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

Tuesday, August 31, 2021

August 2021 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for August 2021. The reported stories reflect at least 4 new Ponzi schemes worldwide, 3 guilty pleas, more than 32 years of prison sentences, and an average age of approximately 57 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. 

Interactive Brokers was sued in a class-action lawsuit alleging that it aided and abetted a $23 million Ponzi scheme run through the account of Haena Park. Park lost over $14 million of investor contributions that were deposited into the account. She was sentenced to 3 years in prison in 2018.

Kim Butler, of Texas, was barred by the SEC for steering investors into the Ponzi scheme run by Woodbridge Group of Companies.

Brian Davison, the CEO of EquiAlt LLC, settled claims of the SEC against him that he took part in a $170 million Ponzi scheme. The EquiAlt real estate scheme raised $170 million from about 1,100 investors. Davison ran the scheme with Barry Rybicki.

David DeBerardinis, 59, pleaded guilty to certain charges in connection with a fraud that prosecutors alleged exceeded $100 million and affected more than 20 investors. He had previously pleaded not guilty to charges that he defrauded investors out of $96 million. Investors, mostly from Louisiana, believed they were buying into legitimate energy trades and were promised 17% returns. 

Johanna M. Garcia, of Florida, and her two companies, MJ Capital Funding LLC and MJ Taxes and More Inc., were charged by the SEC with running an alleged Ponzi scheme. More than 2,150 investors invested at least $70 million in the scheme that involved fraudulent securities offerings. Investors were promised annual returns of 120% to 180% returns from supposed small business loans called “merchant cash advances.” The SEC alleges that possible sales agents included Bryant Guayara and Shanaz Ali of Da VibezCreations LLC and DaVibezStudio; Erick Ruiz of Four Corners Investors Group LLC; Steven Fernandez and Monica O'Mealia of Empire Investors, LLC; Gloria M. Galvez and Mauricio A. Guayara of GMG Special Services, LLC; Shaaz Ali of Obsidian South, LLC; Raed Kahn of Ascension Capital Group, LLC; Marco Rosas and Mauricio Rosas of M5 Store LLC, Zio Marco Transportation LLC and Zio Marco Services LLC; Leonela Duarte and Harry Medina of HAMN, LLC, LeDuarte Corp. and LeDuarte USA, LLC; and Osmary Soto and Fabricio Guzman of DMFabrimar General Services, LLC. A group of investors have sued Wells Fargo Bank for allegedly aiding and abetting the scheme.

Michael David Greenfield aka Michael Ben-Ari and his Israeli investment company, EGFE Israel Ltd., are suspected of operating a Ponzi scheme in Israel. A U.S. Bankruptcy Court issued an emergency order approving a lawyer representing Israel to recover $150 million of lost funds in the U.S. Greenfield was arrested in April by Israeli authorities but he fled the country using a fake passport. His whereabouts are unknown. 

Joshua Jeppesen, Michael Noble, and Laura Mascola agreed to a settlement with the SEC regarding their involvement in the Bitconnect Ponzi scheme. The settlement involves more than $12 million and is in relationship to the $2 billion scheme that collapsed in 2018.

Joy Kovar, 86, and her son, Brent Kovar, 54, were sued by the SEC, and the appointment of receiver was sought in connection with an alleged scheme run through Profit Connect Wealth Services Inc. The scheme allegedly raised at least $12 million from more than 277 investors. Investors were told that their funds would be invested in securities and cryptocurrencies such as bitcoin and that investments would be made based on recommendations from an “artificial intelligence supercomputer.”

Andrew Dale Ledbetter, 79, was sentenced to 5 years in prison for his role in raising about $149 million as part of a $322 million Ponzi scheme run through 1 Global Capital LLC. Ledbetter had reached a plea agreement earlier in the year and agreed to relinquish his law license. The scheme promised investors returns from business loans known as merchant cash advances and defrauded 3,600 investors in 42 states. Jan Douglas Atlas and Alan G. Heide were previously sentenced in connection with the scheme, that was masterminded by CEO Carl Ruderman.

Wayne McKelvy, 59, of Colorado, was sentenced to 18 years in prison and ordered to pay $37 million in restitution for his role in a $54 million “green energy” Ponzi scheme run through Mantria Corp. McKelvy ran the scheme with the help of Troy Wragg, 39, and Amanda Knorr. The scheme promised investors up to 484% returns. 

Mirror Trading International is under investigation by U.S. authorities on allegations that it was running a bitcoin scheme. The company is based in South Africa but many of the 260,000 investors are outside of that country. 

Christopher A. Parris, 41, of Georgia, pleaded guilty to charges relating to a Ponzi scheme as well are wire fraud involving the purported N85 masks during the pandemic. Parris, along with co-defendant Perry Santillo, defrauded about 1,000 investors out of at least $115.5 million through their company, Lucian Development. Lucian had acquired City Capital Corporation, which turned out to be a Ponzi scheme being run by Ephren Taylor. Lucian offered returns from investors in products issued by First Nationale Solutions (FNS), Percipience Global Corporation, United RL Capital Services, Boyles America, Middlebury Development Corporation and NexMedical Solutions. Santillo was previously convicted and is awaiting sentencing.

Timothy Patrick Peabody and Monarch Capital Investment Fund LLC were the subject of a final cease and desist order sought by the Missouri Secretary of State, Securities Division. They used a company called Retire Happy, LLC to raise funds for the investments in the unregistered securities. They raised more than $7 million. Investors were told their investments were to fund real estate investment ventures in Florida.

Martin A. Ruiz of New York was arrested on charges that he defrauded investors out of more than $8 million of retirement savings. Ruiz is an investment advisor who solicited investors in his hometown in New Mexico to buy limited partnership shares in a supposed real estate investment vehicle called RAM Fund. Ruiz’s Carter Bain Wealth Management LLC controls more than $61 million in client investments. 

William Stenger of Vermont reached a plea deal in connection with the Ponzi scheme run through Jay Peak Resort. Stenger was the former president of the ski resort. Ariel Quiros, the former owner of Jay Peak, changed his plea to guilty last year. William Kelly, an advisor to Quiros, was indicted along with Stenger and Quiros over their failed plan to build a biotechnology plant using money raised through an EB-5 visa program. About $110 million was raised from 220 immigrant investors in connection with the biotech project. 

John J. Woods of Georgia was sued by the SEC and his assets were frozen on allegations that he defrauded more than 400 investors out of $110 million. Woods allegedly ran the scheme through Horizon Private Equity III, LLC, and investment advisors at Livingston Group Asset Management Company dba Southport Capital. Woods denies that he was running a Ponzi scheme.

INTERNATIONAL PONZI SCHEME NEWS 

Brazil

Authorities seized 591 bitcoin worth about $28.5 million from an alleged Ponzi scheme in what is the largest cryptocurrency seizure ever in Brazil. GAS Consultoria Bitcoin promised returns of 10% to customers. The owner of GAS, Glaidson Acacio, was arrested along with 4 others.

England

Jolan Saunders was sentenced to almost 9 years in connection with a Ponzi scheme run through Saunders Electrical Wholesale Ltd. for failing to pay his confiscation order. His co-conspirators, Michael Strubel and Spencer Steinberg, were previously sentenced to 7 years and 6 years 9 months, respectively. The three defendants were previously convicted of lying about supply contracts to supposedly supply the Olympic village for the London 2012 Olympics. The scheme took almost £80m from investors.

India

Mohammad Aslam was arrested on allegations that he defrauded 50 investors in a Rs 2.5 crore Ponzi scheme.

Nandlal Kesar Singh, 55, chairman of the Phenomenal group of companies, was arrested on allegations that he defrauded investors out of Rs 684 crore. Singh allegedly convinced investors to invest in his companies, Phenomenal Housing Finance Ltd, Phenomenal Plantation Ltd, and Phenomenal Healthcare Services.

Nigeria

Joshua Adeyinka Kayode, 22, was arraigned on charges that he defrauded 170 investors out of N10.9 billion though his fraudulent investment program run through Quintessential Investment Company Limited.

Barimke Group has been charged with allegedly running a Ponzi scheme. The scheme promised returns of 27% and was run by Barisuka Turakpe aka Barisuka Craig and Uzoamaka Ijeoma Chinoyerum.

Russia

Kirill Doronin, one of the founders of Finiko, was arrested in July in connection with an alleged large cryptocurrency Ponzi scheme. Doronin had obtained Turkish citizenship under a different name, Onur Namik. Finiko’s other co-founders, Marat and Edward Sabirov and Sygmunt Zygmuntovish were placed on a wanted list by Russian police. Investors were promised returns and were to exchange bitcoin for the native token of Finiko in return. Investors’ losses might be up to $95 million.  

Turkey

Authorities busted an alleged Ponzi scheme involved Dogecoin. The scheme involved a Dogecoin mining system in which investors were promised guaranteed returns of 100% within 40 days. About 1,500 investors were defrauded.


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