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

Kathy is a senior business trial attorney with more than 30 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, May 31, 2022

May 2022 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for May 2022. The reported stories reflect at least 12 new Ponzi schemes worldwide, 3 convictions, 2 guilty pleas, more than 64 years of prison sentences, and an average age of approximately 54 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. 

Eddy Alexandre, 50, of New York, and EminiFX, Inc. were sued by the SEC and were the subject of an asset freeze in connection with an alleged crypto and foreign exchange trading scheme. The scheme involved at least $59 million, and investors were promised 5% to 9.99% weekly returns. Alexandre was also arrested in connection with the alleged scheme, and the FBI complaint alleged that the weekly earnings promises were false.

Jeremy Arrington, 44, of Wisconsin, was convicted in connection with a $2.4 million investment scheme that defrauded 20 victims. The scheme was run through Wisconsin Home Buyers Network, which promised returns to investors ranging from 12% to 36% from real estate investments.  Joe Nemeth intends to plead guilty in connection with the scheme. They used investor funds to pay off their debt and delinquent taxes.

Luiz Capuci Jr., 44, of Florida, was charged in connection with an alleged scheme run through Mining Capital Coin. Investors were promised returns from crypto mining but instead their funds ended up on wallets that Capuci owned. Capuci also promised returns from “Trading Bots” which were to trade at a high volume for significant returns, but instead the funds were diverted to Capuci and his co-conspirators. Capuci also touted his own cryptocurrency, Capital Coin. Approximately $62 million was paid into the scheme.

Wynn Charlebois, of North Carolina, and his company, WC Private LLC, were accused by the SEC of operating a $7.1 million that allegedly defrauded 75 investors. Charlebois offered investors bogus investment opportunities, including investments in fake option contracts. Charlebois represented that he supposedly had provided consulting services for companies that had compensated him with stock options.

Alexandra H. Cock and her company Wealth Plus were barred from the securities industry after the SEC charged her in connection with the Ponzi scheme run through Professional Financial Investors and Professional Investors Security Fund.  Cock raised more than $2.5 million for the $26 million real estate-based Ponzi scheme. Cock had been promised a referral fee from Kenneth Casey, now deceased, who ran the scheme.

Michael J. DaCorta, 57, of Florida, was found guilty of running the $80 million Ponzi scheme through Oasis International Group. The scheme defrauded 700 victims and promised huge returns from foreign currency exchange trades.

Bernard Ross Hansen, 61, and Diane Renee Erdmann, 49, of Washington, failed to show up at their sentencing hearing and were on the run after being charged with running a Ponzi scheme through Northwest Territorial Mint. The scheme allegedly defrauded 3,000 investors out of more than $30 million in connection with a gold and silver bullion scheme. Hansen and Erdmann were later arrested after a hotel employee recognized them.

Marlin Hershey, 52, and Dana Bradley, 52, of North Carolina, were indicted on charges relating to an alleged scheme run by Gary Dragul. They allegedly induced dozens of investors to invest millions of dollars in their entities, Performance Retire on Rentals, LLC, Distressed Lending Fund, LCC, Moteng Funding, LLC and Southeast Lot Acquisitions, LLC, among others. 

Sam Ikkurty aka Sreenivas I Rao, of Oregon, and Ravishankar Avadhanam, of Illinois, and Jafia LLC were charged by the CFTC in connection with an alleged $44 million Ponzi scheme that collected funds from 170 investors. The scheme involved cryptocurrency and digital assets and was run through Ikkurty Capital dba Rose City Income Fund, Roe City Income Fund II LLP, and Seneca Ventures LLC. Investors were promised profits as high as 62% annually on the website and through YouTube videos. The two defendants allegedly kept $18 million for themselves and transferred funds to other participants and to offshore entities under their control. 

Mark Marchi, of New Jersey, was charged in connection with a $2.8 million Ponzi scheme run through Precipio Capital. Marchi claimed he was trading securities, and even though he had a loss on his trading activity, he paid out a total of $1.4 million to early investors. Marchi had previously pleaded guilty to other charges in 1998 and had been barred by the New York Stock Exchange. 

Sven Eric Marshall, 64, of Indiana, was sentenced to 10 years and one month in prison and ordered to pay back $1.94 million in restitution. Marshall, an attorney, pleaded guilty to mail fraud, securities fraud, and bank fraud in connection with a scheme that defraud elderly victims. He took money from the estates of his clients who hired him to administer their wills. He started the scheme in 1998 and promised returns of 4% to 8% per year. More than $730,000 was taken from 16 investors over a 14-year period. Marshall used his law practice to embezzle more than $1.3 million from clients in finalizing their estates and wills.

Brian K. Martinsen, Michael A. Castillero, Francine A. Lanaia, and Eric D. Lachow, of Florida, were sued by the SEC in connection with an alleged scheme run through StraightPath Venture Partners LLC and StraightPath Management LLC. The scheme involved the selling of pre-initial public offering shares that they did not own. At least $410 million was raised from more than 2,200 investors. The defendants paid themselves more than $75 million and sales agents about $48 million.

George R. McKown, 71, of Indiana, was sentenced to 7 years in prison in connection with a Ponzi-like scheme that defrauded more than two dozen investors. McKown and co-defendant, Richard E. Gearhart, solicited investments into their company, Asset Preservation Specialists, and promised returns of 6% to 8%. The scheme involved at least 25 victims and involved more than $5 million. 

Andrew M. Middlebrooks, of Michigan, and his company, EIA All Weather Alpha Fund Partners I LLC, was sued by the SEC on fraud charges that they were operating a Ponzi scheme causing losses of nearly $39 million. Middlebrooks operate a hedge fund, EIA All Weather Alpha Fund I LP, and allegedly misled investors by making false and misleading statements regarding the fund’s performance. The scheme defrauded over 100 investors and represented that the fund “had extremely successful trading performance, with cumulative returns upwards of 2,500% from the fund’s inception” when in reality the fund had lost approximately $27 million. The SEC also named EIA All Weather Alpha Fund Partners II LLC; and Shop Style Shark LLC, Middlebrook’s wife’s business.

Casper Mikkelsen was permanently banned by the CFTC from trading commodity interests, and he was ordered to pay about $1.2 million in restitution. Mikkelson misappropriated his clients’ funds rather than using them from foreign exchange trading and made Ponzi-like payments to his clients as purported forex trading profits.

Robert Narvett, 57, of Wisconsin, was sentenced to 15 years in prison in connection with a scheme that defrauded nearly 70 investors out of over $2 million. 

Eshaq M. Nawabi and his companies Nawabi Enterprise and Hyperion Consulting Inc. were charged by the CFTC in connection with an alleged Ponzi scheme involving off-exchange Forex trading. They solicited funds totaling at least $543,000 from at least 7 investors and promised returns of 8% to 25% per month. The investors could supposedly withdraw their funds at any time.

James Nix, 73, of Texas, was found guilty in connection with a Ponzi scheme he ran with his son, Bradley Nix. Bradley Nix pleaded guilty and was sentenced to 54 months in prison. They operated an accounting firm out of a home and defrauded more than 40 victims out of at least $6 million. 

Inigo Philbrick, 34, was sentenced to 7 years in prison and ordered to pay more than $86.6 million in restitution in connection with a Ponzi-like scheme involving more than $86 million. The scheme was uncovered in 2019 and his partner, Victoria Baker-Harber, 33, was previously sentenced to 7 years. The scheme involved an art dealing fraud and Philbrick was dubbed the “Mini Madoff of the art world.” He misrepresented that he owned certain artworks and sometimes sold more than 100% ownership to multiple individuals and entities.

Ruless Pierre, 52, of New York, was sentenced to 7 years in prison and ordered to pay $2.03 in restitution in connection with a Ponzi-like scheme that targeted the Haitian community and brought in more than $2 million. The scheme was run through Ruless Pierre Consulting Group and investors were promised 20% returns every 60 days. Pierre deposited the investors' money into his personal bank accounts or his company's bank accounts and then transferred the money to trading accounts, where he engaged in unprofitable day trading. Pierre had offered investors returns from silent partnership agreements in fast-food locations, among other things.

Richard Dow Rockwell, 62, of California, and his company Dow Rockwell, LLC were charged by the SEC in connection with the PFI scheme run by Ken Casey.

Brenda Smith, 61, a Philadelphia investment manager, was sentenced to 109 months in prison and ordered to pay $47.2 million in restitution in connection with a $105 million Ponzi scheme run through Broad Reach Capital LP. Smith ran a pooled investment fund and claimed returns of more than 35%. In reality, the accounts lost about 50% of their value. Smith instead used the funds for a mineral mining operation and to pay her expenses, including $2 million for American Express credit card bills.

Jeremy Spence, 25, was sentenced to 42 months in prison in connection with a cryptocurrency Ponzi scheme that defrauded 170 investors out of $5 million. Spence solicited the funds through Coin Signals, promising investors profits from crypto trading that was in reality unprofitable.

INTERNATIONAL PONZI SCHEME NEWS 

Australia

Roger Munro, 72, was sentenced to 4½ years in prison in connection with a $60 million scheme. Munro represented that the funds were sitting in a blind trust in the U.S. He has not been charged in connection with the missing $60 million, but pleaded guilty to a scheme involving three investors who had been promised returns of 30% to 50%.

England

Michael Strubel was sentenced to 6 years and 7 months in prison for his failure to pay back £1.4m of illicit profits. Strubel was originally jailed in 2015 in connection with a Ponzi-style scheme in which he claimed he was supplying services to the London 2012 Olympic village and large hotels. He defrauded investors out of £75.5 million and spent the money on yachts, luxury cars and property. Strubel was ordered to return more than £2.1m to victims, but more than £1.4m is outstanding. Jolan Saunders and Spencer Steinberg have also been charged in connection with the scheme.

India

Pallavi Hota, the director of Purple Qualves Financial Services Private Limited, was arrested on charges that he defrauded at least 43 investors. 

Nigeria 

86fb Football has been accused by investors of running a Ponzi scheme. Thousands of investors were promised returns of 3% and now claim that they have lost over N200 billion.

New Zealand

Quwiex Limited is being investigated by authorities as running a fraudulent cryptocurrency investment scheme. 

Papua New Guinea

A 46-year old Chinese national was arrested on charges relating to a scheme that defrauded nearly 24,000 victims out of 34 million euro. 

Philippines

Authorities warned about a possible Ponzi scheme run through Multi Fortune Stake, which has been soliciting investments without registration. The scheme is run by Ricky Galon, who guarantees returns of 100% in 30 days.

Authorities issued an order of revocation to Wealth on Web Company aka WOW Company, which was operating without a license. WOW Company had characteristics of a Ponzi scheme. WOW was supposedly engaged in the direct selling of goods to consumers and retail trading, and the promoters promised returns of 3% to 6% daily.


Saturday, April 30, 2022

April 2022 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for April 2022. The reported stories reflect at least 8 new Ponzi schemes worldwide, 3 guilty pleas, more than 39 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. 

Matthew Beasley, 49, was accused by the SEC of running an alleged $449,000 Ponzi scheme that operated in Nevada, Utah, and California that defrauded over 600 investors. Beasley confessed to running a Ponzi scheme after he was shot by an FBI agent who had come to his house to investigate and was shot at himself. Investors were told that their money would be used to make advance payments to plaintiffs who had settled tort claims and were willing to pay a premium to be paid on the settlements in advance. Investors were promised returns of 50% or more. Beasley admitted that he did not have relationships with settlement plaintiffs and that he used the investor funds to pay off gambling debts and for luxury items. Jeffrey Judd, the main promoter of the scheme, was also named in the SEC suit. The entities charged with fraud in this action are J&J Consulting Services, Inc. (Nevada), J&J Consulting Services Inc. (Alaska), J and J Purchasing LLC, Beasley Law Group PC, PAJ Consulting Inc, BJ Holdings LLC, Stirling Consulting L.L.C., CJ Investments, LLC, Rocking Horse Properties LLC, Triple Threat Basketball, LLC, ACAC LLC, Anthony Michael Alberto, Jr., and Monty Crew LLC. Other individuals charged with acting as unregistered brokers are Humphries, Shane Jager, Jason Jongeward, Denny Seybert, and Roland Tanner

Vania May Bell, 57, pleaded guilty to running a Ponzi scheme with her father, Hector May, through Executive Compensation Planners. Hector May was sentenced to 13 years in prison and ordered to pay $8 million in restitution. 

David Joseph Bunevacz, 53, Mary Hayca Bunevacz, of California, and CaesarBrutus LLC, Brutuz California Ventures Corp., and CB Holding Group Corp., were charged by the SEC with running a cannabidiol oil vape Ponzi scheme. The SEC alleges that the scheme raised over $35 million from at least 40 investors who were promised returns from the production and sale of cannabis products, including vape pens. 

Shawn E. Good, 55, of North Carolina, was charged by the SEC on allegations that he ran a $4.8 million Ponzi scheme defrauding clients in his position as a Morgan Stanley financial advisor. Good is no longer employed with the firm. Good allegedly had his clients transfer money to his personal bank account so he could make investments in real estate development projects and government bonds on their behalf and promised them returns of 6% to 10%. 

Marlin Hershey, 52, and Dana Bradley, 52, were charged on allegations that they were running a $4 million Ponzi scheme through Performance Holdings. 

David Hu, 64, of New Jersey, was sentenced to 12 years in prison in connection with a Ponzi-like scheme run through International Investment Group that involved more than $120 million. Hu had previously pleaded guilty to the scheme that involved the selling of over-valued and fake loans and falsified documents to deceive auditors and investors. Hu ran the scheme with co-conspirator, Martin Silver, who also previously pleaded guilty. They operated three private funds known as the IIG Trade Opportunities Fund N.V., the IIG Global Trade Finance Fund, Ltd., and the IIG Structured Trade Finance Fund, Ltd.   

Robert A. Karmann, 55, was sentenced to 6 years in prison and was ordered to pay $624 million in restitution for his role as the chief financial officer in the $1 billion Ponzi scheme run through DC Solar. DC Solar defrauded investors by promising returns from trailer-mounted solar generators. DC Solar’s owner, Jeff Carpoff, was sentenced last November to 30 years in prison. Carpoff’s wife, Paulette Carpoff, pleaded guilty and is scheduled to be sentenced next month. Joseph W. Bayliss was sentenced to 3 years in prison, and other defendants have pleaded guilty and are scheduled for sentencing: Alan Hansen, 50, Ronald J. Roach, 54, and Ryan Guidry, 44.

John Law, 43, of New York, was sentenced to 10 years in prison and ordered to pay $1.3 million in restitution. Law previously pleaded guilty to charges in connection with a $115 million Ponzi scheme run by “King Perry” Santillo and Christopher Parris through Lucian Development that resulted in more than $70 million in losses. Santillo and Law sold securities to the public through various businesses including Advice and Life Group, Poconos Investments, First American Securities, and Financial Planners Group of America. Santillo was sentenced to 17 years in prison and Parris was also convicted but has yet to be sentenced.

Scott Merke and Eric Alexander of Florida have been sued by the SEC in connection with the $322 million fraudulent scheme run by 1 Global Capital LLC.

Casper Mikkelsen has been permanently banned by the CFTC from trading commodity interest in connection with a foreign exchange fraudulent scheme that purportedly paid forex trading profits to clients. The CFTC has coordinated with foreign regulators in Denmark on this case.

Robert T. Nicholas, 48, was indicted in connection with an alleged $150,000 Ponzi scheme. Nicholas defrauded his clients as an insurance agent. 

Charles Ochi, 27, of Texas, and Danielle Liggins, 32, or Arkansas, were arrested on allegations that they were running a Ponzi scheme using sham companies to transmit proceeds to Nigeria. They used Global Prime and Liggins Starflexx Commercial to receive money from investors.

Austin Delano Page, 26, and Brandon Alexander Teague, 26, of North Carolina pleaded guilty in connection with a scheme run through D&T Investment that took in $4.2 million from over 300 people. They represented that they were running a hedge fund that invested in securities, but there was no hedge fund and they did not hold any securities. They guaranteed 100% of the initial investment and promised 70% profits from trading.

Richard Dow Rockwell, of California, and Dow Rockwell LLC were charged by the SEC for undisclosed conflicts of interest related to a real estate Ponzi scheme run through Professional Financial Investors, Inc.  Rockwell and his company raised approximately $8 million for the scheme and earned approximately $400,000 in referral fees, which they failed to disclose to their clients.

William Stenger, 73, was sentenced to 18 months in prison and was ordered to pay $250,000 in restitution for his role in the Jay Peak EB-5 Ponzi scheme. Stenger pleaded guilty last year to submitting false information to the government. He raised more than $80 million from over 160 foreign investors through the EB-5 visa program, but the project known as AnC Bio VT failed, and Stenger and Jay Peak’s owner, Ariel Quiros, were accused of running a Ponzi scheme. Bill Kelly was also charged in connection with the scheme.

Junzo Suzuki, 73, and his son, Paul Suzuki, 43, were sentenced to 5 years in prison in connection with the Ponzi scheme run through MRI International Inc. out of Las Vegas. The two ran the scheme with Edwin Fujinaga, 75, who is serving a 50-year prison sentence. The scheme involved $1.5 billion and 10,000 investors, most of whom were Japanese. 

Abner Alejandro Tinoco and his company, Kikit & Mess Investments, LLC, were the subject of a consent order obtained by the CFTC. They had been charged by the CFTC and fraudulently solicited over $7.2 million from 322 clients. The clients had given their money to be managed in customized client portfolios for foreign exchange and crypto trading. Most of the money was instead used to pay Tinoco’s personal expenses such as chartering a private jet, renting a luxury mansion and cars, and buying real estate.

INTERNATIONAL PONZI SCHEME NEWS 

Brazil

Authorities are searching for the creators of Alpha Consultoria, Sadraqui de Freitas and Nathan Assis de Oliveira, who they believe defrauded more than 2,000 people on promises of 30% returns per month on investments in cryptocurrencies.

Canada

Mark E. Cohen, 42, was arrested in connection with an alleged $12 million pandemic-related Ponzi scheme. The scheme promised 13% from the supposed purchase and resale of used vehicles from rental companies.

England

Andrew Fuller aka James Wellesley, 55, and Stephen Burton, 57, are accused of defrauding wine collectors in a £76 million ($99 million) Ponzi scheme. They offered investors large returns on loans that were supposedly collateralized by valuable bottles of fine wines. The scheme was run through Bordeaux Cellars London and Hong Kong-based Bordeaux Cellars.

Kenya

Authorities report that Bitstream Circle is targeting investors in a Ponzi scheme across seven countries. The cryptocurrency scheme has targeting 11,000 people and promises returns between 5% and 8% on daily investments.

Lagos

Chinyere Emeka-Atu was accused of running a Ponzi scheme through her company, Family Food Support Association, that defrauded investors out of N600m. 

Nigeria 

The mother of Ovaioza Yunusa was arrested in connection with an alleged fraudulent scheme run through Ovaioza Farm Goods Storage Business. The scheme promised investors 70% to 80% returns and supposedly involved the buying, selling, and storage of certain commodities.

Philippines

ScentokoWorld Corp. and Brendahl Cruz Holdings had their corporate registration revoked by the SEC due to illegal solicitations from the public. The companies are both affiliated with Brendahl Cruz, the president and CEO and were promising investors 400% returns within 30 days from the purchase of perfume and beauty product packages.

Singapore

Authorities arrested a 29-year old man in connection with an alleged Ponzi-like scam run through Moviitech, a job platform. Job seekers received unsolicited messages on Telegram, Facebook, Instagram and YouTube, promoting a money-making opportunity through watching move trailers. People were promised payment from watching movie trailers and more money for recruiting more people. They were required to purchase a membership plan before they started earning commissions, but stopped receiving commissions and were unable to withdraw from their member accounts. 

Thursday, March 31, 2022

March 2022 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for March 2022. The reported stories reflect at least 15 new Ponzi schemes worldwide, 4 guilty pleas, more than 30 years of prison sentences, and an average age of approximately 56 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. 

Scott Allensworth, 68, of California, was sentenced to 33 months in prison and ordered to pay $2.3 million in restitution for his role in the Ponzi scheme run through Capital Growth Group Associates. The company provided financial services to clients. Allensworth, along with David Hunt Weddle, 66, defrauded clients through a private investment fund called JustInfo LLC. Investors were promised that their money would go into a brokerage account and that a special trading strategy would be used to limit their losses and generate monthly returns of between 5% and 20%. Over 50 victims were defrauded out of more than $2.3 million.

Americo “Rick” Antunes, 71, of Florida was arrested on allegations that he ran a Ponzi scheme through Platinum Bay Capital Management LLC. The scheme defrauded investors out of $2 million.

Darrell Arnold Aviss, 64, who was previously charged in a $12 million alleged Ponzi scheme faces new charges of failing to pay over $3 million in taxes and concealing bank accounts in Monaco.  The scheme promised to invest funds in annuities in Swiss insurance companies, but the funds were instead used to fund Aviss’ lavish lifestyle.

Matthew Beasley, 49, is under investigation for his role in an alleged $300,000 Ponzi scheme that operated in Nevada, Utah, and California. He is facing charges in connection with an FBI agent-involved shooting at his home. When the FBI arrived to investigate the alleged Ponzi scheme, Beasley pointed a gun at an FBI agent and was shot by an agent. A group of investors commenced a class action against Beasley alleging that Beasley, Jeffrey Judd, J&J Purchasing, and J&J Consulting defrauded them and promised investors returns of 10% to 20%.

Gordon Brad Beckstead, 57, pleaded guilty to charges relating to the Ponzi scheme run through BitClub. Beckstead admitted to helping the operators of the $722 million scheme conceal the scheme. He controlled the bank accounts associated with the scheme and the creator of the scheme, Matthew Brent Goettsche.

Vania May Bell, 57, the former comptroller and chief compliance officer of Executive Compensation Planners, Inc., pleaded guilty to participating in a conspiracy with her father, Hector May, in operating a Ponzi scheme. The scheme stole more than $11 million from more than 15 victims. They persuaded clients to withdraw money from their securities accounts with a broker-dealer and to invest in accounts at Executive Compensation Planners to invest in bonds. May was previously sentenced to 13 years in prison.

Robert Craig Bridgforth, of Missouri, and his company called Liberty Gold and Silver were the subject of an order to show cause why restitution, civil penalties and other administrative relief should not be imposed in connection with an alleged Ponzi scheme that defrauded investors out of at least $760,000 who were sold unregistered homemade “silver and gold certificates.”

Stephen Burton, 57, and James Wellesley, 55, were indicted on allegations that they ran a high-end wine Ponzi scheme through Bordeaux Cellars. The scheme took in $99 million from investors who thought they were providing loans to high-net worth individuals who had expensive wine collections that supposedly needed quick cash. Neither the loan recipients nor the wine collections existed.

Jeffrey Carley, 53, of Iowa, was sentenced to 5 years in prison and ordered to pay $1.36 million in restitution in connection with a Ponzi scheme run through Carley Financial Group, Prosperity Partners, and Main Street Solutions. Carley promised returns to victims by directing clients to move money out of traditional retirement accounts to “self-directed IRAs.”

Orazio DeGregorio, 45, was charged by the SEC with running a $1.2 million Ponzi scheme that targeted elderly clients between the ages of 78 and 94.

Kelly Gearhart was released from prison a year early from his 9-year prison sentence following an appeal. Gearhart ran a Ponzi scheme that defrauded hundreds of investors out of millions of dollars. 

Dwayne Golden, Gregory Aggesen, Marquis Egerton, and Indian national, Jatin Patel, were charged by both the CFTC and the Department of Justice in connection with an alleged scheme that defrauded investors out of over $23 million in Bitcoin and $21 million. They operated three digital asset scams through Empowercoin, Ecoinplus and JetCoin. Investors were told the returns were guaranteed and were promised a 200% profit in 90 days. 

Bradley R. Heinrichs, 41, of Idaho, was indicted on allegations that he ran a Ponzi scheme through Anthology Real Estate involving Arizona real estate. The scheme allegedly defrauded Christian families out of $82 million and promised returns of 25%. Heinrich’s business partner Stephen J. Hatch, 72, pleaded guilty in 2017. Heinrichs maintains that he is not guilty.

Dro Kholamian was sentenced to 4 years in prison and ordered to pay $755,000 in restitution in connection with a scheme run through his company, Blue Star. Kholamian solicited funds from investors in the Armenian community and he brought in $995,000 from investors for futures and foreign exchange trading. A consent order was entered in an action brought by the CFTC for solicitation fraud and misappropriation of client funds. 

Satish Kumbhani, 36, was charged in connection with the BitConnect Ponzi scheme with embezzling $2 billion. The scheme was a cryptocurrency Ponzi scheme that defrauded thousands of investors. Kumbhani is an Indian citizen and remains at large. He was sued last year by the SEC, along with Glenn Arcaro, one of the main promoters of the scheme.

Robert Mueller, a Texas attorney, was charged by the SEC with running a Ponzi scheme through Deeproot Funds. Deeproot bought life insurance viaticals, but collected $43 million after the last life insurance policy was purchased.  Deeproot has filed for bankruptcy.

Marco Perez, Jr. aka Sully Perez, 41, of Texas, was charged with allegations that he was running a Ponzi scheme through Permian Basin Proppants, Inc. Perez took in over $11 million for a scheme involving the resale of sand for fracking operations that was supposedly purchased at a discount. 

Gaylen Dean Rust, 62, was sentenced to 19 years in prison and ordered to pay $153 million in restitution in connection with a $200 million Ponzi scheme run through Rust Rare Coin in Utah. Rust, his ex-wife Denise Rust, and their son Joshua Rust, 39, were all indicted in 2019, and all three pleaded guilty to the scheme. The scheme defrauded 568 victims and involved a silver trading Ponzi scheme. 

David W. Schamens, 64, of North Carolina, was charged on allegations that he was running an alleged scheme through TradeStream TD Trading LLC, TFG Trading LLC, Analytics Ltd, Tradedesk Financial Group Inc, and others. He solicited investments into the Algo Fund, describing it as a “proprietary algorithmic trading fund managed by TradeStream. The fund was to use “state of the art servers” located in the same data center as the New York Stock Exchange and the NASDAQ. The scheme allegedly defrauded hundreds of investors out of $7 million and promised returns of between 12% and 30%.

INTERNATIONAL PONZI SCHEME NEWS 

Canada

Authorities warned against using Aweunion aka Awebuy, a company that has been called an online Ponzi scheme.  Authorities say that it falsely promises returns based on claims that its app purchases under-preforming products on Amazon to drive up popularity and spike consumer interest. Investors are promised commissions from their investments.

Charles Debono, 63, pleaded guilty to charges in connection with a Ponzi scheme run through Debit Direct that promised investors $.15 from every transaction with his debit machine business. The scheme involved more than 500 investors who invested more than $41 million. 

China

More than 10 suspects were arrested on charges relating to an alleged Ponzi scheme. A suspicious website recruited virtual currency investors and had more than 60,000 accounts with over $16 million invested. 

India

Braj Kishore Chaudhury was arrested on charges that he was running a Ponzi scheme that defrauded 6,000 investors. The scheme was run through Algo Academy.

Tapan Kumar Samanta, director of Mass Infra Realty Ltd was arrested on charges that he was running a Ponzi scheme. The company changed its name in 2012 to Human Welfare Credit & Thrift Cooperative Society Ltd.

Pranjil Batra was arrested in connection with an alleged Ponzi scheme run through Future Makers Life Care Private Limited. Batra is the software engineer who is accused of stealing funds from the company by creating fake IDs and using funds for his personal expenses.

Arpan Patel and Adyajyoti Nayak, directors of IAAVIC Pvt. Ltd, were arrested in connection with an alleged Ponzi scheme run through a fake stock market advisory company. They are accused of defrauding 400 investors.

Kamal K Bakshi, Paras Nath Singh, Pankaj Singh, Rakesh Singh, Rita Singh, Arvind Singh, Yogendra Pratap Singh, and Gurnam Singh were accused of running a Ponzi scheme through Unipay 2U Marketing Pvt Ltd and 2U Trading Pvt Ltd.

Kenya

An alleged Ponzi scheme called Bitstream Circle Limited, registered in the U.K., has collapsed and investors are unable to withdraw their funds. The director is listed as Quin Yang, of China. More than 11,000 investors who signed up in less than 4 months were promised daily returns of 5% to 8%

Nigeria 

Nurudeen Lawal Ekuma-Ezeogo Fabian Tochukwu was sentenced to 10 years in prison in connection with a scheme run though his Facebook account. Tochukwu created a fake Facebook account using the name Ogboi Ijeoma to defraud victims. 

Singapore

Authorities arrested eight men aged 18 to 30 who are suspected of running Ponzi-like schemes through an e-commerce affiliated business. 

Monday, February 28, 2022

February 2022 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for February 2022. The reported stories reflect at least 5 new Ponzi schemes worldwide, 3 guilty pleas, nearly 54 years of prison sentences, and an average age of approximately 53 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. 

Rudy Avila, 69, of Texas was sentenced to more than 17 years in prison and ordered to pay more than $14,900,000 in connection with a scheme run through Starwood Asset Management Fund, Commodities Investment Group International, Trading Technologies Group, Trading Ventures Group, The L.I.F.T. Group, Capital Ventures Group, and Ventures Group, LLC. Avila regularly wired at least 90% of investor funds to bank accounts belonging to co-conspirators in Costa Rica. Eddie Alexander Contreraz and Ivan Aguirre, both pleaded guilty to charges relating to the scheme last year. 

Dawn Bennett, 58, had a judgment entered against her in connection with the Ponzi scheme she ran though DJB Holdings and DJBennett.com. Bennett is currently serving a 20-year prison sentenced and was ordered to pay $14.5 million in restitution. Bennett was a financial advisor and radio personality on the show, Financial Myth Busting, who told investors that her company would become a sportswear empire that would rival Under Armour. More than $20 million was received from 46 investors.

Bradley R. Heinrichs, 41, of Arizona, was indicted on charges relating to an alleged $82 million Ponzi scheme. Other alleged co-conspirators included Steven J. Hatch, 72, Stephen D. Hatch, Adam Hatch, Ryan Hatch and Jessica Hatch. The scheme involved the sale of Arizona real estate and promised double-digit returns to more than 110 investors. Stephen Hatch pleaded guilty in 2017 and was sentenced to 5 years in prison. Hatch’s children were not charged in connection with the plea agreement.

Joseph Hipp pleaded guilty to charges relating to his role in a $1billion Ponzi scheme run through Future Income Payments LLC. Co-defendant Scott Kohn ran the scheme that defrauded more than 90 investors. Hipp solicited investors into the scheme that defrauded many veterans of the United States Armed Forces. 

Brian Hughes, 57, of Connecticut, pleaded guilty to operating a Ponzi scheme that defrauded investors out of $900,000. The scheme has been called unpatriotic as the scheme solicited investors into a pro-veteran vodka company, Handcrafted Brands, LLC. Hughes sought investor funds to buy Salute American Vodka but then used much of the money to pay his credit card and tax bills.

Zachary Joseph Horowitz aka Zach Avery, 35, was sentenced to 20 years in prison and ordered to pay more than $230 million in restitution in connection with the $650 million Ponzi scheme that defrauded more than 200 investors. The scheme involved sham film licensing deals and was run through 1inMM Capital LLC. Horowitz promised returns from the supposed license of film distribution rights to movies to NetFlix and HBO. No business was actually done with those companies.

Satishkumar Kurjibhai Kumhani, 36, of India, was indicted in connection with the $2.4 billion BitConnect Ponzi scheme. The indictment follows the guilty plea of BitConnect’s lead promoter, Glenn Arcaro. The scheme claimed to use proprietary technology known as the BitConnect Trading Bot and Volatility Software to supposedly generate substantial returns and guaranteed profits. 

James Moore, 60, was sentenced to more than 11 years in prison and ordered to pay approximately $57.5 million in restitution in connection with a $50 million Ponzi scheme run through Bar Works, Inc. The scheme defrauded more than 800 investors and involved a co-working space company. Moore was previously found guilty on criminal charges relating to the scheme. Moore had previously partnered with Renwick Haddow, 53, in 2009 to sell  investments in a hotel scheme. In 2015, they partnered again to solicit investments in Bar Works. Haddow used the alias Jonathan Black, with the knowledge of Moore, and Moore used his company, United Property Group, to solicit investors with false information.

INTERNATIONAL PONZI SCHEME NEWS 

Canada

Charles DeBono, 62, pleaded guilty to charges relating to a Ponzi scheme that brought in $40 million to $48 million. The scheme defrauded more than 500 people and involved a point-of-sale device that he claimed was used in stores across Canada.

England

Stephen Grail, 58, was sentenced to 5 years and 11 months in connection with a Ponzi scheme that ran for 20 years. He claimed he was investing the victims’ money in pensions and loans for them but instead the money was used to fund his lifestyle and a failing business.

Mitchell Mallin, Abdul Mukith, and Anthony Whymark were accused of running a scheme through Essex and London Properties Ltd. The scheme promised 8% to 12% returns from the supposed purchase and resale of residential properties. More than 800 people were defrauded.

India

Sarat Kumar Nayak and Prabhat Ranjan Das were arrested on charges that they defrauded approximately 500 investors in a scheme run through Auroxa Deal Multitrade Private Limited

Kishore Kakde was arrested on allegations that he was running a scheme through Kaak Economic Marketing Pvt Lt. Kakde ran a number of schemes, one of which promised returns of 1,000%.

Sunita Saini, 48, was arrested in connection with a scheme run through Vasundhara Fintech Ltd and M/s Anakaya Nidhi Ltd and defrauded more than 700 victims.

Vietnam

Vo Thanh Long and 9 accomplices were charged in connection with a $7 million alleged real estate Ponzi scheme that defrauded 817 people. The scheme was run through Cao Thang Real Estate Company that promised 20% returns to investors. 


Monday, January 31, 2022

January 2022 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for January 2022. The reported stories reflect at least 5 new Ponzi schemes worldwide, 3 guilty pleas, more than 48 years of prison sentences, and an average age of approximately 47 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. 

Alexander Avergoon, 46, of California, was sentenced to 64 months in prison and ordered to pay about $9.6 million in restitution for his role in several real estate Ponzi schemes. Avergoon pleaded guilty to charges relating to the schemes and also to participating in tax evasion and fraud schemes with Rabbi Yisroel Goldstein. The Ponzi schemes defrauded investors out of $12 million and promised investors monthly dividends from supposed rental income. Avergoon was arrested in Latvia in 2019 and extradited to the United States. 

Tara M. Brunst, 47, of Ohio, pleaded guilty to charges that she ran a scheme that defrauded investors out of about $9.3 million. Brunst was employed as an investment advisor for co-defendant, Raymond A. Erker, 50. Kevin Krantz, 56, was also charged in connection with the scheme. They were accused of selling investments that they misrepresented as annuities and senior secured notes that were with no risk and had a guaranteed rate of return. Erker owned the following companies: Sageguard, Sageguard Consulting, Sageguard Sourcing, Sageguard Technology, Sageguard Venture, Sageguard Solutions and Sageguard Wealth Management Inc., fka Raymond A. Erker Inc., GenSource Financial Assurance Co., and Provident Securities

David deBerardinis, 60, of Louisiana, was sentenced to 15 years in prison in connection with an energy trading Ponzi scheme that defrauded more than 20 investors out of more than $100 million.

Bobby Eugene Guess and his companies, including Texas Cash Cow LLC, agreed to settle claims brought by the SEC in connection with an alleged $44 million Ponzi scheme. They will pay about $1.8 million in disgorgement, interest and penalties.

William J. Miles Jr.  and Donald J. Lutzko of Texas were found liable in an SEC action for running a Ponzi scheme through Capital Energy Group LLC. The scheme brought in $3.9 million in an oil and gas scheme. They promised guaranteed returns of 227% or more.

Austin Page and Brandon Teague were arrested in connection with a scheme run through D&T Investments. The scheme is believed to have defrauded more than 350 people and involved more than $12 million. 

Marco “Sully” Perez, of Texas, was sued by the SEC and charged with running a Ponzi scheme. The scheme was run through Permian Basin Proppants Inc. and defrauded at least 265 investors

John Piccarreto, Jr., of New York, was sentenced to 7 years in prison and ordered to pay approximately $19.8 million in restitution in connection with the Ponzi scheme run through Lucian Development along with Perry Santillo and Christopher Parris. About 400 investors were defrauded. Santillo and Parris were previously convicted and are awaiting sentencing.

Elana Cohen-Roth, 77, of California, was arrested in connection with an alleged Ponzi scheme. She is accused of elder abuse and money laundering.  

Manjit “Roger” Sanjit and his company Heartland Group Ventures were charged by the SEC on allegations that they were running a Ponzi scheme that raised $112 million from more than 700 investors. The funds were to be used to invest in oil and gas projects in the Permian Basin, but the funds were used instead to buy a private jet, a helicopter and real estate in the Bahamas.

Perry Santillo aka King Perry, 41, of New York, was sentenced to 17½ years in prison and ordered to pay $103 million in restitution for his role in the $115 million Ponzi scheme run through Lucian Development and also involved including First Nationale Solution LLC, United RL Capital Services, and Percipience Global Corp. The scheme defrauded 1,000 investors

Junzo Suzuki, 73, and his son, Paul Suzuki, 43, pleaded guilty to charges in connection with the $1.5 billion Ponzi scheme involving 10,000 victims run through MRI International Inc. Co-defendant Edwin Fujinaga, 75, was found guilty and is serving a 50-year prison sentence.  The scheme defrauded Japanese investors by promising them returns from a medical collection business.

INTERNATIONAL PONZI SCHEME NEWS 

Armenia

Eleven people were charged in connection with a UK-registered scheme run through Vodanet British LTD.

Brazil

Johann Steynberg, the CEO of Mirror Trading International, was arrested in connection with the alleged cryptocurrency Ponzi scheme. Steynberg allegedly defrauded thousands of investors in South Africa. The scheme promised guaranteed returns of about 10% per month. 

Canada

Mark E. Cohen, 42, who is accused of masterminding a Ponzi scheme, cannot be located. Cohen was involved with a rental car scheme where he was to buy used cars and resell them at a profit due to the shortage of vehicles because of COVID. The scheme offered returns as high as 13% and defrauded investors out of $12 million.

Authorities are cautioning investors about investing in CoinRise, which is Canada’s fasted growing cryptocurrency trading platform.

Charles Richard Burgess was accused of securities violations and of running a Ponzi scheme that sold about $6.3 million of investments to 40 investors.

India

Arun Kumar Shukla, 36, was arrested in connection with an alleged Ponzi scheme that defrauded nearly 60 victims. Shukla’s accomplice is Ambesh Tiwari, and they ran the scheme through Yne Enterprise.

Additional suspects and companies were charged in connection with the Pearls Group Ponzi scheme, including 11 business made and associated companies. The businessmen are Akash Agarwal, Anil Kumar Khemka, Brajendra Singh Bhadouriya, Mannoj Kumar Jain, Prateek Kumar, Praveen Kumar Agarwal, Rajesh Agarwal, Subhash Agarwal, Manmohan Kamal Mahajan and Janeshwar Das. Pearls Infrastructure Projects Limited, ARSS Infrastructure Projects Limited and Jain Infraprojects Limited were also charged, along with Pearls group executives, Harchand Singh Gill, Chander Bhushan Dhillon, Harsatinder Pal Singh Hayer, Sukhwinder Kaur, Balvir Singh, Gurjant Singh Gill, Joginder Tyger, Prem Seth, Gurnam Singh, Barinder Kaur, Mohanlal Sejpal, Kanwaljit Singh Toor, and Tarlochan Singh.

Mahesh Bhadra, his son Chirag Bhadra, 29, and his daughter Mamata Bhadra, 24, were accused of running a Ponzi scheme through the financing company, Anand Enterprises. The scheme allegedly defrauded 495 people.

Mexico

Jonathan Yemelian Sifuentes was arrested in connection with an alleged Ponzi scheme called Xifra Business Group or Grupo Xifra. Sifuentes was arrested along with his 9 bodyguards, but they were all promptly released because the “facts could not be verified” according to the judge supervising the matter. Sources report that there are still active investigations as to the matter in the U.S. and Mexico.

Nigeria

Four people were arrested in connection with an alleged Ponzi scheme run through QNRT.

Philippines

MassDrop Marketing and Franchising Opc and MDM Ventures Corp. had their registrations revoked on allegations that they were running a Ponzi scheme. The scheme offered monthly returns of 20% for 90 days and additional returns totaling 160% profit.

Portugal

A 45-year-old Portuguese man was arrested in connection with the 2.5-million-euro scheme run through Bitdrop. The scheme involved cryptocurrency and offered returns of 2.5% per week.

Singapore

Wong Kwan Sing, 50, was sentenced to two years and ten months in jail in connection with a scheme run through The Gold Label. The scheme defrauded 2,000 investors in a gold buy back scheme that brought in more than $120 million. Cases involving another two of its former directors, Singaporean Iseli Rudolf James Maitland, 62, and Malaysian How Soo Feng, 47, are pending.

South Africa

Authorities are investigating an alleged Ponzi scheme known as Africrypt, that involves cryptocurrency the scheme is run by Raees and Ameer Cajee.