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. She also handles SEC and CFTC whistleblower claims. 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

Wednesday, August 31, 2022

August 2022 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for August 2022. The reported stories reflect at least 4 new Ponzi schemes worldwide, 1 guilty plea, more than 71 years of prison sentences, and an average age of approximately 51 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. 

Gino Accettola, 55, was sentenced to 11 years and 3 months in prison in connection with a scheme in which 17 people were defrauded out of over $4 million. He promised investors high short-term returns from investments in supposed commercial construction projects in Michigan and Florida. 

Jason E. Adkins, 46, of Ohio, was sentenced to 9 years in prison in connection with a $50 million Ponzi scheme. Investors were promised returns of 15% to 20% from the supposed purchase and resale of discounted tires. The scheme took in more than $80 million. 

Phillip Michael Carter, 44, of Texas was assessed about $12.4 million in fines and penalties in connection with his role in a $44 million Ponzi scheme. The SEC charged Carter along with Bobby Eugene Guess and Richard Tilford and alleged that they defrauded 270 investors. The scheme involved short-term, high-yield promissory notes issued by shell companies involving real estate transactions. Carter was sentenced to 45 years in prison and ordered to pay $30 million in restitution earlier this year. Guess is currently serving a 12-year prison sentence after pleading guilty to a similar but unrelated scheme. Tilford was sentenced to 40 years in state prison.

Thomas Coelho, fka Thomas Jurewitz, 52, was sentenced to 10 years in prison after pleading guilty to a scheme involving live event ticket resales. He represented that he was using connections to ticketing insiders in the live entertainment business to purchase event tickets at face value and then he would resell them at a profit. He defrauded victims out of $1.8 million.

Raymond Erker, 52, of Ohio, was sentenced to nearly 22 years in prison in connection with a $9.3 million Ponzi scheme that defrauded at least 54 clients. Erker, a former financial advisor, promised returns from annuities and secured notes that were supposedly low risk and had guaranteed returns. Erker created fake websites and account statements in defrauding over 50 victims, many of them elderly. Two co-defendants in the scheme previously pleaded guilty and were sentenced earlier this year.

Rathnakishore Giri, of Ohio, and his two companies, SR Private Equity LLC and NBD Eidetic Capital LLC, were sued by the CFTC in connection with an alleged Ponzi scheme that solicited over $12 million and 10 Bitcoin from over 150 investors. Giri was supposedly a digital asset trader but allegedly made false or misleading statements to customers in guaranteeing profits, among other things. Giri’s parents, Giri Subramani and Loka Pavani Giri, were named as relief defendants.

Tytus W. Harkins, 39, was ordered to pay $10.5 million in connection with a trailer park Ponzi scheme. The SEC had accused Harkins of making false statements to investors in connection with his scheme run through Hartman Wright Group, LLC. The scheme raised more than $8 million from investors.  

Pavel Ramon Ruiz Hernandez, 29, of Florida, was charged in connection with an alleged scheme run through MJ Capital Funding, LLC that involved over $42 million. The scheme involved merchant cash advances, which is a type of short-term financing used by smaller businesses. 

Scott A. Kohn, 68, of California, was sentenced to 10 years in prison in connection with the $300 million Ponzi scheme run through Future Income Payments LLC fka Pensions, Annuities, and Settlements LLC. The scheme caused losses to more than 2,500 retirees and had put more than 13,000 veterans into exploitative loans. The scheme solicited pensioners by offering upfront lump-sum payment in exchange for an assignment of the rights to their monthly pensions and disability payments. The assignment transactions were characterized as sales but were actually loans with annual interest rates as high as 240%. Others who have previously pleaded guilty in connection with the scheme are Kraig S. Aiken, 53, of California, David N. Kenneally, 59, of South Carolina, Melanie Jo Schulze-Miller, 40, of Arizona, and Joseph P. Hipp, 52, of Missouri.

Michael Malekzadeh, 39, and his company Zadeh Kicks LLC, of Oregon, were charged in connection with an alleged high-end sneaker scheme. Zadeh Kicks promised the early release of high-end shoes to buyers before other competitors. Some day-traders and sneaker enthusiasts were in the business of flipping shoes such as Air Jordans and reselling them at a higher price. Zadeh Kicks offered to sell shoes such as Nike Air Jordon 11 Cool Grey sneakers for $115, which was less than the $225 sold on Nike’s official website.  Other highly sought-after sneakers were also sold for below-market prices before manufacturers released them to the public. About $70 million was taken into the fraudulent scheme that had about 600,000 orders. Only 6,000 orders could be filled. Malekzadeh spent the cash on luxury cars and about $3 million on Louis Vuitton merchandise. Malekzadeh’s fiancĂ©, Bethany Mockerman, has also been charged in connection with the scheme. The government seized millions of dollars in cash and goods.

Sean Michael Mueller, 53, of Colorado, pleaded guilty to charges in connection with a Ponzi scheme that netted $71 million from 65 investors, including Hall of Fame quarterback John Elway. Mueller was accused of failing to deposit investor funds into brokerage accounts as promised and also of creating phony account and brokerage statements.

Vladimir Okhotnikov, Jane Doe a/k/a Lola Ferrari, Mikhail Sergeev, and Sergey Maslakov plus seven other U.S.-based defendants were charged by the SEC with running a cryptocurrency Ponzi scheme known as Forsage. The scheme raised more than $300 million from retail investors worldwide. The SEC alleged that the only source of revenue was funds received from investors.  The US-based defendants are Cheri Beth Bowen, 44, of Mississippi; Ronald R. Deering, 69, of Idaho; Samuel Ellis, of Kentucky; Mark Hamlin, of Virginia; Carlos L. Martinez, 54, of Illinois; Alisha R. Shepperd, 34, of Florida; and Sarah Theissen, of Wisconsin. Ellis and Thiessen reached settlements with the SEC that include disgorgement and civil penalties. The promoters of the scheme were known as the Crypto Crusaders.

Alexandra Robert, 23, of Florida and of Haitian descent, was charged in connection with a scheme that took in more than $900,000 from 80 investors in the Haitian-American community. She ran the scheme through Chalala Academy LLC and Lendvesting Academy Corp, offering investment programs with “risk-free” investments with up to 48% returns. Robert was supposedly making loans to small business borrowers who could not qualify through traditional lenders.

Reva Joyce Stachniw, 70, of Illinois, and Ron Throgmartin, 58, of Georgia, were convicted in connection with a Ponzi scheme. Authorities had alleged that the defendants raised more than $650 million from investors, promising investors that their investments were backed by short-term investments in cattle. The scheme was run through MR Cattle Production Services LLC in Colorado to help solicit investors. The defendants also solicited funds for a Colorado-based marijuana business, Universal Herbs LLC. Investors were promised returns of 10% to 20% over periods as short as a few weeks.

Matthew J. Turnipseede, 49, of Nevada, was charged in Ohio in connection with an alleged sports-betting Ponzi scheme that defrauded 72 investors out of more than $8.5 million. Turnipseede allegedly falsely claimed that investor funds would be used to make sophisticated sports wagers using an algorithm that generated double-digit returns. He allegedly emailed fraudulent financial statements to the victims and did not ever actually generate the promised profits.

Voyager Digital, which filed bankruptcy last month, has been accused of running a Ponzi scheme that has resulted in more than 3.5 million investors to lose $5 billion collectively. Both Voyager CEO, Stephen Ehrlich, and Shark Tank icon Mark Cuban, have been named in a class action lawsuit for their role in promoting the alleged cryptocurrency Ponzi scheme.

Lee D. Weiss, 51, of Pennsylvania, was sentenced to 5 years in prison and ordered to pay $7.5 million in restitution in connection with a Ponzi scheme that defrauded clients out of more than $7 million. Weiss had pleaded guilty to the scheme run through Family Endowment Partners, LP, an investment adviser registered with the SEC. Weiss supposedly invested the client funds in a now-defunct Florida tobacco company and other private securities offerings, but instead used the funds for personal expenses and to pay other investors. 

INTERNATIONAL PONZI SCHEME NEWS 

Argentina

Javier Milei, 51, an Argentine presidential candidate, was sued in connection with an alleged crypto Ponzi scheme. Milei promoted CoinX on his Instagram account with 1.3 million followers. CoinX has been accused of running a Ponzi scheme that defrauded investors out of between 30 million and 40 million pesos (about $300,000).

Australia

Joe Papalia, 72, pleaded not guilty to stealing about $19 million in an alleged Ponzi scheme. Papalia remains in prison on allegations that he ran a scheme that defrauded his clients in his role as an accountant and financial advisor.

Canada

Arnold Breitkreutz, 74, was sentenced to 10 years in prison and ordered to pay $3.1 million in restitution in connection with the Ponzi scheme run through Base Finance and Base Mortgage. Breitkreutz raised more than $27 million from investors, along with his partner, Susan Way, under the pretense of doing mortgage lending. The scheme defrauded more than 400 investors.

Joshua James Tenhove, 50, was sentenced to 4 years in prison and ordered to pay more than $3.2 million in restitution. Tenhove previously pleaded guilty to charges related to the scheme that involved the sale of light towers.

India

Assets of Burdwan Sunnmarg Welfare Organization were attached by authorities on charges that it was running a Ponzi scheme. Soumyarup Bhowmik is the chairman of the company.  

Satish Kumbhani, the founder of BitConnect, is wanted in India. Kumbhani disappeared in February 2022 after he was indicted in the U.S. in the $2.4 billion Ponzi scheme. 

Kazakhstan

Authorities in Kazakhstan are investigating a crypto-mining business known as Bincloud as being an alleged fraudulent scheme. Promoters convinced investors to invest in the business offering mining equipment rentals, and investors were promised daily returns of 5% to 6%. The investigation is part of a larger effort to fight cryptocurrency-related crimes, as Kasakhstan has attracted mining enterprises due to its low electricity rates. 

Thailand

Actress Savika Chaiyadej aka Pinky, and her mother, Sarinya, along with 17 others were indicted on charges in connection with an alleged foreign exchange futures investment scheme known as Forex-3D. The scheme offered returns of 80% and about 14,000 investors invested about 1.9 billion baht. Apirak Kotethi is the mastermind of the scheme.  

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