Real Estate Pvt. Limited was found guilty in connection with a Ponzi scheme that defrauded investors.


Authorities are investigating whether OneCoin Vietnam is a Ponzi scheme. The cryptocurrency scheme is promoted by Bulgarian Ruja Ignotova and is run via a “financial exchange” called Bamboo. The scheme represents that the purchase of one coin for €0.6 per coin will yield €20 in less than one year. Or, if an investor chooses the VIP package and pays an initial €33,600 to obtain 56,000 OneCoin units, they will recover €1.12 million ($1.24 million) once the price rises from €0.6 to €20. In addition to the virtual currency trading scheme, OneCoin Vietnam is also soliciting investors into its cash-based financial investment scheme, seeking investors of VND5 million (223) and promising a dividend of VND6.5 million ($290) after only 10 days. OneCoin stopped paying interest to its investors in September.


A group of investors in the Jay Peak investment program are seeking production of all emails with the word “Ponzi” from the brokerage firm for Ariel Quiros, one of the developers of the Jay Peak program which was the center of the EB5 scheme. The firm, Raymond James, contends that the search of emails of 20 employees for a 10 year period would produce an overwhelming number of results, most of which would be related to other cases in the news. The investors allege that Raymond James placed the word Ponzi at issue in its motion to dismiss the case against it by stating that to support aider and abetter liability against Raymond James, the plaintiffs would have to allege facts showing that the firm had actual knowledge that Quiros was operating a Ponzi scheme.

The trustee in the Bernard Madoff case has reached a $32.1 million settlement relating to Cohmad Securities Corp., whose clients invested more than $1 billion with Madoff. The settlement is with the estate of former Cohman Chairman Maurice “Sonny” Cohn, his widow Marilyn Cohn, and their daughter Marcia Cohn, who was Cohmad’s chief operating officer.

The court presiding over the Bernard L. Madoff Investment Securities SIPA proceeding dismissed the Madoff trustee’s subsequent transfer claims against foreign entities on the basis of international comity and extraterritoriality. The ruling dismissed the trustee’s $21.53 million of claims against Charles and David Koch, among others.

The Madoff court denied without prejudice Fairfield Sentry’s assignment of more than $900 million of claims to the Madoff trustee. The proposed assignment was just part of the entire settlement agreement and the ruling was without prejudice to the Fairfield liquidators to seek approval of the entire settlement agreement. In re Fairfield Sentry Limited, 2016 Bankr. LEXIS 4046 (Bankr. S.D. Nov. 22, 2016).

Thursday, November 3, 2016

Administration of a Mega Ponzi Scheme Case - Free Webinar

Is it better to unwind a Ponzi scheme case in a bankruptcy, a receivership or a SIPA proceeding? 

Kathy Bazoian Phelps is moderating a webinar co-hosted by the American Bankruptcy Institute #abiLive and the National Association of Federal Equity Receivers, with panelists Stephen Harbeck (the CEO and President of SIPC), Kenneth Bell (the receiver of ZeekRewards), and Brian Bash (the trustee of Fair Finance). Join us on November 8, 2016 at 1 p.m. EST (free to attend). 

Register at abiLIVE.

Monday, October 31, 2016

October 2016 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for October 2016. The reported stories reflect: 2 guilty pleas or convictions in pending cases; over 66 years of newly imposed sentences for people involved in Ponzi schemes; at least 5 new Ponzi schemes worldwide; and an average age of approximately 51 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it.

Golan M. Barak, 49, was indicted on allegations that he ran a $2 million real estate Ponzi scheme. Barak told investors that they would be in partnership with him to buy and manage properties that would generate rental income or make a profit when the properties were renovated and flipped.

Ian Bick, 21, was sentenced to 3 years in prison following his conviction last year for running a Ponzi scheme that defrauded more than 15 investors out of almost $500,000. Bick ran the scheme through several companies, including This is Where It’s At Entertainment, LLC, Planet Youth Entertainment, W&B Wholesale LLC, and W&B Investments LLC. He had promised investors that he could generate large returns by purchasing electronic devices and reselling them at a profit on the Internet.

Steven Edward Branstetter, 60, pleaded not guilty to charges that he was operating a Ponzi scheme that defrauded victims out of more than $2 million. Branstetter allegedly offered fake annuities and insurance policies by creating fake account statements and contracts. The alleged scheme involved at least 18 victims over a 9 year period.

Donna S. Brown, 65, was charged in connection with an alleged $25 million Ponzi scheme that defrauded at least 200 investors. Brown ran Budget Finance Co., promising returns between 8% and 12%. Brown issued false quarterly investment statements to clients along with IRS 1099 forms that she did not submit to the IRS. Brown has agreed to plead guilty.

Changes Trading, Changes Worldwide, Timothy Baggett, Kimball Parker, and Parker’s company, MakeYourFuture LLC, were charged by the CFTC for fraud and commodities violations. According to the complaint, the Defendants allegedly took more than $850,000 from at least 289 customers. They allegedly promised investors 300% annualized returns and represented that their trading system “never had a losing month.”

Stuart G. Dickinson was barred by FINRA from the securities industry after he recommended that his customers invest in a Ponzi scheme run by ATM Financial Services and ATM Alliance. Dickinson sold more than $1 million in limited partnership interests in ATMA.

Kenneth Grant, 68, and Thomas Abdallah, 52, were sentenced to 92 months and 82 months, respectively, in connection with the Ponzi scheme run through KGTA Petroleum Ltd. Additionally, Jerry Cicolani, 52, was sentenced to 57 months, Jeffrey Gainer, 52, was sentenced to 52 months, Mark George, 59, was sentenced to 21 months, and Kelly Hood, Cicolani’s wife, was placed on home confinement. The scheme promised investors 60% returns from the sale of fuel products.

Christopher Hanson, 54, was sentenced to 2 years and 9 months in prison for a $1.1 million Ponzi scheme that he ran through Hanson Holdings LLC. Hanson defrauded 3 investors by representing that he would use their invested funds to purchase a collateralized mortgage obligation, against which a line of credit would be obtained, allegedly providing substantial dividends within months. He promised up to 250% returns. Instead, Hanson moved the money into his personal bank account and paid earlier investors when they wanted their money back.

Maria Guadalupe Hernandez, 59, the former president and CEO of El Paso Federal Credit Union, was sentenced to 15½ years in prison for running an $18 million Ponzi scheme out of the credit union. Her assistant, Hilda Simental Mendoza, 53, was sentenced to 10 years last month. They sold non-members share certificates in the credit union but concealed the list from other employees and the board.

Francisco “Frank” Hobson, 39, pleaded guilty to charges relating to a $2.3 million Ponzi scheme. Hobson was a licensed real estate agent who promised investors that their funds would be used to purchase properties, but the properties were not actually for sale or did not exist.

James Merrill, 55, pleaded guilty to charges for his role in the TelexFree Ponzi scheme. Merrill had previously pleaded not guilty and was scheduled to go to trial next month. The scheme involved over $3 billion taken from nearly 1 million investors in more than 240 countries.

Terry Wayne Millender, 52, and his wife, Brenda Millender, 56, were charged with running a $1.2 million Ponzi scheme that targeted church members of the church in which Terry Millender was the head pastor. The Millenders operated a company called Micro-Enterprise Management Group, along with Grenetta Wells, 55, who was also charged in connection with the scheme. They promised investors profits from short-term loans to poor business owners in small countries. Instead, they used the money for personal expenses, including the purchase of the Millenders’ $1.75 million home.

David Schwarz, 60, was indicted for his role in the Cay Clubs Resorts and Marinas Ponzi scheme. Schwarz was vice president of Cay Clubs and is accused of creating numerous bank accounts for Cay Club using family members as straw borrowers for loans to purchase condo units. Fred Davis Clark Jr. was sentenced in February to 40 years in prison for masterminding the $300 million scheme that promised 20% returns.

Dror Soref and Michelle Seward continued with their preliminary hearing based on charges that they were running a Ponzi scheme. The defendants allegedly defrauded investors out of $21 million, promising returns between 10% and 18%.

Jack Utsick, 73, was sentenced to 18 years in prison in connection with his $207 million Ponzi scheme. Utsick defrauded nearly 3,000 investors through his company, Worldwide Entertainment, Inc., promising investors returns from his promotion of tours of concerts for artists such as The Rolling Stones, Rod Stewart, Aerosmith, David Bowe, Elton John and Britney Spears.

Stuart Alan Voigt, 67, was sentenced to 6 months in prison for his involvement in a Ponzi scheme. Voigt, while serving as a bank board chairman, approved a loan to Jeffrey Gardner, whose business, Hennessey Financial, was accused of running a Ponzi scheme. Voigt, who knew of Gardner’s poor financial condition and who knew that Gardner owed him millions of dollars, did not disclose the financial issues.

Shawn Patrick Watkins’ trial was rescheduled to next year to give the defense more time to investigate the allegations that Watkins was running a Ponzi scheme. Prosecutors allege that Watkins defrauded investors out of $3.5 million in connection with a real estate Ponzi scheme.

Herbert Weinstein was barred by FINRA from the securities industry. A $3.1 million judgment had been entered against him in a civil lawsuit stemming from a Ponzi scheme. Weinstein was not barred because of the judgment but because of his refusal to appear to give testimony. His lawyer claims that Weinstein had no involvement in the Ponzi scheme involving 20 investors and $6 million that was run by Ira J. Pressman, who was sentenced to 8 years in connection with the scheme. The scheme was run through PJI Distribution which supposedly bought and sold closeout and overstock merchandise.



Veronica Macpherson, who has been accused of running an alleged $190 million Ponzi scheme through her company, Macro Realty Development, continued to solicit investors for her property development program. Macpherson charged investors $180 to attend a function updating investors on the business. Macpherson’s assets were frozen in August by authorities, but her scheduled dinner event promised to “provide a complete history of projects you have been involved in and the proposed solutions.” The Australian Securities and Investments Commission extended its prior order against Macpherson and her companies and expressly cancelled the financial services license of Macro All State Investments & Securities Limited. The alleged scheme promised returns of up to 20%.


Nicholas Smirnow, 59, the operator of the Pathway To Prosperity Ponzi scheme, pleaded guilty to one count of fraud for a scheme that defrauded numerous victims in Canada and the U.S. He received a 7 year prison sentence for the scheme that netted him close to $6 million. Investors are believed to have lost about $70 million. Smirnow has also been charged in the U.S., and his wife, Dianna Rose Smirnow, received a 6 day sentence last year and was required to pay $16,000 in restitution.


Police arrested Subhashmohan Chadda, 47, along with employees, Amol Nirvani, 30, Poornima Salve, 35, and Chirag Arora, 28, for allegedly running a Ponzi scheme that had defrauded more than 500 people over 10 years.

Gurmitsingh Kundansingh Bhatti, 37, has been sentenced to 2 years in jail in connection with a Ponzi scheme that defrauded over 300 investors. Bhatti worked for Shreehari Enterprises and promised investors that they could double their money in three months.

New Zealand

Jimmie McNicholl was charged in connection with an alleged $8.3 million Ponzi scheme run through Arena Capital, trading as BlackfortFX.


Converged Dynamic International Limited was labeled a Ponzi scheme by the Nigerian SEC. The scheme offers a product called “Resources Investment Account.” The SEC issued a warning: “The general public is hereby advised to desist from investing in products marketed by the company.”


Switzerland is raising the pressure on Malaysia to cooperate with a probe into the company 1 Malaysian Development Berhad (1 MDB), which allegedly involves billions of dollars. About $800 million appears to have been misappropriated, and billions appear to have passed through Swiss banks. Switzerland is investigating and seeks the assistance of Malaysia.


The trustee of Bernard L. Madoff Investment Securities LLC was not permitted to reargue the issue of whether the trustee could seek to avoid transfers made by Bernie Madoff individually. Securities Investor Protection Corporation v. Bernard L. Madoff Investment Securities, LLC, 2016 Bankr. LEXIS 3757 (S.D.N.Y. Oct. 18, 2016). The court held that the issue had already been decided that the BLMIS trustee could only pursue transfers made by BLMIS, and not by Madoff individually. The lawsuit relates to transfers made to Frank Avellino and Michael Bienes.

A New York state court of appeals refused to overturn the dismissal of claims brought by successors to feeder funds of the Bernard Madoff scheme against Citco Group Ltd. and PricewaterhouseCoopers LLP. New Greenwich Litigation Trustee, LLC v. Citco Fund Services (Europe), 2016 N.Y. App. Div. LEXIS 6702 (N.Y. Sup. Oct. 18, 2016). The court found that New York law applied and that the in pari delicto doctrine barred the claims.

The trustee in the Bernard Madoff scheme filed a motion seeking court approval of a settlement with Stanley Chais and other defendants that resolves litigation in California. The settlement will pay about $277 million, of which more than $262 million will go to the trustee of the Madoff scheme to distribute to customers and another $15 million to California’s attorney general to resolve a related class action lawsuit.

In the trial of the Post-Confirmation Committee for Small Loans, Inc. against Derek Martin and his companies, including Money Tree, Inc., the court disallowed the use of the reference to Money Tree or any of the other entities as a Ponzi scheme.

Liquidators for two Cayman Islands-based funds of Platinum Partners filed a bankruptcy petition in New York. The bankruptcy court froze more than $118 million in assets after the trustee of Black Elk Energy Offshore Operations LLC accused the fund manager of siphoning $200 million in proceeds from an asset sale.

The receiver of the WCM777 Ponzi scheme case has recommended to the Court that about 84% of the submitted claims be disallowed.

The ZeekRewards receiver announced that more than 41,000 claimants have not filed the required certification and release necessary to receive distributions on account of their claims and that they run the risk that their claims may be forfeited.

Friday, September 30, 2016

September 2016 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

    Below is a summary of the activity reported for September 2016. The reported stories reflect: 4 guilty pleas or convictions in pending cases; over 56 years of newly imposed sentences for people involved in Ponzi schemes; at least 4 new Ponzi schemes worldwide; and an average age of approximately 51 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it.

    Eric Aronson, 48, was sentenced to 10 years and 4 months in prison in connection with a $19 million Ponzi scheme that defrauded more than 200 people. Aronson founded Permapave Industries and Permapave USA Corp. and promised returns of up to 400% for buying promissory notes that paid for the importation of stones.

    Ian Bick, 21, previously convicted for running a Ponzi scheme, is seeking probation, saying that he is a victim of overzealous prosecutors and greedy investors. Bick maintains his innocence and wants probation, while prosecutors are seeking an 8 year prison sentence.

    Jason “Jay” Borromei, a key figure in the TelexFree Ponzi scheme, filed for bankruptcy, seeking a stay of the TelexFree trustee’s lawsuit against him. The trustee has accused Borromei and his company, Opt 3 Solutions Inc., of aiding and abetting the Ponzi scheme.

   Steven Edward Branstetter, 60, was arrested on allegations that he is operating a Ponzi scheme that defrauded victims out of more than $2 million. Branstetter allegedly offered fake annuities and insurance policies by creating fake account statements and contracts.

    Joseph Castellano, 59, pleaded guilty to charges that he operated a $1.45 million Ponzi scheme that defrauded 10 people. Castellano ran his scheme using the following companies: Casbo Investments, Wallingford Investors Limited Partnership, AIM Realty Investors and Castellano & Co. LLCCastellano said he had clients who needed capital for business or real estate projects, and he promised investors returns of 6% to 8%.

   Christopher Donrick Daley, 33, was convicted of running a $1.4 million crude oil futures Ponzi scheme that defrauded at least 55 investors. Daley promised investors returns of at least 20% per month in his scheme which he was operating beginning in 2010.

   Chad Roger Deucher, 43, declined to plead guilty as was expected in response to allegations that he ran a $28 million Ponzi scheme. About 170 investors lost about $16 million in Deucher’s real estate investment company, Marquis Properties. Investors were promised returns of up to 22% and monthly interest rates as high as 12%. Deucher sent $376,000 of investor funds to an account controlled by his wife and used other funds to pay for a mortgage on his residence.

    Carl Ferrell was indicted on charges related to an alleged fraudulent scheme that he ran through his company, Wholesale Properties International. The scheme involved real estate, and Ferrell allegedly provided false information to induce investors to invest.

  Catharine Ann (“Cathy”) Finberg pleaded not guilty to charges in connection with an alleged Ponzi scheme that took $1.5 million from 28 investors. The investors believed that Finberg was investing money on their behalf. Finberg was charged with failure to register as a securities broker, dealer or salesperson, among other things.

   Eugene Grathwohl aka Scott Wolas aka Frank Amolsch aka Drew Prescott aka Allen Lee Hengst aka Robert Francis McDowell, 67, is wanted in connection with an alleged Ponzi scheme in which 16 victims lost $1.65 million. Grathwohl raised money from investors to supposedly buy and reform a bar but he disappeared with the money. A warrant has been issued for Grathwohl’s arrest in Massachusetts. He is also wanted on a warrant in Alabama, and another in New York where he worked as a lawyer for Hunton & Williams and was investigated by the SEC in connection with a $20 million fraud case. 

    Jeff Guinn is being sued by investors in connection with his alleged Ponzi scheme run through Aspen Financial Services. The investors are seeking $6.9 million. Guinn is the son of the late Kenny Guinn, Nevada’s governor from 1999 to 2007. Guinn filed bankruptcy for himself and Aspen Financial in 2013. Guinn refutes the allegations that he was running a Ponzi scheme.

   Mark Anderson Jones, 64, pleaded guilty to charges in connection with charges that he ran a $10 million Ponzi scheme through the Jamaica Bridge Loan Fund. Jones had misrepresented that investors funds would be used for bridge loans to Jamaican businesses o awaiting funds from approved commercial bank loans. He promised investors returns of 15% to 20%. About 21 investors were defrauded.

    George Lindell, 68, and Holly Hoaeae, 41, were sentenced to 210 months and 10 years, respectively, and each ordered to pay $8.9 million restitution, for the investment scheme run through The Mortgage Store. The scheme involved 166 investors who invested over $26 million, and a jury found them guilty in 2015. They issued promissory notes to investors guaranteeing returns of 7%, and they taught seminars on how to use the equity in homes for investment purposes. They advertised “The Parking Lot” as a safe place to “park” their money and earn guaranteed rates of interest. 

   James M. Merrill and Carlos N. Wanzeler, already under indictment for their role in the TelexFree scheme, were the subject of a superseding indictment that added 8 new counts, including a money-laundering forfeiture allegation. Wanzeler fled the U.S. in 2014 and is an international fugitive.

    Randy Scott Miland, 62, pleaded guilty to running a Ponzi scheme in which he solicited about $575,000 from his chiropractic clients. Miland has two previous convictions for Ponzi schemes. The first, in 1999, led to an order that he pay $1.5 million in restitution. In 2006, he was convicted for another scheme and ordered to pay more than $250,000 in restitution. 

   John Kevin Moore and his company, Big Sky Mineral Resources, are being investigated for running an alleged Ponzi scheme that defrauded 36 investors. The scheme involved more than $2.7 million in investments in oil leases in Montana.

 Dawn Wright-Olivares aka Dawn deBrantes, 48, was sentenced to 7½ years in prison for her role in the ZeekRewards Ponzi scheme. Her stepson, Daniel Olivares, 34, was sentenced to 2 years in prison. Both defendants had pleaded guilty in 2014. Paul Burks, 69, the operator of the scheme, was convicted by a jury in July. ZeekRewards ran penny auctions that promised investors up to 125% returns. There were about 900,000 participants in the program worldwide.

    Platinum Partners Value Arbitrage Fund (International) Limited had a liquidator appointed over it by a Cayman Islands judge. Investors in that company, as well as in Platinum Partners LP Funds and Platinum Partners Credit Opportunities Fund, are investigating the Funds and what is alleged to be a Ponzi scheme. The investigation also focuses on the related entities: Platinum Credit Holdings LLC managing member, Mark Nordlicht; Platinum Credit Management LP; Platinum Partners Value Corp.; Platinum Management (NY) LLC.

    Sanderly Rodrigues De Vasconcelos aka Sann Rodrigues has agreed to plead guilty to a charge of immigration fraud. Rodriguez was charged civilly by the SEC in 2014 in connection with the TelexFree Ponzi scheme.

   Simonia De Cassia Silva, 44, consented to judgment against her in a lawsuit filed by the SEC for her role as a promoter of Tropikgadget FZE and Tropikgadget LDA, both of which operated under the name Wings Network. Silva promoted the scheme, along with Vinicius Romulo Aguiar, by selling Wings Network membership packs. Others involved in the scheme were Thais Utino Aguiar and Dennis and Elaine Somaio.

    William Stenger, 66, reached a settlement with the SEC in relation to the Jay Peak Ski Resort Ponzi scheme in which he agreed not to engage in any securities transactions. Stenger and Ariel Quiros, 58, allegedly ran a Ponzi scheme through a government immigration program in connection with the Jay Peak Ski Resort owned by Q Resorts Inc. and Q Burke Mountain Resort in northern Vermont. The scheme took in $200 million, promising foreigners the benefit of the EB-5 Immigration Investor Program, which allows foreigners who invest in U.S. companies to obtain green cards.

    Shawn Patrick Watkins, 46, was indicted on charges that he ran a $43.5 million real estate Ponzi scheme in California that defrauded about 50 investors. Watkins claimed to be a former law enforcement officer to lend credibility to his program that he ran through The Equity Growth Group Inc. Watkins and his company are also defendants in at least two cases in Utah in which investors say they were defrauded. Watkins and his business partner, Angel Bronsgeest, have also been embroiled in litigation in the past.

    William J. Wells, 43, was sentenced to 46 months in prison in connection with a $1.5 million scheme described as “Ponzi-like.” Wells defrauded more than 30 investors through his investment firm, Promitor Capital LLC, by misrepresenting that he had consistent positive returns in the stock market.



   Veronica Macpherson, the head of Macro Realty Developments, has been accused of running a Ponzi scheme. Macpherson took in about $190 million from investors and promised them returns from a mining boom. It is alleged that Macpherson has access to bank accounts across the globe and that she spent more than $2 million on first-class travel for herself and for the staff of Macro Realty Developments.


    Rashida Samji, 63, was sentenced to 6 years in prison for masterminding a $110 million scheme that defrauded 284 investors. Her scheme was the largest Ponzi scheme in B.C. history. Investors were promised secure 12% returns and were led to believe that their money was being invested in a winery, the Mark Anthony Group, that was expanding into South Africa and South America.


    Hundreds of angry investors staged a protest in Shanghai demanding action in connection with an alleged Ponzi scheme run through Dada Group. The company had promised 7% returns. It is believed that 29,300 people invested a total of $38.7 million (190 million yuan). Ma Shenke, the controller of Dada’s parent company, Shanghai Shentong Group, was detained in connection with an investigation. Shanghai Shentong Group is estimated to have raised between 4 and 6 billion yuan from investors, and Shenke is now under investigation because the company stopped paying investors back last December. 


   About 1,000 victims in the WinCapita scheme will soon receive compensation from about 8 million euros set aside by the Ministry of Justice for their losses. The scheme, run by Hannu Kailaj√§rvi, promised four-fold returns for participation in a foreign exchange investment club. Kailaj√§rvi was found guilty and sentenced to 5 years in prison in 2013.


    Police arrested Prabhat Ranja Mallik, the chairman and managing director of Kalinga Co-operative Society Limited. Prabhat had been ensuring investors that he had been investing their money for four years but failed to return their money.

    Officials arrested the directors of Infinity Realcon, Pranab Mukerjee and Prabir Kumar Mukherjee, in connection with an alleged Ponzi scheme that involved Rs 565 crore.

   Sankar Saha, the director of PAFL Industries Ltd., was arrested for allegedly illegally collecting Rs 60 crore from investors.

New Zealand

    The Asset and Forfeiture Unit is seeking a full forfeiture order against Colin Davids, 49, in connection with an alleged Ponzi scheme that he ran through Platinum Forex Group. An auditor’s report recently filed reflects receipts by Davids of R329 from thousands of investors. Davids is the pastor of the New Direction Church and owns two multimillion rand homes and luxury cars. Davids has denied the charges.


   The Securities and Exchange Commission in Nigeria has warned that the online investment program “MMM Federal Republic of Nigeria” is a Ponzi scheme. “MMM” stands for Mavrodi Mondial Moneybox which is named after Sergei Panteleevish Mavrodi of Russia who founded MMM in 1989. Mavrodi has previously been found guilty by a Russian court for defrauding over 10,000 investors out of more than $4.3 million. He was sentenced to 4½ years but has since launched schemes in multiple other countries including Nigeria, South Africa, Zimbabwe, and some east African countries.


    Hsu Ssu-wei, a fugitive of Taiwan, was brought back from Malaysia to face charges that he and The Maxim Trade Group were running a Ponzi scheme. The Maxim Trade Group was accused of fraudulently taking more than NT$13.9 billion from investors in Taiwan, Malaysia, South Korea, China and Hong Kong. The Bureau of Investigation raided 16 locations used by the company last year and seized about NT$60 million in cash, luxury cars and bank accounts.


   Criminal charges were filed against Gary and Margarita Huang, alleging that the married couple operated a P148 million Ponzi scheme that defrauded 46 investors. The couple capitalized on their connection with Commonwealth Foods Inc. (Comfoods) by allegedly enticing investors to invest in “Comfoods Lending Program,” promising 4% returns and the return of principal in 6 months. Comfoods has denied any involvement in the scheme.

South Africa

   The South African Reserve Bank has launched a national campaign called “Easy Come Easy Go” to warn the public about Ponzi and pyramid schemes.


   The Ponzi scheme, MMM Zimbabwe, collapsed leaving thousands of people having lost thousands of dollars. The same scheme has recently been found in Nigeria and South Africa as well.


    A court approved a sale by the receiver of Aequitas Management LLC of membership interests in CCM Capital Opportunities Fund LP fka Aequitas Capital Opportunities Fund LP for $12.2 million. The SEC had filed a complaint against Aequitas earlier in the year, alleging that Aequitas was engaged in a $350 million Ponzi-like scheme.

    Berkshire Hathaway was sued by a New York City biker courier company, Breakaway Courier, for allegedly scheming to steal insurance premiums in a “reverse Ponzi scheme.” The lawsuit alleges that the victims are led to believe that their capital is protected and will be returned to them, but that Berkshire Hathaway “illegally siphons off premiums through an unlicensed, unregistered and under collateralized Hawaiian entity, leaving New York employer and injured workers without the funds that New York State requires to be available to cover losses due to worker injuries.”

   A victim in the Diversified Lending Group Ponzi scheme was awarded $15.6 million by a jury against MetLife. Christie Ramirez, who had invested $280,000 in the scheme, sued MetLife, saying that the insurer had ignored or failed to see signs that its agents were selling the investments that guaranteed returns as high as 12%. Ms. Ramirez’s case is the first in seven cases that involve 98 victims.  

    TD Bank NA was sued by investors of Michael Kwasnik who ran an $8.5 million Ponzi scheme. The lawsuit accuses TD Bank of negligence for failing to detect the fraudulent activity of Kwasnik. The lawsuit also names Kwasnik and his father, William Kwasnik.

    A proposed class action by Bernie Madoff investors against HSBC Bank was dismissed on the basis that the claims either lacked jurisdiction or were barred by securities law. Hill v. HSBC Bank PLC, 2016 U.S. Dist. LEXIS 125921 (S.D.N.Y. Sept. 15, 2016).

    A court dismissed a class action by investors in the Bernard Madoff Ponzi scheme against two of the feeder funds, Tremont Group Holdings and Kingate Management. In re Kingate Management Ltd. Litig., 2016 U.S. Dist. LEXIS 129882 (S.D.N.Y. Sept. 21, 2016).

  The Stanford Financial receiver sought approval of a $120 million settlement with Willis Towers Watson Public Ltd. Co. Willis had been accused of assisting the Stanford Ponzi scheme by vouching for Allen Stanford and leading investors to believe that the investments were insured by Lloyd’s of London. If approved, this will be the largest single recovery from litigation in the Stanford case. Some of the other significant settlements in the case are: $40 million from accounting firm BDO USA LLP; $35 million from New York law firm Chadbourne & Parke LLP; and $24 million from security consulting firm Kroll Inc.

    A court denied the Stanford Financial receiver’s motion to dismiss the bankruptcy of Peter Romero, the former U.S Ambassador to Ecuador. In re Romero, 2016 Bankr. LEXIS 3408 (D. Md. Sept. 16, 2016). The receiver had obtained a $1.25 million judgment against Romero which Romero is seeking to discharge in his bankruptcy case. The court declined to find any bad faith in Romero’s bankruptcy filing.

    The TelexFree clams deadline has been extended to December 31, 2016, from the previously set deadline of September 26, 2016. The trustee, who has already received 80,000 claims, requested the extension due to the large number of participants in the program, the geographical location of the claimants all over the world, language barriers and the difficulty for some in gathering the necessary documentation. Claims must be filed through TelexFreeClaims.com.

    Traffic Monsoon, which has been alleged to be a Ponzi scheme by the SEC, promoted a new campaign on Facebook called “Revenue Shares Matter.” The campaign began a few days after civil unrest in Charlotte, N.C. and some believe that the new Revenue Shares Matter campaign appears to be trading on the “Black Lives Matter” movement. The new campaign, announced through a Facebook account in the name of Jose Nunes, includes a flame-filled graphic that appears to urge members of similar revenue sharing programs to “RIOT.” At least one person posted in response: “Jose, I think you may well that some people will find this post and caption is in bad taste and may be deemed highly offensive to many people who support and believe in the BLM movement.”

    Two civil lawsuits were filed against Traffic Monsoon and Charles Scoville. The complaints are the first civil suits against the defendants following the complaint filed by the SEC against them in July alleging that securities fraud and that they were running a Ponzi scheme. One complaint seeks not only the return of the investment but also damages for “emotional distress, anxiety, depression, insomnia, guilt and frustration caused to him by the Defendants.”