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

Saturday, July 31, 2021

July 2021 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for July 2021. The reported stories reflect at least 5 new Ponzi schemes worldwide, 5 guilty pleas, more than 72 years of prison sentences, and an average age of approximately 52 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., 56, was sentenced to 5 years in prison in connection with a fraudulent scheme run through his companies, three business entities, Stargrower Commercial Bridge Loan Fund 1 LLC, Stargrower Asset Management LLC and EDU Holding Trust. More than 100 individuals invested more than $10 million in the scheme that supposedly needed funds to finance the use of shipping containers of food. 

Thomas F. Casey and Dennis R. Di Ricco, the founder and CFO of Golden Genesis, Inc., respectively, were ordered to pay $1.6 million in connection with a scheme that defrauded seven Missouri investors. They utilized an unregistered Las Vegas broker-dealer, Retire Happy, LLC, to sell more than $9 million in investments. 

Manuel Chavez, 30, of Florida, and Mark Oman, 36, of Washington, were convicted on charges relating to a sweepstakes scheme that took $4.5 million from victims. The two defendants falsely told victims they had won a sweepstakes prize but requiring investors to pay a fee to collect their reward for supposed taxes and fees.

David deBarardinis, 59, of Louisiana, pleaded guilty to running a Ponzi scheme that defrauded more than 20 investors. Prosecutors allege that the fraud exceeded $100 million. deBarardinis convinced investors to loan him money to act as a middleman in energy trades.

Allen Roy Duquet, 70, was sentenced to 25 years in prison and ordered to pay over $5 million in restitution in connection with a Ponzi scheme that defrauded 26 investors. Duquet solicited money from investors for real estate investments but instead mismanaged and misused the funds. Joseph Bernard Charde has also been accused of acting as a broker to the transactions made by Duquet as a part of its investment program called "The Commission Resource Program."

Richard E. Geaerhart, 71, of Indiana, was sentenced to 5 years in prison and ordered to pay $5.3 million in restitution in a securities Ponzi-like scheme. Gearhart was a licensed insurance agent from 2008-2013 operating out of Gearhart & Associates. He was also CEO of Asset Preservation Specialists Inc. He sold unregistered securities to his insurance clients and promised them that there was no risk to their principal and returns of 6% to 8%.

Craig Harbaugh of Nebraska was found dead on the day he was to be sentenced following his conviction for running a Ponzi scheme. Harbough was a former deputy sheriff and was convicted of defrauding a bank and several individuals out of nearly $11 million. He provided false purchase orders and service contracts for his business which sold tactical gear for law enforcement.

Bernard Ross Hansen aka Ross B. Hansen, 60, of Washington, was convicted on charges that he defrauded investors in a scheme run through Northwest Territorial Mint. Vault manager, Diane Renee Erdmann, 48, was also convicted.  They ran both a custom business that manufactured medallions and other awards, as well as a bullion business that involved the selling, buying, exchanging, storing, and leasing of gold, silver, and other precious metals.  

George Heckler, 65, was sentenced to 5 years and 3 months in prison and was ordered to pay restitution in the amount of $19.25 million in connection with a scheme that defrauded investors out of about $20 million. Heckler ran the scheme through multiple investment funds, including Conestoga Partner Holdings, Cassatt Short Term Trading Fund LP, and CV Special Opportunity Fund LP.

Joshua Heppensen, Laura Mascola, Ryan Maasen, and Michael Noble settled with the SEC in connection with their role as promoters of the BitConnect scheme. The Bitcoin scheme raised over $2 billion before shutting down.

Naim Ismail, 60, pleaded guilty to running a $15 million Ponzi scheme that involved supposed real estate investments. Ismail defrauded both individual and corporate victims.

Roger Nils-Jonas Karlsson, 47, a Swedish citizen, was sentenced to 15 years in prison and ordered to pay over $16 million in restitution in connection with a cryptocurrency scheme. Karlsson had pleaded guilty to running the scheme through a business called “Eastern Metal Securities.”

Joy Kovar, 86, and her son Brent Kovar, 54, were sued by the SEC on allegations that they were running a $12 million Ponzi scheme that defrauded 277 investors. The alleged scheme was run through their Las Vegas based company, Profit Connect Wealth Services. The Kovars represented that supercomputer and artificial intelligence could generate 20%-30% fixed returns per year with monthly compounding interest.

Dane Roseman, 38, and Ivan Acevado, 44, of California, pleaded guilty in connection with the Woodbridge Group of Companies Ponzi scheme. They worked as sales agents for Woodbridge and falsely claimed that Woodbridge was profitable and promised high rates of return. The scheme defrauded more than 9,000 investors out of more than $1.29 billion. 

Alexander S. Rowland, 30, of New Jersey, was sentenced to 9 years in prison and ordered to pay more than $3.1 million in restitution. Rowland defrauded more than 120 clients who thought they were investing in Rowland’s company, Roaring Investments, Inc., for purposes of investing in stocks and cryptocurrency. He promised a minimum return of 25% with potential returns of 50% or higher.

Lambert Vander Tuig and Ben Schachtshneider were sued by the SEC on allegations that they ran a $50 million Ponzi scheme through Biosynetics and Biosynetics Management. Investors were told that the funds would be used for research and development. Additionally, the sum of $763,500 was raised from 28 investors through the nonexistent pharmaceutical company that supposedly had secured distribution agreements with major retailers.

Howard L. Young, 75, was sentenced to 8 years on prison. Young solicited cancer patients to invest in his company, Integrative Medical Services, telling them he had received a $2 million grant from Vanderbilt University to study cancer. Participants had to pay $10,000 up front, but he did not hold the money in escrow as he promised. Patients also did not routinely receive the nutritional supplements, exercising, coaching or gym memberships promised by Young.

INTERNATIONAL PONZI SCHEME NEWS 

Australia

Michael Gu, whereabouts unknown, is the founder of the property group iProsperity and is accused of running a $245 million Ponzi scheme. The scheme collapsed last year when authorities accused of him of defrauding clients by claiming he was buying a portfolio of commercial property in Australia. Harry Huang, the CFO, was also accused of misappropriating investor funds. Gu allegedly passed $8 million though the Crown Melbourne Casino.

Mirror Trading International, a collapsed cryptocurrency trading firm, was placed into final liquidation. An additional 8,000 bitcoin, valued at about $268 million, were traced and added to the 1,281 bitcoin previously recovered.

Chris Marco, 63, is under investigation for running a Ponzi scheme that allegedly defrauded as many as 340 investors for 16 years. The fraud is alleged to have defrauded investors out of $250 million.

Joe Papalia, an accountant, is being investigated in connection with an alleged Ponzi scheme.

United World Enterprise is accused of running a Ponzi scheme through the cattle farm at Currabubula Station. UWE is Chinese-owned and lured more than 900 retirees into investing up to $46 million for fake agritourism and aged-care village schemes. 

Brazil

Claudio Oliveira was arrested in connection with an alleged $300 million cryptocurrency scheme run through the Bitcoin Banco Group. 

England

Stephen Allen pleaded guilty in connection with his role in the Renwick Haddow Ponzi scheme. Allen forged information regarding Haddow’s assets.

Ghana

Authorities sought to shut down Q-NET Company Limited, Q-NET Investments Limited, and Q-NET Limited on allegations that they were operating a Ponzi scheme. The directors of the companies are identified as Mbun Mbabugri Kazani and Braimah Suraju.

India

Syed Fakruddin, 47, Miran Mohideen, 48, and Mohammad Manas, 32, were arrested in connection with a scheme allegedly run through a mobile app called “Share me.”

Chetan Dand, 42, was arrested on allegations that he was running a Ponzi scheme that defrauded over 100 investors out of Rs 16 crore. Dand’s accomplice, Kelvin Kenia, 23, left for Africa with the money but his family claim he died during the pandemic. 

Mir Sahimat alias Kalu and Mir Jamiruddin were arrested in connection with an alleged Ponzi scheme run through Green Ray International.

Pratap Kumar Biswal was arrested on charges that he was running a Ponzi scheme through Mass Infra Reality

Dillip Kumar Jain, one of the directors of Ocean Videsh Limited, was arrested in connection with a scheme that defrauded investors by promising returns from long-terms loans at low rates of interest. The company was shut down in 2013 and two other directors had been arrested.  Jain had been on the run.

Turkey

Mehmet Aydin, 29, is being extradited to Turkey to face charges that he was running a $130 million Ponzi scheme. Aydin is the developer of the Farm Bank online game also known as Cliftlik Bank. Aydin turned himself in in Brazil out of fear for his life. He faces 75,000 years on prison for running the scheme that defrauded over 130,000 people. Fatih Aydin, the brother of Mehmet, was detained in Uruguay and is expected to be extradited to Turkey.

A real estate company called Ger├žek Evim (My Real Home) operating under SAS Holding has been found to be part of a Ponzi scheme that grossed $69.2 million. The company promised 10% returns to its 13,000 customers.