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, November 30, 2018

November 2018 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for November 2018. The reported stories reflect at least 12 new Ponzi schemes worldwide; about 60 years of newly imposed sentences for people involved in Ponzi schemes; 4 guilty pleas or convictions, 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.

Gary L. Cain, 61, was arrested in Texas just two days before he was to begin serving his prison sentence in connection with a Ponzi scheme run with former state Sen. Carlos Uresti, 54. A jury previously found Uresti and Cain guilty in connection with the fracking enterprise run through FourWinds Logistics. FourWinds CEO Stanley P. Bates pleaded guilty earlier this year.

Craig Carton, 49, was convicted for his role in a ticket-selling Ponzi scheme. Prosecutors had alleged that Carton had misappropriated at least $5.6 million. Michael Wright, 42, pleaded guilty to charges related to the scheme in September. They were accused of soliciting investors to fund a business of buying and reselling blocks of tickets to music, entertainment and sporting events. Joseph Meli is currently serving 6½ years in prison for the scheme. Meli’s wife, Jessica Ingber Meli, was ordered to pay $4 million in connection with the SEC action in which she was named as a relief defendant.

Stephen Tudor Crozier, 66, of California, pleaded guilty to charges relating to a scheme that defrauded investors out of more than $1 million. Crozier held himself out as a financial advisor with knowledge of the European financial markets.

Michael D’Alessio, 53, pleaded guilty to charges related to an alleged Ponzi scheme run through Michael Paul Enterprises in New York. The scheme involved luxury real estate developments that defrauded investors out of approximately $58 million.

Rabbi Zvi Feiner of Chicago was accused of defrauding investors in his local Jewish community out of more than $35 million. Feiner is the head of Feiner Investment Corporation, which was running an alleged nursing home investment scheme.

Edwin Fujinaga,72, was convicted in connection with his role in the $1.5 billion Ponzi scheme run through MRI International Inc. The scheme defrauded more than 10,000 Japanese investors by promising them that their money would be used to purchase medical claims. Fujinaga used less than 2% of the investor funds for that purpose and instead used the money to pay earlier investors and to buy a private jet, a mansion, real estate in Hawaii and Beverly Hills, and luxury cars.

Sebastian Greenwood was arrested and extradited to the U.S. in connection with the OneCoin scheme. Greenwood was arrested in Thailand and is accused of being involved in a $400 million money laundering scheme through OneCoin. Greenwood is believed to have been second in command at OneCoin behind Ruja Ignatova.

Khemraj Dave Hardat, 50, was charged for allegedly defrauding investors out of $5 million in a Ponzi scheme. Hardat is a Canadian national who has been living in Los Angeles on an expired tourist visa. Hardat allegedly defrauded at least 7 investors by falsely claiming that NBA stars such as Stephen Curry and Shaquille O’Neal were endorsing his products. He misrepresented that he had a postgraduate doctoral degree from Yale and used falsified bank statements to lure in investors. Hardat used the funds for payments on his Maserati and Lamborghini, among other things.

Gaylen Dean Rust and Rust Rare Coin, Inc. of Utah were charged by the CFTC with running an alleged $170 million Ponzi scheme. The scheme allegedly defrauded at least 200 people in a commodities pool called Silver Pool. Investors were told they were buying into a share of a pool that purchased precious metals and were promised annual returns of 20% to 25%. The CFTC lawsuit also names Denise Gunderson Rust, Joshua Daniel Rust, Aleesha Rust Franklin, R. Legacy Racing Inc., R Legacy Entertainment LLC, and R Legacy Investments LLC as relief defendants.

Robert Shapiro, the former Chief Executive Officer of Woodbridge Group of Companies, agreed to pay $120 million to the SEC to settle allegations that he ran a $1.2 billion real estate Ponzi scheme. Shapiro did not admit or deny the allegations. The scheme targeted 8,400 investors and promised returns as high as 10% from investments in developers who flipped luxury real estate. Meanwhile, another broker, Dennis Ferwerda, was barred from FINRA for his involvement in selling investments in the Woodbridge Ponzi scheme.

Brandon Walton Stewart, 33, of California was sentenced to 35 years in prison in connection with $13.5 million Ponzi scheme. Stewart promised investors that he would use their money to buy stocks in companies such as Facebook.

Bobby Duane Vise, 53, of Texas, was sentenced to 13 years in prison and ordered to pay $1.27 million to 12 victims in connection with a Ponzi scheme that defrauded investors out of more than $1.2 million. Vise pleaded guilty to running a real estate investment scheme.

Roland Von Kurnatowski, 67, of New Orleans was accused of running a Ponzi scheme. A lawsuit filed against Von Kurnatowski alleges that he persuaded investors to invest in Bond Fund One, or BF-1, which would trade U.S. Treasury bills. The scheme defrauded investors out of hundreds of thousands of dollars.

April Vuong, 42, and Hao Quach, 41, were each sentenced to six years in prison in connection with a Ponzi scheme and will be sentenced to an additional 5 years in prison if they fail to pay restitution for the next 10 years.

INTERNATIONAL PONZI SCHEME NEWS

Canada

Robert Castano was permanently banned from any involvement in securities transactions. Castano previously pleaded guilty to defrauding investors by promising monthly returns of 5% from trades on the stock market. The scheme brought in more than $2.5 million through his company, Skyline Communications, $1.5 million of which was lost.

England

Essex and London Properties Limited was shut down following findings that the company misused £18.9 million of investor funds. The scheme involved more than 800 investors who were promised 8% returns annually if the money was held for 3 years, or 12% if the money was held for one year. The company claimed to generate the returns from the purchase and resell of properties or from rental income. In reality, the company only purchased one property.

Japan

Eight men were arrested in connection with an alleged $73 million cryptocurrency Ponzi scheme.  The scheme defrauded 6,000 people by promising them between 3% and 20% returns. The company, Sener Trader, claimed to be a U.S.-based investment firm. Sener Trader created a bogus Amazon ebook listing for its fictional CEO, “Spenser Brown” to try to hide the company’s Japanese origins. Six of the 8 men plead guilty and two have maintained their innocence. Sener Trader was formed after the demise of a prior scheme run by Eagle Gates Group.

India

Goodman Goqo, 33, pleaded not guilty to charges that he defrauded more than 4,000 people out of R76m. Goqo ran the scheme through his business, Ingede Mineral Holdings. He advised investors that he would invest their money on the stock exchange and offered them 30% monthly interest over six months with the principal guaranteed.

Sudipto Roy Choudhary, 44, was arrested in connection with the Rose Valley Ponzi scheme. The chairman of the scheme, Gautam Kunda, was arrested in 2015.

Braja Mohan Patnaik, 44, and his wife, Tridhara Mohanty, 40, were arrested on charges that they collected approximately Rs. 60 crore from over 1,550 investors in a number of schemes. They were directors of Datum Marketing Limited, which was used to lure in investors.

Gali Janardhan Reddy and Ali Khan were arrested in connection with an alleged $1 million Ponzi scheme that promised investors returns of 40% to 50% a month. Reddy is accused of taking Rs 20 crore from Syed Ahmed Fareed, the owner of Ambidant Marketing Pvt Ltd. to strike a deal with officials to drop the case they were investigating against Ambidant. Fareed and Ambidant are under investigation for defrauding hundreds of investors. Fareed is alleged to have run the scheme with his son, Syed Afaq. They are involved with the following other firms in India as well: Ambidant Constructions Ltd., Ambidant Marketing and Trading Company, Profit Theme, Ammar Enterprises, Ambidant Global Solutions, Ambisheltar, Perinet Technologies, Ambigold, Webworld, and Ambidant Marketing Financial Services LLC (Dubai).

Assets of Gold Sukh Trade India Ltd. and its directors Narendra Singh, Mahendra Kumar Nirwan, Manvendra Pratap Singh Chauhan and Bablu Sharma were seized by authorities in connection with an alleged Ponzi scheme.

Malay Banerjee and R P Dasora were arrested in connection with an alleged scheme involving Kim Infrastructure and Development Limited. The scheme allegedly defrauded 5,000 agents and investors who were promised that their money would be doubled or tripled.

Vinay Shah was arrested after being on the run for two weeks in connection with an alleged Ponzi scheme that defrauded investors out of Rs 260 crore. Shah’s wife, Bhargavi is still on run but Shah’s friend Chanda Thapa was also arrested.

Four people were charged in connection with the GainBitcoin cryptocurrency scheme.  Vivek Bharadwaj, Pankaj Adlakha, Hemant Bhope and Amit Bharadwaj will face trial in December.

Charges were filed against tviexpress.com and its promoters and associates, Tarun Trikha, Varun Trikha, Sikha Trikha, Shakti Sharad, and Anoop Kumar. They are accused of running a scheme involving share trading, commodities trading, holiday package booking, and air ticketing. Investors were promised that their money would double in a year, but the returns have not been paid.

Nigeria

Michael Eke, the founder of Micheno Micro Cooperative Society, was arrested in connection with an alleged N27 million Ponzi scheme.

Kayode Samuel and Kola Banji were arrested in connection with an alleged Ponzi scheme known as D9 Club. The scheme is believed to have defrauded at least 200 investors.

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