October 2018 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for October 2018. The reported stories reflect at least 9 new Ponzi schemes worldwide; about 46 years of newly imposed sentences for people involved in Ponzi schemes; 5 guilty pleas or convictions, and an average age of approximately 52 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed.

Arthur Lamar Adams, 58, of Mississippi was sentenced to 19½ years in prison in connection with a Ponzi scheme run through Madison Timber Properties, LLC. Adams obtained over $100 million from more than 250 investors located in at least 14 different states. Madison Timber held itself out as being in the business of buying timber rights from landowners and then reselling those rights to lumber mills at a higher price. The investors understood they were providing the financing for the purchase contracts for the timber rights. Investors were guaranteed returns of 12-13% interest. Adams had previously pleaded guilty and admitted it was a Ponzi scheme.

Yehuda Belsky aka Jay Bell, was charged with running a $1.25 million commodities scheme that defrauded at least 14 customers. Belsky, the owner of Y Trading LLC, had previously been barred for life by the CFTC from trading in commodities, but was holding himself out as a successful commodities trader.

Dawn Bennett, 56, was found guilty of defrauding investors in a $20 million Ponzi scheme. Bennett testified at her trial that she paid approximately $720,000 to arrange for priests to perform religious ceremonies to help her and she cast “hoodoo” spells on investigators to ward off a federal investigation. Bennett raised more than $20 million from 46 investors in connection with her luxury sportswear business, DJB Holdings later known as Province of the Dragon. Bennett and coworker, Bradley Mascho, overstated the company’s sales and liabilities to their investors. Mascho previously pleaded guilty. Bennett used the investors’ money to pay for jewelry, cosmetic medical procedures, and a $500,000 annual lease for a luxury suite at the Dallas Cowboys’ home stadium.

J.T. Bramlette, 40, and others were charged by the SEC in Utah with alleged securities violations in connection with a $10.8 million investment scheme. The scheme involved the Melrose Resort in which investors were promised false returns of up to 24% and were provided false reports and statements. Bramlette was the “ringleader of the fraud” and the others raised funds for the project through Private Placement Capital Notes II, LLC, Synergy Capital Management LLC, and Pelorus Group. Bramlette used at least $1.5 million to pay personal expenses, including trips to Disneyland, shopping sprees on Rodeo Drive, Las Vegas trips, and a Land Rover.

Kevin Brody, 54, and Matthew Eckstein, 48, of New York, were charged in connection with a $10 million scheme that allegedly defrauded 40 senior citizens. Brody and Eckstein are financial advisors who convinced clients to invest their retirement savings in their company, Conmac Funding Corp., with assurances that the investments were safe and that they would earn 4% interest.

Craig Carton, 48, has filed papers asking a court to prevent prosecutors from calling his alleged ticket scheme a Ponzi scheme or using the words “sham,” “fleece” and “fraudulent.” The court denied his request. Carton was arrested last year on charges that he was running a $4.6 million scheme in which he used money from investors in a ticket reselling business to pay his gambling debts. Carton was accused along with Michael Wright, 42, and Joseph Meli of running a ticket Ponzi scheme by soliciting investors to fund a business of buying and reselling blocks of tickets to music, entertainment and sporting events. Meli is currently serving 6½ years in prison for the scheme. Carton has pleaded not guilty.

Jean Danhong Chen, 53, and her husband, Tony Jianyun Ye, 50, along with Kai Hao Robinson, 45, Kuansheng Chen, 60, the Law Offices of Jean D. Chen,  and Tree Lined Holdings, LLC fka Tree Lined Properties, LLC were named in a lawsuit filed by the SEC in connection with an EB-5 scheme in California. The scheme brought in millions of dollars from foreign investors seeking permanent U.S. residency through the EB-5 Immigrant Investor Program. The defendants were paid over $10 million in commissions in connection with the scheme. The SEC also alleged that Chen and Ye secretly acquired and operated an EB-5 regional center, Golden State Regional Center LLC.

Kevin Cecil Drost, 61, was charged in connection with a $5 million offering fraud through Maryland-based Owings Group, LLC. Drost was a salesman, along with Brian Koslow and David Waltzer, for the scheme run by Mark Johnson. The SEC had charged the group with securities fraud earlier in the year.

Nicholas Gelfman of New York entered into a consent order with the CFTC and a default judgment was entered against and his company, Gelfman Blueprint, Inc. A $2.5 million fine was levied against Gelfman and his firm. Gelfman took in more than $600,000 from at least 80 customers who understood they were entering into contracts of sale of Bitcoin through electronic web-based Bitcoin trading platforms. Gelfman represented he had a high performing algorithmic trading computer program named Jigsaw that generated monthly profits of 7% to 11% and protected against risk. The CFTC had alleged that Gelfman created false performance reports showing positive Bitcoin trading gains and then staged a fake computer hack to further conceal losses and misappropriation.

Kevin Kyes, 70, was sentenced to 5 years in prison and ordered to pay more than $3.6 million in restitution in connection with a $7 million Ponzi scheme that targeted 60 Japanese investors. Kyes worked with a partner, John Holdaway, 74, to defraud investors through their business, Money Management Strategies. They represented that they could do high-speed trading with 100% returns on investments.

Wayne McKelvey, 55, was convicted for his role in a $54 million Ponzi scheme run through Mantria Corp. McKelvey is a former insurance salesman who raised money for the scheme run by Troy Wragg and Amanda Knorr, both of whom previously pleaded guilty. The scheme promised profits from green technology that would turn trash into fuel and “carbon-negative” housing developments. McKelvey had raised money for the scheme through his “Speed of Wealth” seminars, telling investors that Mantria was the next Microsoft and that it was “on the cusp of a revolutionary technology that’s going to change the world, and you guys can benefit from it by putting money in and getting stinkin’ wealthy.”

Raymond K. Montoya, 70, pleaded guilty to charges that he ran scheme through a pooled investment known as RMA Strategic Opportunity Fund LLC for 8 years. Montoya represented to investors that they were earning substantial returns when the fund was actually sustaining significant losses. Montoya promised investors returns from investments in stocks and bonds, but only a portion of the money was actually invested. The rest was diverted for his personal expenses such as luxury vehicles and the mortgage on his son’s residence. Montoya told investors he had $5 billion in assets in his fund when the highest amount he ever had was about $20 million.

Edward Lee Moody Jr., 47, of Virginia, was criminally charged and then pleaded guilty in connection with a 13-year scheme that collected $6.1 million from 53 investors. Moody had previously been named in an SEC lawsuit, along with his companies, CM Capital Management LLC and G.E. Holdings Corp. Moody used at least $1.4 million of the investor funds to pay business expenses, purchase a home, make car loan payments, shop, and travel to Las Vegas and other destinations.

Stephen Condon Peters, 45, of North Carolina, faced additional charges in connection with an alleged $15 million Ponzi scheme run through VisionQuest Wealth Management. Peters ran the alleged scheme by selling notes in VisionQuest Capital, and the notes were then sold to clients of VisionQuest Management. Both companies were owned by Peters. Investors were promised returns of 8%, or 9% if they chose to forego interest and reinvest. The investor funds were used by Peters to purchase, among other things, luxury vacation home in Costa Rica, a horse farm in Wake County where he lived, a Cadillac Escalade, properties in Jacksonville and Ferguson, N.C., farm equipment, a gun collection with rifles and pistols, and diamond jewelry.

Jason Rhodes, 46, of Connecticut, was arrested on charges that he allegedly misappropriated nearly $20 million in a Ponzi scheme. The scheme involved investments into a hedge fund that was supposedly purchasing securities. Rhodes allegedly defrauded 25 investors and falsified an investor account statement in at least one instance.

Ernie Julius Romer III, 57, was accused of one additional charge in connection with an alleged $3 million Ponzi scheme. Romer has been in jail for 13 months, unable to afford the $1 million bond. He has pleaded no contest and is awaiting sentencing.

Carl Frederick Sealey, 43, of New Jersey, was sentenced to 78 months in prison in connection with a Ponzi scheme that defrauded about 20 investors out of $1.6 million. Sealey is the ex-chairman and CEO of Global Standard Industries and SEK Industries and misrepresented to investors that their investments were risk free and were earn 10% interest in 90 days. He falsely claimed that his equity-investment firms had almost $50 billion in assets. Instead, Sealey spent the investors’ funds on his personal expenses for things like spa treatments, jewelry and helicopter-flying lessons and rides.

Karl James Stehlin aka Carl Davis, 63, was sentenced to 10 years in prison in connection with a $10 million scheme that he ran through Marble Bridge Funding Group. Stehin would fake invoices to companies that offered factoring services.

Carlos Uresti, 54, and Stanley Bates, 46, were charged by the SEC in connection with an alleged $11 million oil and gas fracking Ponzi scheme. Uresti, who had been found guilty by a jury on criminal charges dropped his appeal of his conviction and 12 year sentence. He also surrendered his license to practice law and resigned from the Texas Senate.

Frederick Alan Voight, 61, was charged in Nebraska in connection with an alleged $40.9 million Ponzi scheme. Voight ran the scheme through several entities, including F.A. Voight & Associates and Daystar Funding. He represented to investors that he provided financing to companies to take them through ‘commercialization to profitability.” Voight allegedly raised about $76 million from 608 investors, but only about $22 million of the funds were loaned.

Susan Margaret Werth, 57, of San Diego, California, was charged and pleaded not guilty in connection with an alleged Ponzi scheme that raised approximately $26 million. Werth ran the scheme through Commercial Exchange Solutions and Exchange Solutions Company and falsely claimed that she would use investor funds for short-term construction loans. She represented that the investments were 100% guaranteed and promised rates of returns of at least 15% on 30 to 90-day terms. Werth allegedly spent $2 million of the funds to fund her lifestyle.

Lucita “Lu” A. Zamoras, 55, of Illinois, was charged in connection with an alleged $3.5 million Ponzi scheme that defrauded at least 12 victims. Zamoras is a financial advisor who alleged preyed upon elderly Filipino families by falsely promising them safe, low-risk investments in retirement products and custom insurance services. Zamoras instead used their money to feed her gambling habit and pay her personal expenses. Zamoras operated through several businesses, including First Fidelity Tax, JQH Ventures, and Cornerstone Home Solutions.

INTERNATIONAL PONZI SCHEME NEWS

Australia

The Berlin Group, an MLM cryptocurrency scheme, is believed to be a Ponzi scheme. Joachim Pydde is the director of The Berlin Group. Laurie Suarez aka Lorenzo Suarez is the Executive Operations Manager and is a ‘convicted fraudster.’ Peter Ohanyan, the company’s Chief Marketing Officer, was promoting 3T Networks, an illegal unregistered securities offering.

Belgium

The Financial Services and Markets Authority updated its fraudulent crypto site with 21 new crypto sites that have been blacklisted. Five of those sites are no longer available, where 16 others are still operational. One of them changed its business model to video on demand services after being blacklisted.

China

More than 20 suspects were detained in connection with an alleged $14 billion Ponzi scheme called Data Tycoon involving latex bedding. Instead of selling latex products, however, they sold financial products to investors who were encouraged to bring in new investors. Investors became members of the DT Group, and over 1 million-member accounts were opened from June 2016 to August 2018.

England

Victoria Smith, 29, was sentenced to 4½ years in jail in connection with a Ponzi scheme. Smith defrauded investors by offering preferential rates in fake foreign currency schemes.

India

Asif Ashrak Malkani was arrested after evading authorities for 9 months. Malkani is the founder of Kashh Coin and defrauded investors out of hundreds of thousands of dollars. Malkani was gearing up to launch a new scheme called V-Tube.

Aalima Nowhera Shaikh, 45, the chairperson of Heera Group, was arrested on charges that investors were defrauded in Shaikh’s “Halal investment programmes.” Shaikh is accused of defrauding 10,000 investors out of Rs 500 crore.

New Zealand

Kelvin Clive Wood, 69, was charged with running a Ponzi scheme through a foreign exchange brokerage and trading business. The scheme allegedly involved 18 investors who lost $7 million. Wood entered a no plea.

Nigeria

Lizzy Efah was arrested while trying to flee from Nigeria. She has been accused of operating a Ponzi scheme named Golden Achievers, which is a Swiss gold scheme.

Poland

The DasCoin scheme is being criminally investigated. Polish authorities seized over $11.6 million from what is believed to be a Ponzi scheme involving cryptocurrency. Das Coin was a cryptocurrency launched to raise funds for a company known as Net Leaders.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

An appellate court upheld a lower court’s rejection of a stipulated amount of restitution pursuant to a plea agreement by Dean Hamilton. Hamilton had pleaded guilty to one count of securities fraud in connection with a Ponzi scheme run through Galileo Financial LLC. He had sold securities to four investors who lost a total of about $512,000. The stipulation for restitution provided that he pay $38,000 to victims at the rate of $500 per month. The court disagreed to ordered restitution in the amount of $382,085, which order was upheld on appeal. State of Utah v. Hamilton, 2018 UT App 202 (Oct. 25, 2018).

The bankruptcy judge approved the plan of liquidation for the Woodbridge Group of Companies, LLC. Woodbridge was a high-end real estate developer and operated through at least 279 companies. The scheme involved about $1 billion.  The liquidation plan was approved over the objection of some of the creditors. 

September 2018 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for September 2018. The reported stories reflect at least 8 new Ponzi schemes worldwide; about 38 years of newly imposed sentences for people involved in Ponzi schemes; 4 guilty pleas or convictions, 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. 

Stanley Bates was sentenced to 15 years in prison in connection with the Ponzi scheme run through FourWinds Logistics with co-conspirator state senator Carlos Uresti. Bates had previously pleaded guilty. Uresti was sentenced to 12 years in prison earlier in the year, and Gary Cain was sentenced to 5 years in prison. All three men were ordered to pay back their victims more than $6.3 million.

Bitconnect, Magma Foundation and Pension Rewards Platform were the subject of cease and desist orders sought by the North Dakota Securities Commissioner. The action is part of an initiative known as “Operation Crypto Sweep,” which is a multi-jurisdiction investigation and implementation effort involving about forty U.S. and Canadian security regulators. Bitconnect has previously received such orders from regulatory authorities in Colorado, North Carolina and Texas.

Wade T. Caughman, 51, of South Carolina, pleaded guilty to charges that he ran a Ponzi scheme. Caughman told investors that he had lucrative auto sales leads from local credit unions and that investors would make $800 in interest for money loaned to finance the purchase of cars that were sold to credit union members. He created fictitious auto loan and purchase paperwork to persuade investors.

Homero Joshua Garza, 33, the former CEO of GAW Miners, was sentenced to 21 months in prison and ordered to pay $9.2 million in restitution in connection with the cryptocurrency scheme involving PayCoin. GAW Miners had guaranteed investors a $20 floor price for PayCoin, but the highest price paid was $15.92. GAW, short for “Geniuses at Work,” also ran its own cloud-based wallet service (Paybase), cloud-based mining service (ZenMiner), and online discussion board (HashTalk).

Jeffrey Goldman, 52, and Christopher Eikenberry, 49, of Michigan, were charged on allegations that they were running a day-trading scheme through Nonko Trading that defrauded customers out of at least $1.4 million. Nonko targeting inexperienced traders and provided them with accounts that merely simulate actual trading. The customers’ deposits were used for personal expenses and to make Ponzi payments. The SEC had previously charged four other individuals and two entities in connection with the fraud. Naris Chamroonrat and Adam Plumer have settled the charges. Criminal charges against the other two, Yaniv Avnon and Ran Armon, are pending.

James E. Hocker, 48, was criminally charged on allegations that he was running a Ponzi scheme involving about $1.5 million. He had previously been sued by the SEC in connection with the scheme run through James E. Hocker & Associates involving the sale of insurance products and annuities. Hocker allegedly defrauded about 25 individuals and promised them returns of between 10% and 30%.

Claud R. “Rick” Koerber was found guilty on charges relating to one of the biggest Ponzi schemes in Utah history. Koerber raised almost $100 million in connection with the fraudulent real estate scheme that he ran through his companies, Founders Capital, Franklin Squires Investments and Franklin Squires Cos. 

Nemelee Liwanag Jiao, 47, was sentenced to 8 years in prison for running a Ponzi scheme that defrauded 39 investors out of about $1.9 million. The scheme victimized Filipino, African, Indian and Korean fellow medical workers. Jiao sent funds to the Philippines and bought luxury items for herself.

Kevin B. Merrill, 53, Jay B. Ledford, 54, and Cameron R. Jeziersky, 28, were indicted on charges relating to an alleged $364 million Ponzi scheme in Maryland that defrauded at least 400 victims. The three individuals invited investors to buy consumer debt portfolios from which they would profit from debt payments and flipping of the portfolios. The three men and their five companies, including Global Credit Recovery LLC, Delmarva Capital LLC and Rhino Capital Holdings LLC, were also named in a lawsuit filed by the SEC. Prosecutors allege that about $197 million was repaid to investors and about $148 million is still owed to investors.

James Bernard Moore, 57, was arrested in connection with a $17 million Ponzi scheme. Moore and his company, Universal Voicetech, Inc., were also named in a lawsuit filed by the SEC accusing them of selling fraudulent investments. The scheme related to misconduct by Renwick Haddow, 50, and his company Bar Works, Inc. Moore and his network of sales agents raised over $5 million from at least 100 investors. 

LaVerne “Vern” Moter, 50, of Colorado pleaded guilty to charges that he was running a $2.6 million real estate Ponzi scheme. Moter was supposedly buying undeveloped land in Arizona through his company, American Undeveloped Real Estate Fund. Investors were promised interest between 5% and 12% per year.

Jonny Ngo, Donato “Mick” Baca Jr., and NL Technology, LLC were sued by the SEC on allegations that they were running a Ponzi scheme. One day later, Ngo and NL Technology entered into a consent judgment agreeing to pay back $4.5 million, without admitting or denying the allegations in the complaint. The SEC alleged classic Ponzi scheme factors, such as false promises that funds would be used in a wholesale electronics import business; false promises of security; exorbitant returns for short periods of time; no meaningful legitimate business activity; and the use of new money coming in to pay prior investors and themselves, rather than for the alleged business. The scheme defrauded over 350 investors and had raised $61 million by promising returns of 5% to 15% every two weeks to 45 days.

Perry Santillo, 38, was previously charged by the SEC with running a Ponzi scheme that defrauded 637 investors and raised $102 million. Santillo, along with Christopher Parris, 38, Paul Larocco, and John Piccarreto, are accused of running the fraudulent scheme. The FBI is actively interviewing victims.

Michael Scronic, 46, of New York, was sentenced to 8 years in prison and ordered to pay more than $22 million in restitution in connection with a Ponzi scheme that defrauded 45 people out of $22 million. Investors were promised returns in the Scronic Macro Fund. Scronic had previously pleaded admitted to the scheme.

Mark S. Scott, a former partner at Lock Lorde and founder of MSS International Consultants Ltd., a private equity fund headquartered in the British Virgin Islands, was arrested and pleaded not guilty to charges that he helped launder $400 million in connection with an international cryptocurrency Ponzi scheme known as OneCoin.

Roger Dale Williams, a preacher in Kentucky, was sentenced to 63 months in prison and ordered to pay about $1.4 million in restitution after pleading guilty to running a fraudulent investment scheme that netted him $2 million. The scheme was run through Dash Holdings and more than 50 people were defrauded. Williams offered investments in stock purchases, start-ups, and bonds, and he provided investors with false IRS forms.

Michael Wright, 42, pleaded guilty to charges that he, along with co-defendant Craig Carton, ran a ticket Ponzi scheme. They were accused of soliciting investors to fund a business of buying and reselling blocks of tickets to music, entertainment and sporting events. Joseph Meli is currently serving 6½ years in prison for the scheme. Carton has pleaded not guilty.

INTERNATIONAL PONZI SCHEME NEWS 

China

Ten people were sentenced in connection with an $8 billion Ponzi scheme. Xu Qin, a founder of Zhongjin Capital, was given a life sentence, and nine others were given sentences ranging from five to 12 years. 

India

Prakash Uttekar, 58, and Venkatraman Natrajan, 60, were arrested in connection with the Royal Twinkle Star Club scheme. The company’s managing director, Omprakash Goenka, was arrested earlier this year. About 18,000 investors are believed to have been defrauded.

Vivek Bhardwaj, the brother of Gain Bitcoin founder Amit Bhardwaj, was brought in for questioning about the scheme. 

Authorities in Arizona and Illinois wrote to India’s Criminal Investigation Department seeking assistance in recovering laundered assets for victims in connection with the Bitconnect cryptocurrency scheme. The scheme is believed to have defrauded investors out of $5.66 billion by promising them 800% returns per annum. Indian authorities are investigating whether they have authority to seize assets.

Nigeria

Micheno Multipurpose Cooperative Society is reportedly running a Ponzi scheme and has stopped paying investors. 

Philippines

Marcelino Ramojal, 51, and his son, Tishiri, 28, were arrested in connection with an alleged Ponzi scheme run through I-SURE and Maximum Care Solutions. Authorities are still looking for Marcelino’s wife, Flordefe, and another son, Cliff. 

Russia

Authorities found that a group of companies operating under the name Cashberry were running a Ponzi scheme.

South Africa

Jaco Jordan, 52, was charged on allegations that he ran a Ponzi scheme that defrauded about 120 victims by convincing them to invest half of their pension money into his scheme. He promised them they would double their money through their investments.

Thailand

Victims of an alleged Ponzi scheme run by Khon Kaen, 46, sought to have her arrested. The scheme involved 300 investors who were promised large returns but were cheated out of 40 million baht.

Uganda

Police arrested Simon Musinguzi and Daniel Kalyango in connection with an alleged scheme run by Adsan Enterprises that allegedly defrauded investors out of Shs812. The scheme involved cryptocurrency ventures. Adsan had started as a company that supplied chicks to poultry farmers at a subsidized price but later began channeling money into cryptocurrency.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

A group of 836 foreign investors sued People’s United Bank in connection with the Jay Peak Ski Resort Ponzi scheme. The investors allege that the bank misappropriated their funds.

Investors are seeking to certify a class in a case against GAW Miners LLC and ZenMiner LLC in an alleged cryptocurrency Ponzi scheme involving the sale of “miners” of virtual currency. 

Notice of a previously sealed lawsuit brought by the SEC against 1 Global Capital LLC and its former CEO, Carl Ruderman, was made public. The lawsuit accused them of fraudulently raising more than $287 million and misappropriating at least $35 million of that. 

Proskauer Rose agreed to pay $63 million to settle claims brought by investors in the R. Allen Stanford Ponzi scheme. 

A court ruled that U.S. securities laws can be used to prosecute fraud cases relating to cryptocurrency offerings. The decision relates to charges that Maksim Zaslavskiy fraudulently took at least $300,000 from investors in a cryptocurrency scheme called REcoin, which he claimed was backed by real estate, and another cryptocurrency called Diamond, which he claimed was backed by diamonds. 

August 2018 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for August 2018. The reported stories reflect at least 7 new Ponzi schemes worldwide; about 20 years of newly imposed sentences for people involved in Ponzi schemes; 2 guilty pleas or convictions, 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. 

Arthur Lamar Adams and Madison Timber Properties LLC were the subject of an SEC complaint accusing them of running a multi-million dollar Ponzi scheme. Adams had previously pleaded guilty to charges brought in Mississippi. Investors were told their money would be used by MT Properties to acquire timber-harvesting rights from landowners. Investors were promised returns of 12% to 15%. More than $100 million was invested by more than 250 investors. Adams’ sentencing in his criminal case has been delayed until October.

Michael D’Alessio, 52, was arrested on charges relating to an alleged Ponzi scheme in New York. Alessio sold investments for real estate projects through his firm, Michael Paul Enterprises. Instead of generating promised returns, however, Alessio use the funds to pay his own debt, to gamble and for other personal expenses.

Jerome H. Cohen, 63, and his son, Shaun D. Cohen, 39, were sued by the SEC in connection with an alleged $135 million Ponzi scheme run through Equitybuild Inc. and Equity Build Finance. The scheme allegedly defrauded about 900 investors and promised returns of 12% to 20% from a real estate scheme that supposedly identified undervalued property. EquityBuild is a Florida corporation with an office in Chicago and solicited funds from investments in Chicago real estate projects. 

John “Jack” William Cranney, 77, of Texas was sentenced to 5 years in prison in Massachusetts and ordered to pay more than $5.5 million in restitution in connection with a $6 million scheme that defrauded 15 investors. Cranney created shell companies and convinced victims to transfer their IRA and 401k retirement funds to him, including Employee Stock Ownership Plan. He spent the money on personal expenses and to prop up his failing nutrition products distributorship.

Randall Alan Finer, 55, pleaded guilty to running a Ponzi scheme in Iowa. Finer raised $887,700 from investors for his day-trading operation but used more than half the money on personal expenses and to pay promised returns to earlier investors.

Gilbert Fluetsch, 52, was barred by the SEC from the securities industry. Fluetsch was the chief operating officer of California-based Hoplon Financial Group and was alleged to have assisted Daniel B. Vazquez Sr., the company’s owner, in creating the New Economic Opportunities Fund I, or NEON. The Fund was to pool investor funds to purchase and flip real estate. They sold membership units in the fund totaling $2.18 million to 27 investors. The funds were misused on unrelated business or personal expenses.

Michael James Frew, 70, was indicted in Nevada on charges that he ran a real-estate related Ponzi scheme. Investors understood that Frew would invest their funds in real estate in the United States and abroad, but Frew instead spent the money on personal expenses, to speculate in the stock market, and to repay earlier victims a portion of their investment.

Evan Greebel, 45, was sentenced to 18 months in prison and ordered to pay $10 million in restitution for his role in the scheme run by Martin “Pharma Bro” Shrekli. Shrekli was previously found guilty of securities fraud for running a Ponzi scheme involving his biotechnology company Retrophin Inc. Greebel was outside counsel for Retrophin and was found guilty of scheming with Shkreli to commit fraud.

Barry M. Kornfeld, Ferne Kornfeld, Lynette M. Robbins, Andrew G. Costa, Albert D. Klager and their companies, including Knowles Systems Inc., were sued by the SEC and accused of selling retail investors more than $243 million in unregistered securities in Woodbridge Group of Companies LLC to more than 1,600 investors. Woodbridge was allegedly running a $1.2 billion Ponzi scheme. Robbins was the highest-earning external agent of Woodbridge, receiving at least $8.1 million in commissions.

Hector May, 77, was accused of running a Ponzi scheme that stole millions of dollars from a company’s pension plans. May was a financial adviser whose advisory firm, Securities America, operated as Executive Compensation Planners.

Edward Lee Moody Jr., 47, and his Virginia-based company, CM Capital Management LLC, were sued by the SEC, claiming that Moody embezzled over $2 million and paid out $1.4 million in a Ponzi-like fashion. 

John K. Moore aka Kevin Moore was found guilty of running a Ponzi scheme in Montana. Moore had been charged with defrauding 36 investors out of $2.7 million through his mining company called Big Sky Mineral Resources and a fine art investment company called Glacier Gala. Moore had previously been convicted in the late 1980s for defrauding a victim out of $75,000 in a gold coin scheme.

Daniel Rivera, 48, was indicted in New Jersey on charges that he ran a scheme through a company called Robbins Lane Properties, Inc. Rivera, a financial advisor, misrepresented that the company employed real estate professionals who would use the investments to fund real estate ventures. The investors were promised monthly returns based on “secure real estate investments in the company’s portfolio.” Rivera spent the money on personal expenses and his child’s tuition and sorority fees.

Brandon Walton Stewart, 33, pleaded guilty to charges that he ran a $13.5 million Ponzi scheme. Stewart was arrested in Dallas and extradited back to Orange County, California. He had promised investors that he would invest their money in stocks such as Facebook, but he instead spent the money on himself.

Cory Ryan Williams, 40, of Arizona, was sentenced to 7 years in prison for running a Ponzi scheme that brought in about $13 million from about 50 victims. Williams promised investors returns of 5% weekly but he lost more than $8 million in trading stock futures. Williams and his company, Williams Advisory Group, were previously charged by the CFTC with running a commodity futures fraud, promising to invest funds using his expertise and based on his supposed profitable past.

INTERNATIONAL PONZI SCHEME NEWS 

Canada

Authorities have alleged that Todd Norman John Bezzasso, Bezzaz Holdings Group Ltd., Nexus Global Trading Ltd., Wei Kai Liao aka Kevin Liao, and Florino Corsi, were running a fraudulent investment scheme. Bezzasso was the sole director and officer of Bezzaz and Nexus, Liao was a finder for Bezzaz, and Corsi was a finder for Bezzaz and Nexus. About $5 million was raised from about 85 investors who were promised monthly returns in various investments. The returns promised ranged from 5% to 30% for periods of one to 6 months.

China

Linlijia Commerce and Trade wound up all of its stores when its sole investor, Shanlin Shanghai Financial Information Service, was busted for running a Ponzi scheme. Shanlin was running a peer-to-peer lending operation and when its accounts were frozen it was no longer able to inject cash into Linlijia’s accounts.

England

Freddy David, 49, was sentenced to 6 years in prison. He admitted to stealing about $19 million from about 55 people in a Ponzi scheme by selling them fake investments through HBFS Financial Services, a wealth management company. David targeted mostly Jewish victims from his synagogue. The rabbi of the congregation apologized for calling David up to read a blessing, not knowing that David had defrauded members of the congregation. David lost much of the money on gambling websites.

India

Ganesh Hazare, the director of Atharva4U Infra and Agro Pvt Ltd., and Shivaji Nikale, the managing director, were arrested in connection with an alleged Ponzi scheme run through the companies. The scheme promised investors that they would double their money in a period of 5 years, triple their money in 7 years, and make 4 times their money in 10 years. 

The Ponzi scheme run through GainBitcoin saw two more suspects arrested. The scheme defrauded victims out of $150 million. The individuals had close ties to Amit Bhardway, the individual who started GainBitcoin.

Divyesh Darji was arrested upon his arrival from Dubai for his role in the Bitconnect scheme. Darji is the Asia head of the scheme which was shut down by regulators in Texas and North Carolina.

Gardas Ramesh and four others were arrested at the premises of GRM Estates on charges that they defrauded over 1,200 investors out of $1.43 million in a Coinx Trading cryptocurrency scheme.

Taiwan

Thirteen executives and employees of Maxim Trader Group were found guilty of defrauding investors out of about $453 million. The firm was supposedly engaged in foreign exchange trading and other investment opportunities and promised investors between 3% and 8% per month, and as much as 98% per year. About 50,000 people from Taiwan, Southeast Asia, Hong Kong, China, Japan, South Korea and Australia invested with the company before it collapsed in 2015. Chang Chin-su, the chief executive, was sentenced to 11 years in prison, and Chia Hsiang-chieh, the chief assistant, was sentenced to 9 years. Chang’s sister, Chang Mu-tan, was sentenced to 5 years. Maxim had claimed that it was an affiliate of Royale Globe Holding, a NASDAQ-listed company. Malaysian authorities earlier this year indicted Andrew Lim Ann Hoe, the chief executive of Maxim Capital, and company executives Chin Ming Kam and Goh Seow Mooi on charges relating to a scheme known as the Maxim Trader Compensation Plan. Malaysian investigators estimated that 50,000 investors around Asia had lost a total of US $5 billion.

Thailand

Officials in Thailand are seeking the extradition of four Singapore citizens believed to be involved in the Eagle Gates Group Ponzi scheme. The scheme has resulted in losses of about $9.8 million and 250 Thai and foreign investors. U.S. national, Derrick Matthew Keller, has been detained as an alleged accomplice and has admitted that he was an actor that was hired by the CEO of Eagle Gates to deceive investors in China, Hong Kong, Macau, Malaysia and Thailand.

Uganda

Charles Nwabuikwu, 44, was arrested on charges that he ran a Ponzi scheme through Development Channel that defrauded Ugandans. The company described itself as “the world’s most comprehensive platform for increasing access to basis development needs between the developed and under developed countries and communities.” 

The Bank of Uganda released a statement cautioning the public against investing in businesses which sound too good to be true. The Bank stated that if a business guarantees high returns with little risks of losing the investment, it is false. 

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

City National Bank agreed to pay $33 million to settle claims that it aided and abetted a Ponzi scheme run by Nationwide Automated Systems Inc. The scheme involved the sale of ATM machines to investors who were promised $.50 from each ATM transaction.

About $16 million is being distributed in the Thomas Petters Ponzi scheme case.  The payments will go to about 360 investors.

Proskauer Rose LLP and the receiver in the R. Allen Stanford $7 billion Ponzi scheme reached a $63 million settlement of claims against the law firm in connection with the scheme. The firm admits no wrongdoing in the settlement.

A putative class of investors settled with United Development Funding IV to resolve claims that the company and covered up its “Ponzi-like” nature.  The settlement is for $13.5 million.

July 2018 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for July 2018. The reported stories reflect at least 10 new Ponzi schemes worldwide; over 40 years of newly imposed sentences for people involved in Ponzi schemes; 3 guilty pleas or convictions, 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.

Michael R. Casey, 71, faced charges in Texas that he defrauded 700 people through an online commodities business called Commodities Online LLC that allegedly ran a $19 million Ponzi scheme.  Casey had been on the run for 4 years. He had first worked as outside counsel for the business and later became its president. Investors were promised returns of 33% to 35%.

Dillon Dean, 26, was fined $1.9 million for defrauding about 600 investors in a Bitcoin scheme. A court in New York ordered a default judgment against Dean and his company, The Entrepreneurs Headquarters Limited, finding that they engaged in a fraudulent scheme involving Bitcoin. Dean, who has disappeared, claimed that investors could earn returns between 15% and 50%. Starting in August 2017, Dean claimed that his site had been hacked and he stopped paying returns. Meanwhile, Dean started another website called “Real Trade Profits,” which also solicited investments in Bitcoin.

Sergio Delmico and his companies MNV Energy LLC and MNV-K LLC were sued by a group of investors accusing the gas station operators of running a fraudulent scheme. Wellington Siqueira Vilela and Ricardo Botos da Silva Neves were also named in the lawsuit. The defendants are alleged to have been running a Ponzi scheme, which promised investors 1% returns per month from the gas station operations.

Francisco Plascencia Esparza, 46, was sentenced to 6½ years in prison in connection with a $12 million real estate Ponzi scheme. Esparza previously pleaded guilty to the scheme in which he told investors he would be acquiring real estate with their funds. About 70 investors were defrauded in the scheme.

Carolyn Grant, 63, was sentenced to 6½ years in prison in North Carolina and was ordered to pay restitution of $13.5 million for her role in a Ponzi scheme that defrauded more than 65 people out of $13 million.

Bobby Eugene Guess, 66, was sentenced to 12 years in prison for his role in a $6 million Ponzi scheme. The scheme defrauded investors by promising them returns from an internet advertising company. Guess hosted a radio show called “Dollars & Sense” and held investment seminars.

Cameron J. Hager, 42, pleaded guilty to charges in connection with a $4.7 million Ponzi scheme relating to the sale of cattle. The scheme, run in Missouri, defrauded 89 investors through a business called 5A Holdings, LLC. Investors understood that their funds would be used to purchase herds of cattle that Hager said he could sell for substantial profit. Investors were promised returns of 23% to 28%.

Michael Kwasnik, 48, formerly of Kwasnik & Associates, and his father, William Kwasnik, 69, were ordered to pay $36.88 million to the New Jersey Fund for Client Protection and the Pennsylvania Lawyers Fund for Client Security. Both men have been charged with operating a Ponzi scheme and diverting money to their business entities, including Liberty State Financial Holdings Corp., Liberty State Benefits of Delaware, Liberty State Insurance Services, Oxbridge Investors Fund, OPIS Management Fund and Capital Management of Delaware. About $13 million was taken from about 40 clients.

Luxe Vacation Homes and its owner, Justin Steubs, have been accused of running a rental Ponzi scheme, using current rental income to pay off future rentals. The company was an agency that rented out short-term rentals for homeowners in Palm Springs, California. Luxe was taking money from future rentals to pay off current rentals.

Edward Lee Moody, Jr., 47, and CM Capital Management LLC were charged with defrauding 60 investors in a $4.94 million Ponzi scheme in Virginia. The SEC is also seeking disgorgement from G.E. Holdings, a company allegedly controlled by Moody.

Vance Moore II, 64, was arrested in connection with an alleged Ponzi scheme run with co-defendant, Walter Netschi, 62. The scheme involved $80 million in an ATM scam in which investors believed they were buying automated teller machines to be placed in convenience stores, shopping centers, hotels and other locations. Investors believed that Moor and Netschi had 4,000 machines when in reality they only had about 400. Moore’s company, ATM Financial Services, would supposedly process, operate and maintain the machines.

Steven Pagartanis, 58, was arrested on charges that the he ran a real estate related Ponzi scheme for more than 18 years. The scheme allegedly defrauded at least 17 victims by promising them 4.5% to 8% annually. The victims, mostly elderly women, invested over $13 million and sustained losses of over $8 million. The money was supposed to be invested in Genesis Land Development, a publicly traded company based in Canada, but Pagartanis instead invested the money into a shell company that he controlled called Genesis I Holdings.

Daniel B. Rudden, 71, confessed to running a $55 million Ponzi scheme through his business, Financial Visions. The scheme promised returns of 12% from supposed funeral funding services to more than 600 funeral homes and cemeteries. About 150 investors were defrauded in the scheme. Rudden was subsequently arrested in Colorado. The SEC then froze the assets of a group of companies operating under the Financial Visions name.

Perry C. Santillo Jr., First Nationale Solution LLC, Christopher Parris, Paul Anthony Larocco, John Piccarreto, Thomas Brenner, Percipience Global Corporation, and United RL Capital Services were sued by the SEC and accused of running a Ponzi scheme that defrauded 637 investors. The scheme allegedly defrauded investors by falsely representing that their funds would be invested in in fields such as financial services, insurance, real estate development, and medical laboratories. Some of the assets frozen in connection with the alleged $102 million Ponzi scheme were unfrozen when found to be part of a separate business.

Sherman C. Vaughn Jr., 47, was ordered to forfeit $8 million generated by him and former Philadelphia Eagles linebacker Merrill Robertson Jr., 38, in a Ponzi scheme run through Cavalier Union Investments LLC.

Kevin Wanner, 56, was sentenced to more than 11 years in prison in connection with a Ponzi scheme he ran through Questar Capital Corporation dba Precision Financial. Wanner defrauded 66 investors in North Dakota by selling fictitious brokered certificates of deposits and unregistered interests in pooled investments.

INTERNATIONAL PONZI SCHEME NEWS

Canada

Timothy Ray Carruthers, 59, was charged with running a fraudulent scheme through Wakina Consulting Inc.  The scheme involved $5.5 million in what has been labeled as a mortgage Ponzi scheme. It is alleged that Carruthers facilitated 257 fraudulent loans, promising investors monthly interest payments and administration fees on the loans.

England

Freddy David was sentenced to 6 years in prison for defrauding 55 victims out of £14.5 million in a Ponzi scheme. David, a wealth manager, pleaded guilty to defrauding his victims by promising them 8% interest per year when their money was locked in a bank account for 3 months to 5 years. 

Germany

Jörg Biehl, 56, was sentenced to 8 years in prison in connection with a Ponzi scheme run through 22 companies known as the Infinus Group. Biehl was accused of defrauding 22,000 investors out of $375 million, although it is believed that the scheme involved more than 50,000 investors and €2 billion. Infinus started in 2001, buying life insurance policies and offering the owners improved surrender values. The money that was freed up as a result was then invested in other products offered by Infinus, such as fixed-interest bonds, registered bonds, and profit participation rights.

India

The offices of Pailan Group and the home of Apurba Saha were raided by authorities after the company was accused of running a Ponzi scheme.

Regulators claim that Heera Islamic Business Group, aka Heera Gold, were running a Ponzi scheme.  Heera Gold is headed by Dr. Aalima Shaikh Nowhera and the company claims to be a gold trading company with businesses all over the world. The company targeted the Muslim community, promising high returns and making references to “Allah” to convey a devout image to investors.

Amit Bhardwaj, the promoter of the GainBitcoin scheme who is currently in prison, has offered to pay investors back their principal investment. There are over 100,000 investors who were promised monthly returns of 10%. The victims have demanded that they be compensated in an amount equal to the value of the bitcoins today.

Charges were filed against the directors of Samruddha Jeevan Multi-State Multi Purpose Co-operative Society Ltd, Mahesh Kisan Motewar and Prasad Kishor Paraswar. The scheme promised to provide cattle and goats as well as high rates of return to investors.

New Zealand

Lance Jack Ryan aka Lance Jared Thompson, 44, and Jimmie Kevin McNicholl, 56, were convicted in connection with a Ponzi scheme that defrauded 900 investors. Ryan was sentenced to 7½ years in prison while McNicholl received 11 months’ home detention and community service. The scheme was run through BlackfortFX and promised returns from a “straight through processing” foreign exchange trading platform.

Thailand

Chinnawat Noiwan was arrested in connection with a scheme he operated through OD Capital. It is believed that 500,000 people may have been defrauded in connection with the scheme. 

Turkey

The founders of Turcoin, an alternative digital currency, were arrested. Sadun Kaya and Muhammed Satiroğlu were arrested after the scheme involving $211 million was revealed to be a Ponzi scheme. Turcoin was established by Hipper and stopped paying returns in June. Satiroğlu denies the claims and stated, “I have not fled with the money. I will return all the money to the members if authorities unblock my bank accounts. Actually they are the ones who are involved in serious corruption.”

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

A class action against JPMorgan Chase & Co. was settled for $4.6 million in connection with the Ponzi scheme run by William Wise. Almost 200 investors alleged that JPMorgan overlooked suspicious activity in connection with the scheme, accusing it of aiding and abetting the scheme run from Millennium Bank.

YouTube was added as a defendant to a class action lawsuit against BitConnect. Thousands of investors were reached through YouTube, and YouTube was accused of failing to protect its users from BitConnect-promoting content, by not delisting and demonetizing videos about it. Reports state that the scheme’s promoters posted over 70,000 hours of BitConnect-related content on YouTube, which received over 58 million views. Google, Facebook and Twitter have all banned crypto-currency-related ads.

JPMorgan Chase & Co. was accused by investors of aiding and abetting a Ponzi scheme run by Renwick Haddow. The investors in Bar Works Inc. claim that the bank turned a blind eye to the scheme. Haddow, who identified himself as Haddow, then used a fake alias, Jonathan Black, to raise funds from investors. Haddow solicited investments in start-up companies he created, including Bitcoin Store (a purported online platform for Bitcoin trading) and Bar Works (an entity that claims it was adapting former restaurants and bars into co-working spaces). The investments were solicited through InCrowd Equity, Inc., which claimed it was a crowdfunding portal through which investors could purchase shares. 

A proposed class of investors reached an $18.5 million settlement with the law firm Tonkton Torp LLP in connection with the scheme run through Aequitas Management LLC.

June 2018 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for June 2018. The reported stories reflect at least 9 new Ponzi schemes worldwide 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. And please remember that I am just relaying what’s in the news, not writing or verifying it.

Matthew Eckstein, 48, was charged in connection with an alleged $5 million Ponzi scheme that defrauded 14 people. Eckstein ran the alleged scheme through Conmac Funding, promising a risk-free investment at 4% over 2 years. Eckstein is a financial advisor who started Sisk Investment Services Inc. in 2015, but used the money to fund other business enterprises or for his personal use, rather than investing into Conmac Funding. Eckstein pleaded not guilty.

Randall Finer, 54, pleaded guilty to charges relations to a Ponzi scheme run in Iowa. The scheme brought in more than $800,000, and he is accused of diverting 52% of the money into his own accounts for living expenses.

Jesse Harris and his company Harris Custom Projects were the subject of an asset freeze sought by the Kansas Securities Commissioner who alleged that Harris was running a $5.5 million Ponzi scheme. Harris used investor funds to purchase a house, car and furnishings for his home.

James E. Hocker, 48, was charged by the SEC in connection with an alleged Ponzi scheme that promised investors 10% to 30% returns from an insurance scheme. Hocker promised guaranteed returns from investments he would supposedly make on the investors’ behalf in the S&P 500 and other investment vehicles. Hocker was selling insurance products and annuities under the name James E. Hocker & Associates. The investors withdrew money from their life insurance policies or retirement accounts to invest with Hocker. Hocker raised approximately $1.27 million from about 25 investors.

Ralph T. Iannelli and his leasing company, Essex Capital Corp., were accused by the SEC of running an $80 million Ponzi scheme. The scheme involved 70 investors and promised them returns of 8.5% to 10%. Essex Capital was supposedly going to use 100% of investor funds to purchase equipment and investors would be paid back within 3 years. The SEC alleged that Essex only spent about 9% of the capital raised from investors and through bank loans.

Brian D. Jones, 38, pleaded guilty to charges that he ran a Ponzi scheme in connection with his cattle broker business in Indiana. Jones took $473,000 from his victims, promising them large returns from the buying and selling of bull calves from dairy farms in Wisconsin to cattle ranches in Texas and Missouri. Jones used investor funds from gambling and his personal benefit.

Mitchell Klein faced sentencing in connection with a Ponzi scheme that defrauded investors out of $60 million. Klein had pleaded guilty in February to running the scheme with John Magee and Burton Dorfman through FKF 3 LLC. Magee and Dorfman were not charged in the case.

Alex Reaves Lundin, 26, was sentenced to 2 years in prison in connection with her role in a Ponzi scheme run by her husband, Jeremy Lundin. Jeremy Lundin previously pleaded guilty to the scheme he ran through Big Island Capital in which he defrauded at least 51 people out of $1 million. Alex Lundin assisted her husband in soliciting new investors and assuring investors that their funds were safe.

Billy Wayne McClintock, 76, was sentenced to 10 years in prison for his role in a Ponzi scheme that brought in more than $20 million  from over 220 investors in Minnesota. McClintock ran the scheme with Diane Alexander, and they offered investors 38% annual returns from supposed investments in Europe.

Perry Santillo, 38, and Christopher Parris, 38 were charged along with Paul Anthony LaRocco, 55, John Piccarreto, 34, and Thomas Brenner, 55, in a civil lawsuit brought by the SEC with running a $102 million Ponzi scheme that defrauded 637 investors. Santillo and Parris would “buy or take over books of business of retiring investment professionals from around the country.” The other three defendants would then persuade clients to withdraw their money and invest in First Nationle Solution, Percipience Global Corp., and United RL Capital Services. Santillo used at least $13.4 million fund a lavish lifestyle. Investors have sued Bank of America along with the five individuals for allegedly aiding and abetting the $102 million scheme. 

Carl Frederic Sealey, 43, pleaded guilty to running a $1.6 million Ponzi scheme through Global Standard Industries Inc. and SEK Industries Inc. Sealey is a Philadelphia investment adviser who used investors funds to fund his own lavish lifestyle instead of using the money to finance real estate deals. Sealey claimed to have more than $15 billion in domestic assets and another $33 billion offshore. Investors were told their investment was risk-free and they would get their money back in 90 days. When there was a delay, they were told they could get their money back more quickly if they invested additional funds for other deals.

Carlos Uresti, 54, was sentenced to 12 years in prison and order to pay $6.3 million in restitution. Uresti, a Texas senator who was convicted on charges relating to a Ponzi scheme run with co-defendant Gary L. Cain, resigned from his senate seat in advance of his sentencing. Cain was sentenced to more than 5 years in prison. A jury found Uresti and Cain guilty in connection with the fracking enterprise run through FourWinds Logistics. FourWinds CEO Stanley P. Bates pleaded guilty earlier this year.

James VanBlaricum and six others were charged by the SEC in connection with an alleged oil and gas Ponzi scheme in Texas. The alleged scheme was run through Texas Energy Mutual LLC fka Texas Energy Management. Also included in the complaint were Rodney Pope, Chet Inglis, Robert  Gilliam, Matthew Leaverton, William Hill and Erik Rhodes. The complaint alleges that the defendants raised over $10 million by guaranteeing returns from the use of their funds to drill oil wells.

Thomas Michael White, 59, John Kevin Reech, 56, and Joseph Mario Genzone, 53, were indicted in Miami on charges relating to an alleged Ponzi scheme. The three defendants alleged solicited investors to buy shares of stock in First Call Ventures LLC and its subsidiaries, promising investors a 100% return and that their money was safe.

INTERNATIONAL PONZI SCHEME NEWS 

Australia

Poker professional William “Billy” Jordanou, 59, pleaded guilty to charges that he ran a $72 million Ponzi scheme, along with Robert Zaia, 54. Jordanou admitted to using forged documents to receive loans from clients to supposedly fund property development.

Canada

Rashida Samji was ordered to surrender herself following dismissal of her appeal on her conviction on charges that she defrauded nearly 284 investors in a $110 million Ponzi scheme. She was sentenced to serve 6 years in prison.

Cambodia

Authorities warned of risks of buying, selling or trading cryptocurrencies without getting a license. They warned investors of potential losses due to the volatile nature of cryptocurrency as well as the risk of hacking.

Cayman Islands

A Cayman Islands court dismissed rival claims made by a Saudi Arabian family and a Kuwaiti-born businessman, finding that both sides defrauded banks out of about $126 billion in a Ponzi scheme. The al-Gosabis and Maan al-Sanea blamed each other for their losses.  Ahmad Hamad al-Gosabi and Brothers (AHAB) and Saad Group are owned by al-Sanea, had sued each other for fraud relating to a Ponzi scheme run through a unit of AHAB known as the Money Exchange. Sanea had married into the al-Goasbi family and was managing director of Money Exchange. The al-Gosabis allowed al-Sanea to use the Money Exchange for “massive personal borrowing.” The Money Exchange had raised about $126 billion by fraudulently borrowing funds from at least 118 banks around the world.

India

Authorities detained Tah Kazi in connection with a cryptocurrency Ponzi scheme run through Finstone Group, called Money Trade Coin (MTC) estimated to have involved around Rs 300 crore to Rs 500 crore.  The director, Amit Lakhanpal, absconded along with four others. The scheme promised investors ten-fold returns in 5 to 6 months.

Authorities attached 47 properties of Royal Twinkle Star Club and Citrus Check Inns Ltd. The promoter of the scheme, Om Prakash Goenka, is currently in prison.

Authorities began searches of the offices of Atharva 4 U Infra and Agro Pvt Ltd. in connection with an alleged Ponzi scheme. The scheme promised investors that they could double their money from investments in construction, travel and tourism, educational institutions, hotels and resorts. Shivaji Niphade, Ganesh Hajare, Sachin Gosavi and Mukesh Sudesh are all named in the scheme.

Six people were charged in connection with an alleged crypto Ponzi scheme run through NCR Coin LLP. The director of the scheme, Rohit Kapopara, allegedly devised a fake kidnapping and said that all of the company’s digital holdings had been acquired by a kidnapper.

Turkey

Turcoin, an alternative digital currency, was revealed to be a Ponzi scheme. Turcoin was established by Hipper, which was founded by Muhammed Satiroğlu and Sadun Kaya. The scheme stopped paying returns in June and the Hipper executives left Turkey with 1 billion Turkish Lira ($211 million). Satiroğlu has joined investors in suing Kaya, alleging that his partners, and not he, stole the money. Kaya is also involved with Anafis, Inc., another company involved in the scheme.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

The trustee of the Bernard Madoff Ponzi scheme reached a settlement with J. Ezra Merkin and his two funds, Ascot Partners LP and Ascot Fund Ltd., along with Gabriel Capital Corp. Merkin and his companies, who lost money in the scheme, are to pay $280 million and will be allowed a $502 million claim in the case. The distribution, however, will be used to fund the settlement.

JPMorgan Chase agreed to pay $4.6 million to settle a proposed class action that accused the bank of aiding the Millennium Bank Ponzi scheme run by William Wise. Investors allege that JPMorgan allowed Wise to steal millions of dollars from accounts held at the bank despite numerous signs that he was running a fraud.