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.


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