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

Thursday, February 29, 2024

February 2024 Ponzi Scheme Roundup

Below is a summary of Ponzi scheme activity reported for February 2024. There were at least 6 new Ponzi schemes revealed this month. Ponzi schemers received more than 134 years of prison sentences and 4 guilty pleas. The average age of the fraudsters was about 53 years old. Please feel free to post comments about these or other Ponzi schemes that I may have missed. 

Vladimir Artamonov was accused of running a $2.9 million Ponzi scheme and his investment program run through Project Information Arbitrage fund was shut down. Artamonov is a Harvard MBA graduate and he used alumni network to defraud at least 29 people. He projected returns of 500% to 1,000% by claiming to be able to identify investments Berkshire Hathaway would make ahead of the market from public state insurance files.

John Feloni, 64, and his company, Stock Squirrel, Inc., had judgments entered against them in a case brought by the SEC. They were ordered to pay over $2 million in disgorgement. The scheme defrauded approximately 180 investors out of almost $2.5 million by promising them returns from the development of a smartphone application offering financial services to the youth sector.

Gary L. Gauthier, 74, of Florida, was sentenced to 5 years in prison in connection with a Ponzi scheme he ran with David Dreslin. The scheme defrauded about 40 investors out of $6 million. Gauthier was the former host of the Christian radio show “It’s God Money.”

Rafael Alberto Vargas Gonzalez aka Rafael Vargas, 42, was barred from the securities industry by the SEC in connection with a fraudulent scheme run through Empirex Capital LLC. The SEC had alleged that Gonzalez raised at least $6.6 million from at least 162 investors and promised returns from crypto assets as well as from stocks and bonds. The money was not used for that purpose and Gonzalez misappropriated about $1.8 million. The scheme ran from 2018 through 2023.

Rodney “Rocket” Grubbs of Indianna was accused of running a Ponzi scheme through his company, Pickleball Rocks. Grubbs held himself out as “pickleball’s ultimate ambassador.” He offered investment opportunities in his company that promoted tournaments, equipment, and clothing in the pickleball industry. About 140 investors invested several million dollars, and they were promised guaranteed returns of 12%.

Alan John Hanke, 50, was charged in New Yok on allegations that he was running a Ponzi scheme through IOLO Capital. Hanke promised investors high returns within short periods of time by investing in, among other things, “standby letters of credit,” “medium term notes,” and “high yield bonds.” Hanke filed bankruptcy in 2021, but did not disclose the millions of dollars from investors.

Ronald Walter Hannes, of Washington, was sentenced to 5 years of probation after pleading guilty to operating a Ponzi scheme and defrauding investors out of more than $3 million. Hannes ran the scheme through Hannes Financial Services, Inc. and defrauded at least 21 investors. Investors thought they were investing in “high rate, tax free” bond investments and they were provided with fictitious account documents. The scheme ran from 2012 to 2020.

Marlin Hershey, 54, and Dana Bradley, 53, of North Carolina, were sentenced to 21 months and 10 months, respectively. They had pleaded guilty to running a scheme through Performance Holdings through which they offered unregistered securities in Performance Retire on Rentals and Distressed Lending Fund.  They skimmed 10% off the top of some of the investments without telling their clients. 

Xue Samuel Lee, 35, and Brenda Indah Chunga aka “Bitcoin Beautee”, 43, were charged by the SEC in connection with the fraudulent scheme run through HyperFund. The SEC alleged that for almost two years, Lee conducted a $1.7 billion Ponzi scheme. The scheme was first launched through HyperCapital and then 6 months later was relaunched as HyperFund. It was known as HyperNation at the time of its collapse in 2022. Investors were promised daily returns of 0.5% to 1% of the value of their investment until they earned triple the value of their investment. The scheme was also alleged to be a pyramid scheme. Criminal charges have also been brought against Lee, Chunga and Rodney Burton aka Bitcoin Rodney, 54.

Kumar Arun Neppalli, 57, of North Carolina, was sentenced to 3 years and 8 months in prison and ordered to pay almost $1 million in restitution in connection with a Ponzi scheme. Neppalli targeted the Indian American community in an affinity fraud and promised them returns from real estate investments. He misrepresented that he had insider knowledge of development plans in the town of Chapel Hill due to his employment in the city and that he needed money within a short time frame, somedays the same day, to facilitate closing a transaction. 

Christopher John Pettit, 56, of Texas, was sentenced to 50 years in prison in connection with a $65 million Ponzi scheme that he ran through his law firm, Chris Pettit and Associates, PC. Pettit ran the scheme for more than 20 years, falsely promising to provide various legal and financial services. Pettit opened trustee accounts with client funds and redirected the funds to his personal account. He also deceived clients into investing in high-yield bonds but instead diverted the funds to his personal account. He further misrepresented that he was a qualified intermediary for real estate exchanges, taking in millions of dollars.

Carl R. Ruderman, 82, of Florida, the former chair of 1 Global Capital LLC, was sentenced to 5 years in prison in connection with the $250 million Ponzi scheme. Ruderman raised about $330 million for the scheme. Co-conspirators who have previously pleaded guilty are Alan Heide, 65, Jan Atlas, 78, Steven Allen Schwartz, 78, and Andrew Ledbetter, 81. 1 Global promised returns from pay day loans to small businesses at high interest rates.

Thomas Nicholas Salzano, 65, of New Jersey, pleaded guilty to running a $658 million real estate Ponzi scheme through National Realty Investment Advisors LLC. The scheme defrauded more than 2,000 investors. Salzano was the “shadow CEO” to conceal his history of fraud from investors, and Rey E. Grabato II was the CEO. Investors placed the funds into NRIA Partners Portfolio Fund I LLC.

Brian Simms, 46, of Indiana, pleaded guilty to a Ponzi-like scheme run through Brendanwood Financial Brokerage LLC. The scheme brought in almost $4 million. He is a licensed insurance broker, but not licensed to sell securities. He persuaded 20 people to liquidate their 401ks, annuities, and similar accounts and give their funds to him to invest. He falsified documentation to misrepresent that he had invested in legitimate investments. Simms agreed to pay more than $2.62 million in restitution to the victims.

Peter J. Strauss, 45, of South Carolina, pleaded guilty to his role in connection with the DC Solar Ponzi scheme run by Jeff and Paulette Carpoff. Strauss admitted that he knowingly aided and abetted the transfer of funds from Carpoff. Strauss was an attorney, a captive insurance promoter, and founder of Strauss Global, an advisory services firm.

Phillip Wasserman, 67, was sentenced to 15 years in prison in a Ponzi scheme case in which a jury found him guilty of fraud charges. Wasserman is a former lawyer and licensed insurance agent who solicited elderly investors to put their money into a new insurance venture called FastLife. Wasserman ran the scheme with Kenneth Rossman. Wasserman called himself the Annuity King.

Eliyahu “Eli” Weinstein aka Mike Konig, 48, and Aryeh “Ari” Bromberg, 49, were charged in New Jersey in connection with an alleged fraudulent scheme run through Optimus Investments Inc. and Tyron Management Group LLC. The scheme promised returns from supposed access to deals involving scarce medical supplies, baby formula, and first-aid kits destined for Ukraine. Christopher Anderson, 47, Richard Curry, 36, and Alaa Mohamed Hattab, 35, previously pleaded guilty in connection with the scheme, and Joel Wittels and Shlomo Erez still have criminal charges pending against them. Weinstein’s previous 24-year prison sentenced was commuted by the then President following his conviction in connection with a $230 million real estate Ponzi scheme. The Optimus Investment scheme was started soon after Weinstein was released from prison, using the fake name Mike Konig so investors would not know of Weinstein’s involvement.

Robert Wisnicki, 45, was sentenced to 6½ years in prison in connection with an $18.8 million Ponzi scheme he ran through Wisnicki & Associates LLP and Wisnicki Neuhaser LLP. He persuaded investors to invest in real estate opportunities. Wisnicki used funds from the Wisnicki firms’ clients who did not participate in the real estate investments, which were held in trust in the firms’ IOLA accounts and transferred those funds to the investors to conceal the losses to their investments. 

John J. Woods, 59, of Georgia, was sentenced to nearly 8 years in prison in connection with a $110 million Ponzi scheme run through companies Horizon Private Equity III LLC and Livingston Group Asset Management Company, doing business as Southport Capital. Woods pleaded guilty to the scheme that was run from 2008 through 2021 and lost about $50 million of investors’ funds. More than 400 people were promised returns of 6% to 7% and lost their investments.

Edward Anthony Zimbardi, of Georgia, is under investigation in connection with an alleged Ponzi scheme that involved cryptocurrency and promised 25% monthly returns. California and Canadian authorities have separately taken action. Zimbardi is a convicted felon and is the owner CryptoProgram, which collapsed in 2023.

INTERNATIONAL PONZI SCHEME NEWS 

Canada

Colin Murphy, 27, was sentenced to 5 months in jail for his refusal to turn over evidence relating to the Ponzi scheme run by Aiden Pleterski, 25, known as the Crypto King. Murphy refused to turnover an iPhone and hid it in a toilet caddy during a court-ordered search.

Charges were filed against Michael Ongun Gokturk and his companies, Einstein Exchange Inc., Einstein Capital Ltd., and Einstein Law Corporation (which was not a law firm). The scheme involved a supposed crypto trading platform providing sale and secure storage for user’s money and crypto assets. In reality, Gokturn transferred the deposits into his personal crypto wallet. At one point, the companies held more than $34 million in cash and crypto assets.

Charges were filed against Gary Lee Rathbun, a former radio host, on allegations that he was running a $72 million Ponzi scheme. Rathbun and his business partner, Doug Miller, lured in investors to invest into private companies associated with Northwest Capital. Approximately $25.5 million was invested by 187 clients into the related businesses. 

England

John Neil Hirst, 60, was charged with conspiracy to defraud in connection with an alleged £10 million Ponzi scheme that targeted British expatriates living in Mallorca. 

Guy Flintham, 46, confessed to a £19 million Ponzi scheme that defrauded 240 investors. 

Michael Thomson, the former chief executive of London Capital & Finance, is on trial on allegations that he ran a Ponzi scheme that collapsed in 2019. The scheme involved about 12,000 elderly investors and brough in nearly £240 million. Much of the money was used by Thomson on racehorses, luxury watches, and shotguns.

Iran

At least one person was arrested in connection with a scheme run through Kourosh Company that defrauded people out of approximately $35 million from cheap iPhones following a ban on them in Iran. The government’s ban on the registration of new iPhones created a black market for new phones in which customers have paid exorbitant prices, in some instances almost 3 times the market price for the phone. Kourosh called itself Iran’s “largest phone repair company” and promised to sell iPhones at a discounted price on the condition that it would deliver the phones in a few weeks. The main suspect, Amirhossein Sharifian, has fled to Turkey.

Jamaica

Authorities are investigating Warner Jamaica Media Limited as Ponzi scheme that allegedly defrauded 50,000 Jamaicans out of millions of dollars.

Nigeria

Authorities are investigating an alleged Ponzi scheme run by Aderemi Olufemi Adeoye.

Wednesday, January 31, 2024

January 2024 Ponzi Scheme Roundu

Below is a summary of Ponzi scheme activity reported for January 2024. At least 6 Ponzi schemes hit the news for the first time this month. There more than 41 years of prison sentences for Ponzi schemers, and 2 guilty pleas. The average age of the fraudsters was about 48 years old. Please feel free to post comments about these or other Ponzi schemes that I may have missed. 

Rodney Dean Buckle, 66, of Nevada, was sentenced to one year in jail and ordered to pay $283,000 in restitution in connection with a Ponzi scheme he ran through Rodd United, Rodd U, and Rodd One. Rodd University was a membership-based social club. Buckle promised investors a 100% return on their investments. He established phony businesses and told clients he would invest their funds for them.

Michael Disman, 40, of Texas, pleaded guilty to charges that he was running a $2.7 million Ponzi scheme. Disman admitted to defrauding at least 17 victims using his companies, Dexter Development and Disman Energy. The scheme involved supposed lucrative land development projects, which in reality were nonexistent.

Gopala Krishan, Manivannan Shanmuga, Sakthivel Palani Gounder, and Nanban Ventures LLC were the subject of a preliminary injunction and asset freeze in a case that the SEC had commenced last October. The defendants allegedly raised more than $89 million from more than 350 investors for investments in purported venture capital funds. 

William Koo Ichioka, 30, a Guam resident, was sentenced to 4 years in prison in California and ordered to pay a $5 million fine in connection with a cryptocurrency scheme run through Ichioka Ventures. Ichioka promised returns of 10% every 30 business days to more than 100 investors. Ichioka owes at least $21 million to investors and $40 million to family members.

Siddharth Jawahar, 36, of Texas, was charged in Missouri in connection with an alleged Ponzi scheme run through his company, Swiftare Capital. Jawahar took in $35 million but only spent $10 million on investments. The scheme is believed to be related to Blockchain Global, an Australian blockchain startup that collapsed, with $58 million in claims. 

Horst Jicha, 64, a German national, was charged in connection with an alleged Ponzi scheme run through USI Tech, which held itself out as a European-based cryptocurrency investment platform. Investors were promised profits from purchasing BTC Packages or by earning commissions from referring others to purchase investment packages. Jicha, the CEO of USI Tech, promised investors an average of 1% daily returns. 

Sam Lee aka Xue Lee, 35, an Australia, Brenda “Bitcoin Beutee” Chunga, 43, of Maryland, and Rodney Burton aka Bitcoin Rodney, 54, were charged in connection with an alleged $1.89 billion fraudulent cryptocurrency investment scheme run through HyperVerse. The online investment business used the names HyperFund, HyperCapital, HyperNation, and HyperTech. The scheme involved a non-existent bitcoin mining-based investment company and promised daily rewards of .5% to 1%. Chunga pleaded guilty and admitted to receiving at least $3 million.

Prosper E. Beyond Moore, 27, of Georgia, and his entity, Prosperity Investments & Solutions, LLC, were charged by the SEC in connection with an alleged scheme offering unregistered offerings of securities.  The scheme raised more than $1.4 million from over 60 investors, many oof which were members of Moore’s church. Moore represented that Prosperity had an exclusive investing and lending platform that generated up to 50% returns per month.

Ahmet Neidik, 64, of New Jersey, pleaded guilty to his role in an off-the-road-tires Ponzi scheme run by John K. Eckerd, Jr., 58, and Jason E. Adkins, 46. The scheme defrauded more than 50 investors out of $50 million. Investors were told that tires would be bought at a steep discount and resold to a buyer at a much higher rate. The defendants rarely bought or sold tires and when they did, they used the same tires for multiple deals.

Kumar Arun Neppalli, 57, of North Carolina, was sentenced to 3 years, 8 months and ordered to pay almost $1 million in restitution in connection with a Ponzi scheme that targeted the Indian-American community. Neppalli represented that he had connections to real estate developers in the Orange County area and that he would invest their money in real estate projects.

Marco Ruiz Ochoa, 35, of New Hampshire, was sentenced to 5 years in prison and ordered to forfeit $914,000 for his role in the IcomTech Ponzi scheme. The scheme was founded by David Carmona in 2018, and Ochoa served as the CEO until 2019. Ochoa, Carmona, along with other co-defendants, Juan Arellano Parra, Moses Valdez and David Brend, promised guaranteed returns from cryptocurrency trading and mining. A second company, For-Count, promised victims returns from purchasing crypto-currency-related investment products.

Richard Lee Ramirez, 54, of California was sentenced to 7½ years in prison and ordered to pay about $5.5 million in restitution in connection with the Ponzi scheme run through JMJ Capital Group. Ramirez promised returns of between 10% and 30% from a variety of business ventures, including buying and reselling personal protective equipment, factoring accounts receivable, importing and selling furniture and refurbishing air conditioning units for cruise ships. More than $8.1 million was invested in the scheme that involved at least 34 victims.

Darren Anthony Robinson, 54, of Michigan, was indicted on charges that he operated a Ponzi scheme that stole $100 million from investors. Robinson operated a purported trading firm known as QYU Holdings run out of Panama and Cayman Islands. Robinson is on the run and has not yet been apprehended.

Mark Scott, 54, was sentenced to 10 years in prison in connection with the OneCoin cryptocurrency scheme. Scott was accused of laundering millions of dollars through OneCoin.

Carl Smith was the subject of a final judgment by the SEC against him in connection with a scheme that raised at least $3.7 million from at least 37 investors. The scheme was run through Nanobeak Biotech Inc. and its former CEO, Jeremy Barbera

Paul Horton Smith Sr., 59, of California pleaded guilty to charges that he ran a Ponzi scheme that lasted nearly 20 years and took $24 million from at least 200 investors. Smith ran the alleged scheme through Northstar Communications LLC, Planning Services Inc., and eGate LLC. Smith represented that Northstar invested in real estate or the stock market but just invested money in a non-interest-bearing checking account,

Nicholas Trimble, of Colorado, was charged in connection with an alleged $3 million Ponzi scheme run as a luxury watch resale operation. Trimble was supposedly buying and selling luxury watches and turning a profit, but the several watches he actually purchased constituted just a small part of the funds he solicited.

INTERNATIONAL PONZI SCHEME NEWS 

Australia

Kenneth Charles Grace was found dead in a motel on the day he was due to be sentenced in connection with the Ponzi scheme run through his investment fund, Goldsky Global Access Fund. Approximately $24 million was invested on promises that he could generate returns of up to 20%.

England

Darryl Evans, 62, was sentenced to 8 years in prison following his conviction in connection with a scheme that he ran as a financial advisor. He told his clients that he was investing in algorithms and high-performing companies.

Estonia approved the extradition of Sergei Potapenko and Ivan Turogin, Estonian citizens, to the United States. The two are cryptocurrency entrepreneurs who ran a $575 million Ponzi scheme through HashFlare and Polybius Bank. 

Guam

Julien Abat Weymouth, 21, was sentenced to 2½ years in prison in connection with a scheme that involved the exchanging and transferring of cryptocurrency. Assets worth about $13 million, mostly in bitcoin, were seized.

India

Nikhil Mahajan, 39, was arrested in connection with a scheme run through Singapore-based Variable Tech. The scheme brought in 40 bitcoins and was run with Ajay Bhardwaj.

Philippines

Authorities flagged the following investment programs as potential Ponzi schemes: House of Forex / H. Flores Business Consultancy Services; Foto Trading International; HarvestCTMall; Crypace Limited/Crypace Financial Consultancy Services; DNKC Corp.; Gainz Philippines; S&M Ventures and Salon de Alexis.

Authorities warned against investing in The Tipsy Tavern, a bar and events-themed Ponzi scheme. The company is operated by Danielle Lance Alarcon, and investors were promised 120% per year.

Netherlands

A 23-year-old student in Hengelo was accused of running a Ponzi scheme that defrauded over 100 victims out of millions of euros in connection with a cryptocurrency scheme. He promised returns of up to 50% from his crypto bank. 

Taiwan

David Pan was arrested in connection with his involvement in an alleged cryptocurrency scam found through ACE Exchange. The trading platform is controlled by Michael C.H. Wang. Fourteen people were arrested in total in connection with the scheme, including Spencer Lin who was sentenced to 8 years in prison last year but just arrested. The losses are estimated to exceed $32 million.

Turkey

Kivanç Talu and his wife Beril Talu were arrested at the airport on allegations that they were running a Ponzi scheme that involved 150 million Turkish Liras ($5.1 million). They promised returns of one and a half times within 40 days through a venture that involved creating advertising films for major corporations.

Zimbabwe

E-creator, a global e-commerce company, was exposed as a Ponzi scheme that lured investors with promises of high returns. Masterminds Thomas and Zhao used sim boxes with sim cards to manage transactions and used cryptocurrency to siphon off funds.

Sunday, January 7, 2024

The 2023 Year-End Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps 

The Ponzi Scheme Blog tracks Ponzi scheme news reported on new Ponzi schemes, guilty pleas, criminal convictions, prison sentences and other relevant Ponzi scheme news. Every Ponzi scheme cannot be known, as many slip into the night quietly without ever even being reported to criminal or regulatory authorities, and many simply don’t make the news. As such, it is impossible to capture all of the news.

The unofficial tally of Ponzi scheme news in 2023, even knowing it is incomplete, is itself troubling in its scope. 

At least 115 new Ponzi schemes were reported in the news in 2023

Well over $4.5 billion was lost by victims in Ponzi schemes (49 of the 115 new schemes did not report dollar figures, so the actual number might well be double that amount, or more)

At least 32 people pleaded guilty to running Ponzi schemes

At least 7 were convicted following criminal trial

The average age of the Ponzi schemer is about 49 years old (mid-life crisis?)

All of this is a reminder to stay on high alert and conduct independently verifiable due diligence before investing. For sample questions to ask and due diligence ideas, check out Ponzi-Proof Your Investments: An Investor’s Guide to Avoid Investing in Ponzi Schemes and Other Financial Scams.