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
Whistleblowers
Debtors in Bankruptcy
Secured and Unsecured Creditors

Friday, September 30, 2022

September 2022 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

Below is a summary of the activity reported for September 2022. News in cryptocurrency schemes was prevalent this month, with 16 cryptocurrency firms hitting the Ponzi scheme news. At least 16 new Ponzi schemes worldwide were reported this past month, along with 4 guilty pleas, and more than 88 years of prison sentences. The average age for the alleged Ponzi schemers was approximately 47. Please feel free to post comments about these or other Ponzi schemes that I may have missed. 

Glenn Arcaro, 45, of California, was sentenced to 38 months in prison in connection with the BitConnect cryptocurrency scheme. He fraudulently marketed the scheme that defrauded at least 4,500 people and involved $2.4 billion. Arcaro promised guaranteed returns from BitConnect’s “Trading Bot” and “Volatility Software.” BitConnect’s founder, Satish Kumbhani of India, was indicted earlier this year. 

Timothy Lynch Barton, 59, of Texas was charged in connection with an alleged fraudulent scheme run through the real estate development firm, JMJ, and real estate investment firm, Carnegie Development. Barton pitched real estate investment opportunities in Texas to investors in China, promising annual interest payments for two years and a return of principal at the end of the second year. The SEC charged Barton, Stephen Wall, and Michael Wu and sought the appointment of a receivership over hundreds of acres in North Texas.

Tochukwu Abel Edeh, 32, a Nigerian national from Florida, pleaded guilty to charges relating to a purported cryptocurrency trading service called Felsic Global Trading. Edeh is a used car dealer who laundered the proceeds of the scheme and transferred funds to Nigeria. Edeh is also a defendant in a case brought by the CFTC that has been stayed pending resolution of the criminal case.

Gabriel Edelman and his companies, Creative Advancement LLC and Edelman Blockchain Advisors LLC, were sued by the SEC on allegations that they were running a cryptocurrency scheme. The scheme involved approximately $4.4 million and at least 4 investors who were promised returns from supposed investment in cryptocurrencies. 

Shawn Edward Good, 55, of North Carolina pleaded guilty to charges in connection with a $7.2 million Ponzi scheme that resulted in losses of at least $2 million to at least 12 victims. Good solicited funds from his investment advisory clients and promised them returns of 6% to 10% from “low-risk investments.” He arranged for some of his clients to obtain a liquid asset line of credit secured by their investment or retirement accounts and directed then to transfer the funds to their personal bank accounts and then wire the funds directly to Good’s personal bank account. 

Thomas Huling, 58, of Rhode Island, pleaded guilty to charges relating to a Ponzi scheme involving 10 victims and losses between $1.5 million and $3.5 million. He promoted investment projects including high-yielding bond trading platforms, a car emissions reduction technology, and an online advertising and marketing company.

Carlos Maldonado was sentenced to 11 years and 3 months in prison and ordered to pay almost $2 million in restitution for his role in operating a Ponzi scheme through Business Planning, Resources International Corporation, Glorimar Fashions and Tailoring, LLC, and Global Business Insurance Agency Inc. and associated with Pet Card Systems, Inc., and Datavos Corporation. There were 46 victims of the scheme in Puerto Rico and the continental U.S. Maldonado failed to disclose that the investment funds he fraudulently obtained were used to buy and sell stocks and commodities through personal trading accounts and were spent on personal expenses. 

Joshua David Nicholas, 28, of Florida, pleaded guilty in connection with his role in the global cryptocurrency Ponzi scheme, EmpiresX. Nicholas, along with EmpiresX’s founders, Emerson Sousa Pires, 33, and Flavio Mendes Goncalves, 33, of Brazil, promised guaranteed returns of up to 1% per day from an alleged proprietary artificial intelligence-powered “trading bot.” The scheme defrauded investors out of approximately $100 million. 

James Clark Nix, 74, of Texas, was sentenced to 48 years in prison in connection with a Ponzi scheme that defrauded 40 victims out of at least $6 million. The victims were clients of his accounting practice, and he promised them returns of up to 10% if they invested in his company. Nix spent the money on personal expenses and renting mansions across the country. His son, Bradley Nix, previously pleaded guilty, was sentenced to 4½ years in prison, and testified against his father.

Judith Dianne Paris-Pinder, 49, of Florida, was charged on allegations that she was running a $4.6 million Ponzi scheme through Pinder Associates, Inc. Paris-Pinder promised returns as high as 50% to investors who would lend money to plaintiffs in litigation who had settled their litigation claims but were still waiting for settlements payments from the insurance companies. She did not, however, have any relationships with lawyers representing litigation clients and there were no settlement agreements. Paris-Pinder spent about $1 million on wedding and vacation expenses and other entertainment. 

Pavel Ruiz, 29, of Florida, was charged by the SEC in connection with an alleged $196 million Ponzi scheme run through MJ Capital and MJ Taxes and Moreby by Johanna M. Garcia. MJ Capital and MJ Taxes are currently under a receivership. Over 15,400 investors were allegedly defrauded in the scheme. The SEC alleged that Ruiz and his team of about 70 sales agents raised at least $46 million from over 5,100 investors for the MJ Capital scheme. He represented that the investor funds would be used to make small business loans called merchant cash advances. Ruiz retained $6.5 million of the funds in his personal accounts or of his companies, MJCF LLC and UDM Decorating. Garcia called herself the Mother Teresa of Florida. Both Garcia and Ruiz have partially settled with the SEC.

Brian Simms, 44, of Indiana, was charged in connection with an alleged Ponzi scheme run through his company, Brendanwood Financial Brokerage LLC. Simms was a licensed insurance broker but not licensed to sell securities. He persuaded his clients to liquidate traditional long-term insurance products and reinvest at Brendanwood. Authorities allege that a total of almost $4 million was misappropriated from the victims.

Jeremy Spence, 25, of Rhode Island, was sentenced to 3 years and 6 months in prison in connection with his cryptocurrency trading business known as Coin Signals.  

John Quadrino, 52, pleaded guilty to charges relating to a Ponzi scheme run through Princess Cut Industries, Inc., Sassy Jewelry Buyers, Inc., and Golden Glitter Trading, Inc. The scheme defrauded about 80 victims out of at least $3.5 million based on promised returns from the supposed sale of gold, jewelry and diamonds to refineries and jewelers. Quadrino promised guaranteed returns at the end of a fixed period.

The California Department of Financial Protection filed cease-and-desist orders against 11 cryptocurrency firms, accusing them of Ponzi-like conduct and violations of state securities laws. The companies are identified as the following in a press release from the department:

Cryptos OTC Trading Platform Limited d/b/a COTP – purported crypto asset trading platform

Elevate Pass LLC – purported crypto asset advertising and trading platform

GreenCorp Investment LLC – purported crypto asset trading platform

Metafiyielders Pty Ltd d/b/a Metafi Yielders – purported DeFi platform

Pegasus – purported crypto asset trading platform

Polinur ME Limited – purported metaverse software development company

Remabit – purported crypto asset trading platform

Sity Trade – purported crypto asset trading platform

Sytrex Trade – purported crypto asset and forex trading platform

Vexam Limited – purported crypto asset trading platform

World Over the Counter Limited d/b/a World OTC – purported crypto asset trading platform 

INTERNATIONAL PONZI SCHEME NEWS 

India

Raju Sahani was arrested and his home was searched in connection with an alleged Ponzi scheme run through Bardhaman Sanmang Welfare Trust

Devendra Kumar was arrested on charged that he defrauded 600 people in a Ponzi scheme run through BLS Realty Infra India Limited and BLS Co-operation Credit Society.

Singapore

Iseli Rudolf James Maitland, 63, and How Soo Feng, 48, were each sentenced to three years and 10 months in jail in connection with a scheme run through The Gold Label. The scheme sold gold to more than 2,000 customers, promised returns as high as 24%, and took in more than $120 million in a “buyback” scheme. Wong Kwan Sing, 50, was sentenced to two years and 10 months in jail earlier this year after pleading guilty.

South Africa

Standard Bank was ordered to freeze the bank accounts of suspected Ponzi scheme Lyoness South Africa. Lyoness is a multilevel marketing scheme that was founded in 2003 by Hubert Friedl in Austria and eventually spread to about 40 countries. The scheme is believed to have 190,000 members in South Africa and involve at least R4.75 billion. Members received commissions for introducing members to the scheme. The company developed Project X in which they promised returns of thousands of times the amount invested. Lyoness required members to check boxes on the website to agree to changes in the products, otherwise they would lose their entire investment. 

Craig Massyn was fined R20 million for running a project similar to a Ponzi scheme through Praesidium Advisory Services, Praesidium Wealth, and Praesidium Sentinel. The companies were engaged in trading foreign currency, but the funds they received were paid to Octox and Imagina FX, two companies linked to Massyn. Co-directors Andrew Cunningham-Moorat and Brett Bukes, were fined R2.5 million and 6.5 million, respectively. Two employees of Praesidium, Cindy Lee Schuster and Ryan van Niekerk, were both fined R300 000.

Yunus Moolla, 61, was sentenced to 15 years in prison after pleading guilty in connection with a Ponzi scheme that defrauded 3,799 investors out of R500m. The scheme promised returns of between 2% and 8% per month from the deal and trade of diesel and petroleum products. 

Spain

Authorities opened an investigation of JuicyFields, a medicinal cannabis investment platform. The company offered investors returns of up to 66% from the cultivation, harvesting and sale of legal cannabis plants. A group of 1,200 investors filed a class action against the company after operations and cash withdrawals were halted in July. It is estimated that there are 4,500 victims in Spain alone.  

Thailand

Assets were seized from the home of Nitikorn Inta, the CEO of P Miner Cryptocurrency Group, on allegations that the company was offering more than 30 investment projects that amounted to a Ponzi scheme. The scheme brought in about 438 million baht.

Thai celebrity Pattanapon “DJ Man” Minthakhin and his wife, singer Suteewan “Baitoey” Thaweesin, were charged over their role in the Forex-3D online Ponzi scheme. Actress Savika “Pinky” Chaiyadej, along with her mother and brother, were indicted last month in connection with the scam.

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