Kathy Bazoian Phelps
Senior Counsel in Ponzi Scheme Litigation
and Bankruptcy Matters

Kathy is a senior business trial attorney with more than 28 years experience prosecuting and defending claims for high net worth clients involved in Ponzi scheme matters and in bankruptcy proceedings. Kathy’s practice includes recovering assets for clients in complex fraud cases under standard fee and alternative fee arrangements. Kathy also serves as a mediator in bankruptcy matters, in complex business disputes, and in matters requiring detailed knowledge about fraud or Ponzi schemes.

Kathy’s Clients in Ponzi Scheme Cases and Bankruptcy Matters
Equity Receivers
Bankruptcy Trustees
High Net Worth Investors
Debtors in Bankruptcy
Secured and Unsecured Creditors

Friday, April 30, 2021

April 2021 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for April 2021. The reported stories reflect at least 4 new Ponzi schemes worldwide, 3 guilty pleas, about 22 years of prison sentences, and an average age of approximately 49 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed.  

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

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

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

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

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

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

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

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

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

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

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

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

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

INTERNATIONAL PONZI SCHEME NEWS 

Canada

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

Philippines

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