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

Sunday, January 31, 2021

January 2021 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for January 2021. The reported stories reflect at least  3 new Ponzi schemes worldwide, 4 guilty pleas, 16 years of prison sentences and one life sentence, 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.  

Stacey L. Bean, 35, and Travis Laska, 26, were fined $7,500 each in connection with their role with the VisionQuest Wealth Management LLC Ponzi scheme run by Stephen C. Peters. They were accused of assisting in a fraudulent offering of $10.1 million in promissory notes. Peters also owned VisionQuest Capital LLC and VQ Wealth LLC.

Paul Burks, 74, plea for a compassionate release was denied. Burks is serving a 14-year prison sentence in connection with a $939 million Ponzi scheme that defrauded nearly 1 million investors. The scheme was run through Rex Venture Group LLC, Zeekler, and ZeekRewards. Burks intentionally misled investors and promised returns of 125% for investing in an online auction site. The court denied the request for release which was based primarily on the COVID-19 pandemic.

Carl R. Carro, 59, and James W. Doyle, 72, were charged in connection with an alleged Ponzi scheme run through Endeavor Management Solutions, LLC and Endeavor Consultancy LLC. The scheme defrauded over 50 victims out of more than $1 million by promising them that their investments would be held in an untouched cash reserve fund that would guarantee returns of 10% to 20% after 30 days. Endeavor was a headhunting firm hired by clients to find candidates for openings on their boards of directors.

Steve Chen, 63, of California, was sentenced to 10 years in prison in connection with the cryptocurrency scheme run through US Fine Investment Arts in which Chen sold Gemcoin. Chen represented this his Gemcoin was a digital currency backed by gems mined by the company. About 70,000 investors were defrauded out of about $147 million.  

Fred Davis “Dave” Clark Jr. had his 40-year sentenced commuted by President Trump. Clark was convicted in 2015 for helping run a $300 million Ponzi scheme through Cay Clubs Resort and Marinas

Victor Lee Farias, 47, pleaded guilty to charges that he ran an aviation engine Ponzi scheme through Integrity Aviation. Farias misrepresented that investor funds would be spent on aircraft engines and parts which would be leased or resold to major airlines. Investors were promised returns of 10% to 12% per year.  Farias raised $14 million, and there was no evidence that even a single aircraft engine had been purchased.

Tammy Lynn Hawk, 47, of Tennessee, pleaded guilty to charges relating to an alleged Ponzi scheme. Hawk was a licensed real estate agent. She falsely told customers about parcels of real estate that she could arrange for them to purchase and "flip" for substantial gains. The scheme defrauded 24 victims out of more than $1,000,000.

David Hu, 63, of New York, pleaded guilty to charges relating to a $100 million Ponzi scheme through International Investment Group. Hu created fake loans that he represented were performing and he otherwise hid losses and overvalued loans. He ran the scheme through three funds: IIG Trade Opportunities Fund N.V.; IIG Global Trade Finance Fund, Ltd.; and IIG Structured Trade Finance Fund, Ltd.  Hu and co-conspirator, CC-1, created a collateralized loan obligation trust, the CLO Trust, for which IIG served as investment advisor and then used the Trust to hide losses. Hu agreed to forfeit more than $129 million in funds.

Dennis Mbongeni Jali, 35, John Erasmus Frimpong, 40, and Arley Ray Johnson, 61, are under investigation by the FBI for an alleged $28 million Ponzi scheme run through their company, 1st Million Dollars. The three posed as pastors and attended church events to solicit investments.

Andrew Dale Ledbetter, 78, of Florida, pleaded guilty to charges relating to a $322 million Ponzi scheme run through 1 Global Capital LLC. 1 Global Capital was a purported commercial lender that made “pay day” loans with high interest rates to small businesses. 1 Global obtained funds from investors nationwide to fund the loans.

Charles Paul-Thomas Phoenix, a Florida lawyer, was suspended by the Florida Supreme Court from the practice of law for two years due to his involvement as general counsel and senior vice president for Cay Club Resorts and Marinas. Phoenix cooperated with authorities when the scheme collapsed to avoid prosecution but did not tell the Florida Bar about his involvement with the Ponzi scheme. 

Brett Pittsenbargar reached an agreement to pay a $100,000 civil fine and $234,000 in disgorgement in connection with his role relating to the Woodbridge Group of Companies Ponzi scheme. Pittsenbargar and his company, MGM Home Remodeling LLC, made $1 million in commissions from the sale of unregistered securities in connection with the scheme.

Charles Scoville, the owner of Traffic Monsoon LLC, was ordered to pay the SEC more than $2.5 million in disgorgement and interest and another $2.4 million as a civil fine. Traffic Monsoon was accused of running a Ponzi scheme through its online ad sales business in which it offered bundled advertising services called “AdPacks.”

DeAndre P. Sears was sued by the SEC in connection with an alleged Ponzi scheme run through EquiAlt LLC. Sears’ company, MASears LLC aka Picasso Group, sold at least $25 million worth of unregistered securities for EquiAlt. The EquiAlt scheme raised $170 million from investors and was run by Brian Davison and Barry Rybicki.

Jeremy Spence, 24, of Rhode Island was charged by the CFTC in connection with an alleged Ponzi scheme involving digital assets such as bitcoin. Spence allegedly solicited more than $5 million from more than 170 investors through online discussions on Telegram and Discord. Spence used a series of hedge funds, the largest and most active of which were the Coin Signals Bitmex Fund, the Coin Signals Alternative Fund aka the ‘CS Alt Fund’, and the Coin Signals Long Term Fund. He generated fake account statements showing returns of 148% or greater.

Martin Tirrell of Iowa was sentenced to 41 months in prison and ordered to pay more than $1.4 million in restitution after pleading guilty to running a sports ticket scam.

United Development Funding III reached a $2.3 million settlement with a class of investors to resolve claims that the investors were defrauded.

David Wagner, 54, of New York was sentenced to 6 years in prison in connection with a scheme run through a number of corporate entities known as Downing. About $10 million was solicited from about 40 investors. Wagner’s co-defendant, Marc Lawrence, is scheduled to be sentenced next month. Wagner and Lawrence also began recruiting investors into a new company called Cliniflow Technologies LLC after lawsuits were brought against Downing.

Elihau “Eli” Weinstein, 45, had his 24-year prison sentence commuted by President Trump. Weinstein ran a $200 million Ponzi scheme involving a portfolio of fake real estate investments. Later he ran a scam that involved investments in shares of the Facebook initial public offering. 

INTERNATIONAL PONZI SCHEME NEWS 

Australia

Union Standard International Group (USG), the finance broker who sponsors English Premier League team Sheffield United, was alleged to have defrauded Chinese investors out of $588 million. USG sold financial betting products, contracts for difference, to customers in China, Taiwan and other countries.

India

Bhuvnesh Gupta and Vivek, two jewelers, were arrested for allegedly defrauding victims in a Ponzi scheme.  Victims invested in lucky draw schemes like Shree Mohini Enterprises and were asked to deposit certain sums each month for 20 months. Victims were offered prizes and if they did not win a prize, they would receive jewelry.

Awdhesh Singh, the former managing director of Sun Plan Agro Limited, and Dipankar De, the former managing director of New Land Agro Industries Limited, were arrested on allegations that they were running a Ponzi scheme. 

Shubhra Kundu, the wife of Goutam Kundu, the former chairman of the Rose Valley Ponzi scheme, was taken into custody. 

Spain

Police detained four people in connection with an alleged $15 million crypto Ponzi scheme. About 380 bitcoin were taken by the fraudsters.

Thailand

Apiruk Kothi was arrested in connection with the Forex-3D Ponzi scheme. Kothi is the alleged mastermind behind a scheme.