May 2018 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for May 2018. The reported stories reflect at least 15 new Ponzi schemes worldwide; 5 convictions and guilty pleas; over 26 years of newly imposed sentences for people involved in Ponzi schemes; and an average age of approximately 55 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.

Arthur Lamar Adams, 58, was charged in connection with his role in a Ponzi scheme in Mississippi. Adams pleaded guilty and admitted his company was a Ponzi scheme. The scheme was run through Madison Timber Properties LLC, Madison Timber Fund LLC, and Madison Timber LLC. More than $100 million was invested by more than 250 investors from at least 14 states. The criminal charges were filed after the SEC filed its lawsuit. Adams allegedly falsely represented that Madison Timber Properties was in the business of buying timber rights from landowners and then selling those rights to lumber mills at a higher price. Only a few such timber rights or contracts existed. The investors were guaranteed returns of 12% to 13%. The SEC then filed an action to appoint a receiver over the assets of Adams.

Kenneth Brewington, 53, of California was convicted on charges relating to a $3 million Ponzi scheme run through Compass Financial Solutions. Brewington and his co-conspirators, William E. Dawn, 80, and Brian G. Elrod, 61, previously pleaded guilty to their roles in the scheme.

  

John (Jack) William Cranney, 76, was convicted in connection with a $6 million Ponzi scheme that defrauded 15 investors. Cranney defrauded his friends and business associates by representing that he was investing their money in a fund or retirement plan. Instead, he spent the money on personal bills and put money into his failing nutrition products distributorship.

Seth Adam Depiano, 37, was sentenced to 12 years and seven months in prison and ordered to pay more than $19.6 million in restitution following his guilty plea regarding a Ponzi scheme he ran through The Rental Group, US Funding and Home Services LLC, and Draymond Homes. Depiano had promised investors returns from the purchase and resale, or rental of real properties. He falsely represented high occupancy rates to lure in investors.

Jeffrey Lynn Gentry, 40, was sentenced to 3 years in prison in Tennessee and ordered to pay back more than $10.4 million in restitution in connection with a $43 million Ponzi scheme run through Gentry Brothers Tractor Supply that caused losses of more than $10 million. Gentry convinced investors to pull money from their retirement and savings accounts, promising them returns of 6% to 10% from investments in farming equipment that would supposedly be used to fulfill state government contracts. The scheme defrauded more than 50 people. Gentry previously pleaded guilty to the scheme.

Barry and Fern Kornfeld, and their company FEK Enterprises dba First Financial Tax Group, were the subject of an administrative complaint by Florida regulators, who accused them of selling unregistered securities to investors in the Woodbridge Group of Cos. Ponzi scheme. The Kornfelds are accused of selling at least 529 unregistered notes in 5 Woodbridge related funds for approximately $40 million. Other defendants named in the case are Andrew Grigsby Costa and Costa Financial Insurance, James Gilchrist, Albert Klager and Atlantic Insurance & Financial Services Inc., Lynette Robbins, and Knowles Systems.

Kevin Kyes, 69, was found guilty in connection with a Ponzi scheme that defrauded Japanese investors. Codefendant John Holdaway, 73, pleaded guilty last year. The investors were defrauded out of $6.8 million through a business called Money Management Strategies. Investors were told that the high-speed trading programs had historic returns of more than 100% annually.

Yasuna J. Murakami, 45, was sentenced to 6 years in prison and ordered to pay about $10.5 million in restitution in connection with a scheme he ran through MC2 Capital Management LLC and MC2 Canada Capital Management LLC. Murakami established the investment advisory firms and managed three hedge funds: the MC2 Capital Partners Fund, MC2 Capital Value Fund, and MC2 Capital Canadian Opportunities Fund. The SEC had filed charges against Murakami and his former business partner, Avi Chiat, last year and the Massachusetts Securities Division also filed civil fraud charges.

James Nickels, 67, of Wisconsin, was charged in connection with a scheme he ran through a business called “Fiscal Concierge.” The scheme brought in over $5 million from investors and caused losses of over $3 million.

Steven Pagartanis, 58, pleaded not guilty to charges that he ran a $7.5 million Ponzi scheme. The SEC, which also filed a complaint against Pagartanis, has alleged that the losses were $8 million.  Pagartanis ran the scheme through Omega Planning Associates and defrauded elderly investors. The SEC alleged that Pagartanis defrauded at least nine retail investors that were his long-standing brokerage customers.

Paul W. Smith, 63, was sentenced to 5 years in prison in Pennsylvania in connection with a $2 million Ponzi scheme. Smith had been accused criminal and by the SEC in a civil suit for running a scheme for 25 years. The scheme defrauded about 30 investors in an investment advisory scheme Smith ran through The Haverford Group.

Shawn Patrick Watkins, 48, pleaded guilty in connection with a $3.4 million real estate investment scheme. The scheme defrauded about 50 investors through real estate investment seminars conducted in California under the name The Equity Growth Group Inc. Victims were told that their money would be used to acquire or repair properties or that their money would be used as “bridge loans” to allow the company to acquire properties when money from another investor had not been received. Investors were told that there were hundreds of properties generating rental income and that the company was acquiring new properties to continue its growth. In reality, the company was not acquiring new properties and investor funds were used to pay mortgages on three homes purchased and occupied by Watkins and his family. Co-conspirator Angel Bronsgeest, 55, had earlier pleaded guilty to one count of wire fraud in connection with the scheme.

INTERNATIONAL PONZI SCHEME NEWS

Australia

Aimee Pitman, 26, and a 32-year old man were charged with running a Ponzi scheme that defrauded investors out of $800,000. The scheme persuaded investors to buy a share of an automatic teller machine, but the ATMs either didn’t exist or were owned by someone else.

Botswana

Authorities shut down foreign exchange trader Aquapanel Limited after concluding that it was running a Ponzi scheme. The company is owned by Motswana Shima Moeng Phorie, 28.

Canada

Joshua James Tenhove was charged with fraud relating to an alleged $10 million Ponzi scheme. The scheme was run through Silvertip Energy that sold or rented light towers with the same serial number to multiple investors and sold or rented units that were never manufactured.

Arnold Breitkreutz, 70, and Susan Way, 67, were charged in connection with an alleged Ponzi scheme that lured in more than $27 million from investors. The scheme was run through Base Finance and involved mortgage lending.

China

Two suspects were detained in connection with an alleged Ponzi scheme that took in over 300 million yuan (US$47 million) from over 8,000 people. The scheme was run through an investment management firm called Jielang and promised investors an 8% to 12% return on financial products. Around 80% to 90% of the victims were retirees.

Six people were arrested for allegedly defrauding 3,000 Chinese investors by selling a cryptocurrency they claim was backed by a kind of tea. They had formed a firm named PEB which issued a blockchain-powered token called Pu’er Coin. The scheme promised investors that with each token they held a portion of the Pu’er Tibetan tea supposedly owned by the firm, which was worth billions of dollars. However, there was only very limited tea in stock.

Authorities arrested four more suspects in connection with the OneCoin scheme. OneCoin, known as “Weika Coin” in China, was a billion-yuan Ponzi scheme, and 98 people have been prosecuted so far. Authorities report that $267.5 million has been recovered so far from the cryptocurrency scheme. Companies associated with OneCoin and its founder, Ruja Ignatova, are being investigated in other countries as well.

Germany

P&R Group, once one of the world’s largest container lessors, has been accused of operating a Ponzi scheme. P&R, no longer operating, sold new and used containers to investors, rented them back and offered to repurchase them after 5 years for 65% of the original value. P&R claimed it had sold around 1,600,000 containers to around 54,000 investors. The firm is now accused of selling nearly one million more shipping containers than it owned.

India

Kamal Singh and Vijay Kumar were charged in connection a scheme run through their bitcoin company, bits2btc, which allegedly defrauded over 2,500 people out of more than $14.9 million. They have ties to Amit Bhardwaj who has been charged with running a bitcoin Ponzi scheme.

Rahesh Jain and Sanchit, agents of Amit Bhardwaj, were arrested in connection with their efforts to solicit investors. They operated two Hong Kong-based companies to lure investors and promised returns of 10% each month.

Akash Goud and others were arrested in connection with a scheme that promised investors high end cars at a 30% discount. Goud used references from the few people to whom he delivered cars to lure in other customers. About 60 cars were delivered, but there were about 200 additional orders.

The properties of Oscar Group of companies were attached and bank accounts frozen in connection with an alleged Ponzi scheme run by Prabhas Chandra Rout. Rout was arrested in 2016.

Omprakash Bansantlal Goenka was arrested in connection with an alleged Ponzi scheme run through Citrus Check-Inns Ltd. and Royal Twinkle Star Club.

Sunita Samal, director of Inter Ocean Videsh Limited, was arrested on charges that he defrauded investors in various schemes.

Chhotrai Majhi, 40, was arrested on charges that he ran a Ponzi scheme through a money deposit collection company known as Shree Bhumi Construction Limited. The scheme was run under the guise of a construction company and then moved into real estate, mining and hotels. 

New Zealand

Jimmie Kevin McNicholl, 56, director of Arena Capital Limited, which traded as BlackfortFX, pleaded guilty to charges that he ran a fraudulent scheme as a foreign exchange brokerage. About 900 people invested about $8.3 million into the scheme. Lance Jack Ryan aka Lance Jared Thompson, 44, was also charged but has maintained a plea of not guilty.

Philippines

Margarita Huang aka Irma Pascual was arrested on charges that she ran a Ponzi scheme that defrauded between 29 and 46 victims. The victims were promised returns of 15% per month, but many of them received bounced checks issued by Huang and her husband, Gary Chen Huang. The Huangs claimed to be co-partners in the lending facility they supposedly operated with a large employee cooperative under Comfoods Inc.

South Africa

Derek Bredekamp, 52, has been arrested in connection with the alleged Ponzi scheme run through Platinum Forex Trading Group. It is alleged that Bredenkamp colluded with Colin Davids, the director of Platinum, to defraud investors. Approximately 2,000 investors were defrauded.

Authorities are investigating Bitcaw Trading Company aka BTC Global for alleged investment fraud. More than 28,000 investors are believed to have lost over R1-billion. Investors were promised 2% interest per day, 14% per week, and 50% per month. The founder of BTC Global, known as Steven Twain, has disappeared.

QSG Consult International is under investigation and accused of defrauding 800 people out of R380 million.

South Korea

Two South Korean individuals whose names remain anonymous were arrested for running a $30 million cryptocurrency Ponzi scheme through a company known as Upbit. The scheme brought in money from 3,787 investors who were promised a daily profit of $4,000 and were told they could double their profit if they recruited more investors. 

Turkey

Police detained 28 suspects in connection with an alleged Ponzi scheme run through Detay Maxinet, a company specializing in search engine optimization. More than $16.3 million was collected from more than 18,000 members.

April 2018 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for April 2018. The reported stories reflect at least 12 new Ponzi schemes worldwide; over 1,060 years of newly imposed sentences for people involved in Ponzi schemes; 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. And please remember that I am just relaying what’s in the news, not writing or verifying it.

James Quinn Campbell, Jerald N. Kagarise, David Allen Bjorklund, Ronald E. Caskey, Erik K. Little and Timothy C. McGuire all agreed to cease-and-desist orders with the Colorado Division of Securities for their role in selling unregistered securities for the Woodbridge Group of Companies LLC. Laurent Carrier and his company, Carrier Financial Services, surrendered their Colorado securities licenses earlier this year.

Amrit Jaswant Singh Chahal, 30, and his company, The Kane Capital Investment Group, LLC, were charged by the CFTC in Virginia with running a commodities fraud. The alleged scheme solicited more than $1.2 million from approximately 50 investors.  The scheme promised trading profits of between 28% and 34% from the supposed trading in crude oil futures contracts. Chahal used some of the money for his personal benefit, including for a luxury car, rent, travel and dining.

David deBarardinis, 56, was indicted on new charges that he defrauded banks and investors in Louisiana out of $96 million in an alleged Ponzi scheme.  He pleaded not guilty to the charges. Investors were promised rates up to 17% with guaranteed returns and they understood that deBarardinis was a middleman in fossil fuel trades between energy companies.

Seyed Reza Ali Fazeli, 49, who has pleaded not guilty to running a sports ticket Ponzi scheme through Summit Entertainment Group, was sued by investors who alleged that the business was a Ponzi scheme. Fazeli represented that he would use the $1.3 million invested by the plaintiffs to purchase tickets to the 2017 NFL Super Bowl and resell them at a profit.

Daniel Glick, 64, was sentenced to more than 12 years in prison and ordered to pay $5.2 million in restitution in connection with a Ponzi scheme that he ran through Financial Management Strategies, Glick Accounting Services, and Glick & Associates in Chicago. The scheme involved $5.2 million taken from elderly investors.

Renwick Haddow, 49, was extradited to the U.S. after he fled to Morocco last year on charges that he was running a Ponzi scheme. Haddow, a British citizen, had relied on a fake identity using the name of Jonathan Black and a photo he stole from LinkedIn. Haddow had opened several Bar Works locations in New York and offered investors the opportunity to purchase desks at the locations for $25,000 each.

Bernard Ross Hansen, 57, and Diane Renee Erdmann, 45, were accused of running a Ponzi-like scheme that defrauded more than 3,000 investors out of $25 million. Hansen is the founder and CEO of Northwest Territorial Mint. The indictment alleges that the mint, which made coins and medallions and bought, sold and stored precious metals, lacked assets to fill customer orders. Hansen and Erdmann allegedly took $1 million of the investor funds to pay their personal expenses.

Jeffrey Mitchell Isaacs was ordered to pay $750,000 for selling New Jersey investors more than $7 million worth of unregistered securities for Woodbridge Group of Companies. Isaacs sold the unregistered securities through JB Financial Resources and JMI Associates LLC. The Woodbridge scheme defrauded 8,400 investors across the country.

Shayne Kniss, 42, was charged in Oregon for running an alleged scheme through his investment firm, Iris Capital Management Group. About 47 people invested over $4.3 million. Kniss promised investors returns of 8% to 12% returns from supposedly buying, rehabilitating and reselling houses. Instead Kniss used some money to pay back earlier investors, and about $500,000 for personal use, including investing in a retail marijuana business.

Robert Loya, 53, and Clarence Counterman, 60, had their convictions upheld by the Fifth Circuit. The two tax preparers had been convicted of running a $2.1 million Ponzi scheme. The scheme involved solicitation of investments into their solar energy related companies, including Renewable Energy Consultant Inc. (Nevada), EP Solar Technologies, Inc. (Nevada), LITTCE, Inc. (Texas) and Eco Global Corporation (Texas).

Joseph Meli, 43, and Steven Simmons, 49, were sentenced to 6½ years and 37 months, respectively, in connection with a $100 million Ponzi scheme run through Sentinel Growth Fund Management. Simmons pleaded guilty last year to charges that rose in connection with scheme that supposedly resold tickets to “Hamilton” and other shows. Meli and Simmons had assisted the hedge fund manager, Mark Varacchi, in raising money for the scheme. Varacchi pleaded guilty and has been cooperating with prosecutors.

Stephen Condon Peters, 44, saw additional assets seized in connection with alleged $15 million Ponzi scheme run through VisionQuest Wealth Management. Peters was indicted in December 2017 in connection with the scheme which promised investors returns of 8% to 9%.

Clifton E. Stanley, 66, and Michael E. Watts, 62, and their companies, The Lifepay Group LLC and SMDRE LLC, were charged by the SEC in Texas with running $2.4 million Ponzi scheme and a related $1.4 million scam involving an oil and gas company. About 30 elderly investors invested in the retirement planning and real estate investment company in which they were promised returns of up to 36% per year.

Michael Sullivan, 37, was sentenced to 160 years in prison and will serve an active prison sentence of 5 years in connection with this role a Ponzi scheme run through his company, Kenhill Financial. Sullivan was a day trader who stole about $1.4 million from 15 victims.

INTERNATIONAL PONZI SCHEME NEWS 

Canada

Wade Robert Closson, 47, who pleaded guilty to 55 counts of fraud for running a Ponzi scheme, will be sentenced. Closson ran the scheme through Optam Holdings, Inc. and Infinivest Mortgage Investment Corporation. About 71 investors lost about $5.8 million in the scheme. 

China

Officials shut down a $13 million cryptocurrency Ponzi scheme run through Da Tang Coin (DTC). About 13,000 people were defrauded on promises that members would make about 80,000 yuan ($13,000) every day.

Eight individuals were charged in connection with the Shanlin Finance Ponzi scheme. Zhou Boyun, the legal representative of Shan Lin Financial, turned himself in earlier in the month. The scheme was a peer-to-peer lending platform. Shanlin had more than 500,000 registered users and had raised 5.4 billion yuan. The company had more than 1,000 outlets across the country to sell wealth management fund products packaged with lending to infrastructure and public-private partnership projects. Users were promised annual returns ranging from 5.4% to 15%.

Dubai

Each of the two Indian men, Sydney Lemos, 37, and Ryan D’Souza, 25, who ran the Exential Group foreign exchange fraud, received 517-year prison sentences, as did Lemos’ wife, Valany Lemos. Exential offered up to 120% annual returns in connection the fraudulent investment program that defrauded 7,000 investors.

India

Amit Bhardwaj, 35, was arrested for defrauding investors in a number of cryptocurrency schemes including GainBitcoin, GBMiners, MCAP and GB21. His scam is believed to have involved over 8,000 people adding up to $300 million. Two additional arrests were made of Sahil Baghla and Nikunj Jain in connection with the scheme.

Kalakahnu Bisoi and his wife Monalisha Senapati were arrested on charges that they ran a money deposit collection Ponzi scheme.

Naresh Navale, 35, was arrested on charges that he defrauded 500 investors through his company, S M Motors. The scheme involved a car rental business in which he said he would purchase expensive cars to rent them to five-star hotels and big companies. Investors were promised Rs 20,000 per month.

Pradeep Singhal was arrested on charges that he defrauded thousands of investors in a Ponzi scheme run though a number of companies, including Astonish Digital Advertising Services. The scheme involved companies who held themselves out as facilitator for increasing views of commercial websites.

Deepak Jangra and Deepak Malhotra were arrested in connection with a $2.6 million Ponzi scheme run through Bitmineplus. Investors deposited and bought bitcoins from the company which offered returns as high as 12% plus a 5% referral fee and 10% commissions for bringing in additional investors. The website advertised: “Bitmineplus is a unique service that allows you to immediately profit from your dormant Bitcoin. It takes just seconds to transfer your Bitcoin from your wallet to your Bitmineplus saving [sic] account and you will immediately begin to receive daily interest payments.” 

Nigeria

Swiss Golden Company Limited was accused of defrauding over 7,000 Nigerians out of N3 billion. The scheme involved the buying and selling of gold bars. Maxim Lobaty, a Russian, and two Nigerians, Austin Emenike and Dickson Nonso Onuchukwu, were picked up by authorities.

Philippines

Arnel Ordino and his wife Leonady were arrested on charges that they defrauded at least 50 investors out of $17.32 million through their company, New G Bitcoin Investment Trading. The scheme promised investors a 30% return every 15 days. The couple actually had no Bitcoin dealings and made payouts to investors using money from new victims.

Russia

Authorities sought to ban Telegram, a company run by Pavel Durov who has “decided to become the new Sergey Mavroidi.” Telegram has allegedly raised about $1.8 billion in the pre-sale stage of its ICO

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

The Madoff Victim Fund made a second distribution to victims of the Bernard L. Madoff Ponzi scheme. A distribution of $504 million was made to about 21,000 victims, bringing the total distributed through the Fund to more than $1.2 billion. A total of more than $4 billion could be distributed from the Fund. In the separate SIPC proceeding, the trustee has distributed about $11 billion to the customers of Madoff’s securities firm.

Investors in the Woodbridge Group of Companies, LLC sued sales agents Lynn Merritt and Annua Group LLC seeking to recover $1.86 million in losses from the alleged Ponzi scheme run by Robert H. Shapiro. The scheme allegedly defrauded 8,400 investors out of $1.2 billion. Shapiro and his sales agents promised returns of 5% to 10% on their investments. 

CRYPTOCURRENCY NEWS

Ifan and Pincoin, which were cryptocurrency startups in Singapore and Dubai, respectively, have gone silent after reports that they were fraudulent schemes. An estimated 32,000 investors were defrauded out of an alleged $660 million in tokens. Both schemes were under the control of Vietnam-based Modern Tech. Modern Tech had been promising users in Vietnam 48% returns monthly for iFan tokens if they made an initial investment of $1,000. Users were also given 8% commissions for referring new investors.

March 2018 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for March 2018. The reported stories reflect at least 10 new Ponzi schemes worldwide; over 16 years of newly imposed sentences for people involved in Ponzi schemes; 7 guilty pleas or convictions, and an average age of approximately 46 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.

Daniel Baker, 51, was convicted in Minnesota in connection with a contractor scheme that he ran through his company, Lifestyle Basements. Baker took down payments from clients, did some of the work he was asked to do, but failed to pay subcontractors and for materials. There were at least 14 victims.

William Bischoff, 76, pleaded guilty to charges that he stole more than $4.2 million from 26 investment clients in an 8-year Ponzi scheme run through his company, Genesis Investment Group. In one instance, Bischoff took $400,000 from clients who sold their home and gave the funds to him to purchase a new home. Bischoff bought the new home in his name, secretly took out a mortgage on it, and then deeded the house to the clients who were unaware of the mortgage. The bank ultimately foreclosed on the house because Bischoff was not making payments on the mortgage.

Bitcoin Funding Team and My7Network were shut down and their assets were frozen by the FTC. The companies were promising large returns in exchange for payment of bitcoin. Thomas Dluca, Louis Gatto and Eric Pinkston were also named in the action, and Scott Chandler was named as well, who pitched Jet-coin to investors promising a fixed rate of return on an initial bitcoin investment from supposed bitcoin trading.

Laurent Carrier and his company Carrier Financial Services, surrendered their Colorado securities licenses as a result of their involvement with Woodbridge Group of Companies LLC. Carrier allegedly sold $5.1 million in unregistered securities to at least 50 investors. Woodbridge has been accused of defrauding more than 8,400 investors in a $1.2 billion Ponzi scheme. Carrier denied being aware that the investments were securities but nevertheless agreed to surrender his license because he said he no longer manages “client brokerage money.”

Seth Adam Depiano, 36, pleaded guilty to charges that he ran a $24 million real estate Ponzi scheme in California. Depiano ran the scheme through The Rental Group, US Funding, Home Services LLC, and Draymond Homes, and promised investors returns from purchasing residential properties and either renting or reselling them for a profit.

Gary Alan Frank, 47, was arrested on charges that he was running a Ponzi scheme through Legal Coverage Group Ltd. The alleged scheme brought in $30 million in a loan fraud operation.

Nikolas M. Godfrey, 39, of South Carolina, was indicted in charges that his company, Coast to Coast Business Funding, was running a $1 million Ponzi scheme. Godfrey allegedly defrauded at least 20 victims by representing that he was generating revenue by providing short-term cash advances to businesses. Godfrey was also accused of tax evasion in connection with NJ Holdings, LLC which he used in connection with Coast to Coast. He promised investors returns of as much as 73.5%.

Mitchell Klein pleaded guilty to charges relating to a real estate investment fund running an alleged Ponzi scheme called FKF 3. Klein had previously refused to cooperate but recently entered into a plea agreement. Klein and his partners John Magee and Burton Dorfman formed FKF 3 in 2004 to borrow money from investors, loan it out at slightly higher interest rates and profit from the difference.

Jason Nissen, 45, pleaded guilty to running a $60 million Ponzi scheme that involved the fake resale of tickets to shows like “Hamilton” and other premium sporting events and concerts. The scheme was run through National Event Co. and investors were promised they would make a profit from buying and reselling tickets, but the money was used instead for personal purposes and to make payments to earlier investors.

Firoz Patel, 43, and Fehran Patel, 37, brothers who live in Canada, were charged in D.C. with operating a fraudulent scheme through their company, MH Pillars Ltd., dba Payza. They are accused of moving over $250 million of funds of criminal customers, including Ponzi scheme operators, through their accounts. Payza facilitated the purchase and sale of Bitcoin and other cryptocurrencies.

Jerry David Raines, Donna Lynn Barnard and H.D. Vest Investments Securities dba HD Vest Services were sued in Texas district court in connection with the Woodbridge Ponzi scheme. The defendants were accused of making “false and misleading representations” when describing the supposedly safe, low risk and conservative nature of the Woodbridge securities. Woodbridge has been alleged to be a more than $1.2 billion Ponzi scheme that raised funds from more than 8,400 investors.

Thomas David Renison, Timothy James Allcott and their firm, ARO Equity LLC, were accused by Massachusetts securities regulators of running a Ponzi scheme. The alleged scheme brought in more than $5.8 million and promised investors 8% to 12% returns over 3 to 5 years.

Niket Shah of New Jersey was the target of an SEC complaint seeking to freeze his assets on allegations that he stole more than $250,000 in a Ponzi scheme. Shah used Spark Trading Group LLC to defraud more than 15 investors.

Martin Shkreli, 35, was sentenced to 7 years in prison in connection with a Ponzi scheme he ran through MSMB Capital and MSMB Healthcare, as well as improperly repaying investors with Retrophin Inc. assets. Shkreli had previously made headlines when he bumped up the price of drugs by 5,000% through his pharmaceutical company Turig Pharmaceuticals.

Michael Scronic, 46, pleaded guilty to one charge relating to an alleged $22 million Ponzi scheme in New York. Scronic delivered bogus account statements to investors in his Scronic Macro Fund showing large returns when in fact he had lost or spent the investor funds. At least 46 investors were defrauded.

Kevin D. Wanner pleaded guilty to charges relating to a Ponzi scheme that defrauded 66 victims in North Dakota out of about $5 million. Wanner, doing business as Precision Financial Services, sold investors fictitious brokered certificates of deposit and unregistered interests in pooled investments. Wanner’s former brokerage firms have offered to pay $3 million in restitution.

INTERNATIONAL PONZI SCHEME NEWS 

Canada

Arnold Breitkreutz and his company, Base Finance, along with its office administrator, Susan Elizabeth Way, were determined by Alberta’s securities regulator to have committed a fraud on investors by operating a Ponzi scheme.  The scheme raised more than $137 million from more than 250 investors. Investors were told that they were investing in mortgages held by the company, rather than in a loan to an undisclosed entrepreneur involved in U.S. oil and gas developments.

Cayman Islands

The Cayman Islands Court of Appeal issued a ruling on how funds connected the Bernard Madoff Ponzi scheme should be distributed. The ruling stems from a dispute between two Cayman-registered investment companies – the Primeo Fund and the Herald Fund – who disagreed on how remaining funds from the Madoff scheme should be distributed to investors. In determining that the funds should be distributed to members based on the shareholdings as they existed at the beginning of the liquidation, the court determined that is what the law requires in Cayman. The court did not find that it had authority to “rectify” the distribution so that the funds could be more equitably distributed.

China

Wu Xiaohu pleaded guilty to charges that he ran a £7.37 billion Ponzi scheme through Anbang Insurance Group.

England

Authorities issues a warning about Gainmax Capital, noting that the website looks like a classic Ponzi scheme.

Ghana

Savana Brokerage, an online investment scheme, has caused thousands of customers losses as it has been shut down. Investors were promised 40%, 60%, or 100% returns depending on the package they selected.

India

Information was released that 184 of the people accused in financial scams, most of which are Ponzi schemes, have fled the country since 2015.

Police arrested Shriram Samudra and his wife Anagha Samudra for allegedly defrauding 3,060 investors out of Rs crore in a Ponzi scheme run through Sagar Investments. Cousin Kaivalya Samudra and Kaivalya’s mother, Supriti, were also held. The scheme offered 8% to 15% interest to investors.

Vikram Investment Company has been accused of defrauding over 800 people, including prominent personalities in the art and movie industries as well as in sports and politics. The owner of the company, Raghavendra Sreenath, along with agents Sutram Suresh, Narasimhamurthy, K C Nagaraj and Prahlad, have been arrested. The company had promised investors up to 40% returns on investments.

Authorities attached properties owned by Samruddha Jeevan Foods India Ltd. in connection with an alleged Ponzi scheme. The promoter of the scheme, Mahesh Kisan Motewar, has been accused of defrauding 20 lakh people.

Jamal Khan Khattak was arrested in connection with an alleged Ponzi scheme that defrauded investors out of Rs145 million.

New Zealand

Paul Hibbs, 49, was sentenced to 8 years in prison in connection with the $17.5 million Ponzi scheme that he ran through Cameron Gladstone Investments Limited and Hansa Limited. Hibbs had previously pleaded guilty to the fraud and his companies have been placed in liquidation.

Nigeria

The Central Bank of Nigeria has again cautioned Nigerians to be wary of investments in cryptocurrency, stating that virtual currencies are not legal tender in Nigeria.

Digital Currency suddenly shut its doors, leaving over 500 investors without their funds or the ability to collect them.

Russia

Sergei Mavrodi, a Russian operator of the MMM Ponzi schemes, died at the age of 62.
South Africa

BTC Global is under investigation and is believed to have defrauded more than 27,500 investors in South Africa, the U.S. and Australia. Investors, who had to buy a minimum of $1,000 Bitcoin, were told that BTC Global was the marketing arm of Steven Twain, a binary, foreign exchange and commodities trader. The scheme involved cryptocurrency valued at more than $50 million.

Turkey

Four more people were arrested in connection with an alleged Ponzi scheme run through Ciftlik Bank (Farm Bank). The CEO, Mehmet Aydin, 26, and his wife, Sila Aydin, were previously arrested. Ciftlik Bank collected more than $290 million from about 78,000 people.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

Net losers have filed lawsuits against net winners in connection with the William Apostelos Ponzi scheme. There are 19 plaintiffs suing 56 defendants and a potential class of 100 others to try to get money back from those who benefited from the scheme.  Apostelos is serving a 15 year prison sentence for the scheme that raised at least $66.7 million from 350 investors.

The law firm of Sheppard Mullin Richter & Hampton LLP was sued for $4.3 million on theories of malpractice and fraud relating to a “gifting program” that was run by the firm’s client, Mary Carole McDonnell.  The lawsuit accuses a lawyer of the firm of writing a letter on which the plaintiff relied, which misrepresented McDonnell’s financial situation.

CRYPTOCURRENCY NEWS

Diane Abbott, the United Kingdom’s Shadow Home Secretary has called bitcoin “just a gigantic Ponzi scheme and is stressing the need for the UK to regulate cryptocurrencies. Abbott noted that “if everyone took their bitcoin money and tried to buy a new car all at once the whole thing would collapse.”

Matthew Lesko, the “free money guy,” who became famous in the  1990s by writing books on how to get federal grants from the US government, called Bitcoin a “scam” and a “gamble.”

Charlie Munger, a 94-year-old business partner of Warren Buffett and the vice president of the Berkshire Hathaway conglomerate, said that the idea of cryptocurrency is “totally asinine” and that it is “disgusting” that people buy Bitcoin.

Vlogger Trevon James (Bitcoin Tre) received a subpoena in connection with videos he made and promoted on YouTube regarding promotion of Bitconnect. Although James said that he is ignorant about Bitconnect and securities, many of his videos taught newcomers how to acquire and trade bitcoin and other cryptocurrencies. James promoted Bitconnect when he said he was an investor himself. Another YouTube promoter of Bitconnect, Cryptonick, has disappeared and has removed all of his Bitconnect related content. Craig Grant, called the “Godfather” of Bitconnect, has also been sued but continues to create YouTube content.

MasterCoin+ has been flagged as a potential scam. It is supposedly unrelated to MasterCoin now known as OMNI.

The court in CFTC v. McDonnell, 2018 WL 1175156 (E.D. N.Y. March 6, 2018), found that the CFTC is “one of the federal administrative bodies currently exercising partial supervision of virtual currencies.” The court identified the following 9 possibilities of how cryptocurrency should be regulated: (1) no regulation; (2) partial regulation through criminal law prosecutions of Ponzi-like schemes by the Department of Justice, or state criminal agencies, or civil substantive suits based on allegations of fraud; (3) regulation by the CFTC; (4) regulation by the SEC as securities; (5) regulation by the Treasury Department’s Financial Enforcement Network (“FinCEN”); (6) regulation by the IRS; (7)  regulation by private exchanges; (8)  state regulations; or (9) a combination of any of the above.

The Nine Alternatives for Regulating Cryptocurrency

By Kathy Bazoian Phelps

To regulate or not?  That is the question. And there seems to be no consensus. The results of the Cryptocurrency Poll so far reveal a very clear divide on several important questions about virtual currencies. The public opinion is split nearly evenly on whether cryptocurrency should be considered a currency, a security, or a commodity. An equally wide split is evident in the very fundamental question about who, if anyone, should regulate cryptocurrency.

A recent decision on the question of who is in charge of regulation reveals nine possible alternatives of how to deal with cryptocurrency. Whether the SEC, CFTC or someone other agency should regulate cryptocurrency is an issue up for grabs. The CFTC obtained a ruling on March 6, 2018, that provides some guidance, although still leaves the door wide open.  CFTC v. McDonnell, 2018 WL 1175156 (E.D. N.Y. March 6, 2018). In answering the question of whether virtual currency may be regulated by the CFTC as a commodity, the court identified the following 9 possibilities:

1.  No regulation.
2.  Partial regulation through criminal law prosecutions of Ponzi-like schemes   by the Department of Justice, or state criminal agencies, or civil  substantive suits based on allegations of fraud.
3.  Regulation by the Commodity Futures Trading Commission (CFTC).
4.  Regulation by the Securities and Exchange Commission (SEC) as securities.
5.  Regulation by the Treasury Department’s Financial Enforcement Network     (“FinCEN”).
6.  Regulation by the Internal Revenue Service (IRS).
7.  Regulation by private exchanges.
8.  State regulations.
9.  A combination of any of the above.

In the McDonnell case, since CFTC standing was at issue, the court concluded that the CFTC is “one of the federal administrative bodies currently exercising partial supervision of virtual currencies.” While not reaching a conclusive and exclusive finding, at least we know that someone is in charge, at least “partially.”

Please feel free to express your views on The Cryptocurrency Poll. In the meantime, here is the current split on what it is and how to regulate it:

1. Do you think cryptocurrency is a commodity, security, or currency?

        a. Commodity                 36.75%

        b. Security                  27.11%

        c. Currency                  25.90%

        d. Don’t know                 10.24%

2. Should cryptocurrency be regulated by the SEC, CFTC, or some other agency?

        a. SEC            42.55%

        b. CFTC            20.57%

        c. Some other agency    14.89%

        d. Should not be regulated 17.02%

        e. Don’t know     4.96%

February 2018 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for February 2018. The reported stories reflect at least 3 new Ponzi schemes worldwide: over 90 years of newly imposed sentences for people involved in Ponzi schemes; and an average age of approximately 50 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. Check out the new cryptocurrency section at the end of the post.

Glenn Arcaro, a director of BitConnect, was sued along with Trevon Brown aka Trevon James, Ryan Hildreth, Craig Grant and Crytponick in a class action lawsuit alleging that Bitconnect guaranteed investors returns of up to 40% per month.  The lawsuit claims that founders of OneCoin were involved with BitConnect including Nigel Allen, Ruja Ignatova and Sebastian Greenwood. 

Richard Alan Bazzell, 42, was sentenced to 3½ years in prison and ordered to pay back about $2.5 million to 22 victims. Bazzell ran a Ponzi scheme through his company, Prosperitas Capital LLC, and he ran a side project known as TrailSteaks. Bazzell promised an 8% return.

Amrit Jaswant Singh Chahal, 30, was arrested on charges that he ran a Ponzi scheme through The Kane Capital Investment Group LLC. Chahal alleged promised returns of 28% to 34% annually. The criminal complaint alleges that Chahal falsified brokerage statements to conceal losses.

Peter E. Dahl was accused in a lawsuit of running a $2.8 million Ponzi scheme. Dahl is the founder and former CEO of Crown Bank who left the bank abruptly last year. Dahl is said to have engaged in a pattern of borrowing money from one individual or entity and repaying it from new money borrowed from someone else. The lawsuit also names Crown Bancshares which owns Crown Bank, alleging that the bank board knew or should have known of the fraud.

David deBerardinis, 56, pleaded not guilty to charges that he defrauded investors out of $96 million. Investors, mostly from Louisiana, believed they were buying into legitimate energy trades and were promised 17% returns. Prosecutors allege that deBerardinis was running a Ponzi scheme, that there were no actual trades, and that emails confirming trades were forged.

Ronald T. Dunn, 67, was sentenced to 25 years in prison for a Ponzi scheme that took $693,000 from 13 victims. Dunn was working for Prudential Financial when he committed the financial crimes. Prudential was not involved in the scheme but has offered restitution to the victims.

Anthony Fregenti, 46, is facing new charges after he was released from prison from a prior conviction in 2014 that led to a 5-year prison sentence. Fregenti was released but faced new charges for embezzling more than $500,000 from investors.

Jesse W. Harris was ordered by the Kansas Securities Commissioner to cease and desist operating his business, Harris Custom Projects LLC. The order alleges that Harris solicited more than $5 million in investments to supposedly be used to purchase and resell concrete in connection with construction jobs.

Michael Holcomb, 74, and Gary Holcomb,72, were each sentenced to 6 years in prison for the $40 million Berjac Ponzi scheme. The brothers had pleaded guilty last year to running the scheme. Michael was in charge of Berjac of Oregon and Gary was in charge of Berjac of Portland. They promised investors returns of 5% to 7% from offering loans to small businesses looking to pay insurance premiums. Instead, the Holcombs used the money for speculative real estate projects and their personal use. Michael’s daughters, Jennifer Chalmers, 46, and Kristen Van Breemen, 44, pleaded guilty to single counts of money laundering and were each sentenced to 5 years of probation and 250 hours of community service. 

Lee Loomis, 60, was sentenced to 12 years in prison for a Ponzi scheme that he ran through Loomis Wealth Solutions. Loomis defrauded investors out of more than $10 million to invest in a Naras Fund.

Jeremy Lundin was sentenced to 9 years in prison for running a $1 million Ponzi scheme through his company, Big Island Capital. Lundin’s wife, Alex Lundin, was charged in December for her role in the scheme.

Jason Nissen, 44, the former CEO of National Events Holdings LLC, is planning to enter a guilty plea in connection with a $70 million Ponzi scheme.

Saddle River Advisors and its affiliated investment funds were permanently barred from soliciting investments and were ordered to pay $44.9 million in disgorgement. The SEC had sued John Bivona, Saddle River and SRA Management Associates in March 2016, alleging that Bivona had raised more than $53 million from investors in a fraudulent scheme. Millions of dollars of the investor funds were diverted, and some of the funds went to Frank Mazzola, who had been barred from the securities industry in 2014 for running a similar scheme.

Sherman Carl Vaughn, Jr., 46,was sentenced to 12 years in prison in connection with a $10 million Ponzi scheme that he ran with Merrill Robertson. The scheme was run through Cavalier Union Investments LLC and defrauded more than 60 victims. Robertson was previously sentenced to 40 years in prison.

Tobin Senefeld was ordered to pay almost $845,000 in connection with an alleged Ponzi scheme run through Pin Financial LLC. The order also extended to Veros Farm Loan Holding LLC relating to the scheme that defrauded 80 farm loan investors out of $15 million. Pin Financial served as a placement agency for private offerings made to Veros’ clients, who understood that their investments were being used for farm operations. Senefeld was permanently banned by FINRA from associating with any FINRA member institution.

Robert Shapiro sought the release of a freeze against the assets of Woodbridge Group of Companies LLC. A day later, the SEC sought a contempt finding, accusing Shapiro of failing to comply with an order to disclose family trust assets and accounts under his control. Shapiro also filed a motion seeking to dismiss the SEC case against him, saying that the mortgage notes he sold were not securities.

Senator Carlos Uresti, 54, was found guilty on all 11 felony charges against his involvement in the Ponzi scheme run though FourWinds Logistics. Co-defendant Gary L. Cain, 61, was also convicted on all nine of his charges. The CEO for FourWinds, Stanley P. Bates, pleaded guilty in January. Prosecutors described Uresti as a politician who used his “well-known name” to steer investor funds into the scheme while hiding the true financial status from investors. Uresti is not giving up his senate seat and plans to appeal.

Carlos Wanzeler, 49, the co-founder of TelexFree Inc., was stripped of his Brazilian citizenship. Wanzeler had fled to Brazil after the fraudulent scheme was disclosed, but this could open the door for his extradition to the U.S.

INTERNATIONAL PONZI SCHEME NEWS 

Australia

A deal was reached between India’s financial regulator, SEBI, and the former owners of the Gold Coast Sheraton Mirage hotel relating to tens of millions of dollars that had been frozen. The Pearl Group and Nirmal Singh Bhangoo had moved at least $100 million of proceeds from the scheme to Australia where it was invested in a local subsidiary known as MiiGroup. The funds were then invested into the Sheraton Mirage and almost $90 million has been frozen. The funds had been frozen by a group of 37,000 investors who had filed a class action in Australia, but SEBI intervened in the action and has now taken the funds on behalf of all of the victims in India, which is believed to be as many as 50 million.

Cambodia

About 300 people protested regarding an alleged Ponzi scheme run through Empire Big Capital Limited. The government has received complaints from 7,430 people and it is believed that they have been defrauded out of nearly $60 million. Teng Saroeum and Teng Makara were arrested last June. Four people remain at large in connection with the scheme:  Malayasian Tan Tze Chin aka Sean Tan, and Cambodians Huot Sovann, Chi Gosaly, and Long Sambath.

Germany

Picam was subject to a series of raids in Germany and Switzerland on suspicion that it has been conducting a Ponzi scheme. Picam stopped standing statements and payments to customers last month. It is believed that between 2,000 and 3,000 investors have paid €300 million to the company.

India

The Finance Minister said that the government will take all measures to stop trading of Bitcoin and other cryptocurrencies in India.

Subhranshu Singh, the managing director of Sri Bhumi Group of Companies, was sentenced to 7 years in prison in connection with a scheme that defrauded investors by promising them the doubling of their money in 25 months.

Sampad Jogania and his son, Ajitesh, were arrested for their involvement in an alleged Ponzi scheme run through Creative Express Events and Promoters. The scheme allegedly defrauded investors out of nearly Rs 3 crore.

Kamal Vishnoi was arrested on charges that he set up a fake bitcoin trading platform. Vishnoi held seminars and events to lure investors and then vanished with their money. He promised 5% daily interest and a commission for referring new investors. Investors had to register at the site “Bittradingz.” When he couldn’t pay the promised returns, investors agreed to reduced interest of 2%. Meanwhile, Vishnoi launched a new website called “Softcointradingz” and a new digital currency called “Soft Coin.

  

Malaysia

Three individuals were arrested on allegations that they were running a foreign exchange scheme involving more than 70,000 victims and NZ $350 million. Investors were promised 12% returns monthly. The scheme was run through a New Zealand registered company, United Global Holdings Ltd. The mastermind of the operation, Pandeyan Maruthamuthu, 56, is believed to be hiding in Thailand.

Singapore

Arriffin Chewing, 48, was sentenced to 13½ years in prison for running an $11.4 Ponzi scheme that defrauded 18 people out of $7.1 million. The scheme involved returns from supposedly advantageous rates for foreign currencies as a Hong Kong and Shanghai Banking Corporation (HSBC) employee. Chewing had actually been terminated from HSBC at the time he was soliciting investments. 

Thailand

A group of investors gathered to call for help in connection with their losses of 6 million Baht in the alleged Srithai Network Ponzi scheme.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

The Tax Cuts and Jobs Act eliminates the “theft tax loss” provisions of the Internal Revenue Code. This was a provision relied up by Ponzi scheme victims to attempt to mitigate their losses from Ponzi schemes.

In a lawsuit brought by a feeder fund in the Bernard Madoff scheme against a financial institution and others, the Second Circuit upheld the district court’s finding that the federal court had jurisdiction because it had “related to” jurisdiction with the Madoff bankruptcy case. The court found that “The gravamen of SPV's complaint is that defendants are joint tortfeasors with Madoff and BLMIS, which, if proven, would provide defendants with a putative contribution claim, to be asserted in the bankruptcy proceedings.” SPV OSUS Ltd. v. UBS AG, 2018 U.S. App. LEXIS 3088 (2d Cir. Feb. 9, 2018).

The Trustee in the Bernard Madoff Ponzi scheme reached a settlement with Alpha Prime Fund Ltd. where the Fund will return $76.45 million to the estate to settle the Trustee’s fraudulent transfer claims.

CRYPTOCURRENCY NEWS

Bitfinex and Tether have been called a Ponzi scheme. Tether has been creating tokens to buy Bitcoin. Tether is supposedly backed by physical currency and is closely associated with Bitfinex. One analyst noted: “The idea that Tether is creating coins to buy bitcoin is straight out of satire. If bitcoin is a Ponzi scheme, then this is Ponzi squared; printing fake money to buy a different type of fake money in order to ramp up the price of the latter. If it weren’t likely to cause real-world losses for many investors it would be hilarious.”

Bitstrade was ordered to stop offering unregistered and fraudulent securities in the state of New Jersey. Bitstrade was guaranteeing returns of 10% or greater but failing to disclose “key material facts” to prospective investors, like the address of the business, the names of the executive officers, the risks to investors and how their money would be used.

DavorCoin was served with a cease and desist order by authorities in Texas. Authorities allege that DavorCoin has been engaged in fraudulent activities and tit has been using misleading and deceptive statements to lure in investors. The platform claims that users could earn as much as $513 per day by locking their funds for 120 days.

  

LoopX, a new crypto startup, vanished shortly after raising $4.5 million in its ICO token sale. 

Prodeum, a Lithuania-based company, exited the cryptocurrency scheme. 

Cryptocurrencies tracked by Coinmarketcap.com lost more than $500 billion of market value at one point in January.

JPMorgan Chase & Co, Bank of America Corp. and Citigroup Inc. stated that they will not allow purchases of Bitcoin and other cryptocurrencies on their credit cards.

  

The general manager of the Bank of International Settlements (BIS) slammed Bitcoin as “a bubble, a Ponzi scheme and an environmental disaster.” He further noted that “The volatility of Bitcoin renders it a poor means of payment and a crazy way to store value.”

THE SEC and CFTC addressed Congress in the midst of falling prices for Bitcoin. The SEC Chairman stated that he believes every initial coin offering is a securities sale and that the SEC already has the regulatory oversight needed for enforcement.

The head of Goldman Sach’s investment research warned that investors should prepare for values of cryptocurrencies to crash to zero.

Jim Yong Kim, the President of the World Bank Group, has compared cryptocurrencies to Ponzi schemes.

Cryptocurrency Poll

Let us know your feedback on the cryptocurrency fever. Click on each question, which will open a new window. Please make your selection, but you need not leave a comment in order to vote.

Poll Question No. 1

     Is Bitcoin a Ponzi scheme?


Poll Question No. 2

     Do you think cryptocurrency is a commodity, security or currency?


Poll Question No. 3

     Should cryptocurrency be regulated by the SEC, CFTC, or some other agency?


Poll Question No. 4

     Have you or will you invest in cryptocurrency?


Poll Question No. 5

     Would you use cryptocurrency to actually buy something or only as an investment?

January 2018 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for January 2018. The reported stories reflect 9 guilty pleas and convictions; at least 7 new Ponzi schemes worldwide: over 26 years of newly imposed sentences for people involved in Ponzi schemes; and an average age of approximately 49 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.

Rodney Allen, 65, was indicted on charges that he ran a Ponzi scheme through KA Investments LLC in Idaho. Allen had disappeared after an involuntary bankruptcy was filed against him last April and 77 creditors were listed in the bankruptcy. Allen had provided monthly statements to investors stating they were earning 1.6% to 1.9% returns when they were actually losing money. Allen also paid himself 14% to 18% commissions on their supposed profits. Allen is still missing.

Stanley Bates, 45, pleaded guilty to running a Ponzi scheme through FourWinds Logistics, a fracking company that accepted millions of dollars in investor funds in connection with the scheme. Bates, who also ran Bates Oil Energy & Gas, had been indicted along with Gary L. Cain and Senator Carlos Uresti, 54. Cain allegedly took investor funds for himself, and Uresti allegedly advised investors to invest in Four Winds without disclosing he would obtain a commission for their investments.

BitConnect was shut down as an alleged Ponzi scheme. The company represented that investors could earn up to 40% per month, or 400% per year was promised to others. BitConnect solicited Bitcoin in exchange for BitConnect Coin (BCC) and claimed that BCC would be lent to others and accrue daily interest. A class action lawsuit was also filed in light of the 90% loss in value of Bitconnect tokens. In a second class action lawsuit, BitConnect International, BitConnect Ltd., BitConnect Trading Ltd. and Ryan Maasen were all named as defendants.

Randall Crater, Mark Gillispie and My Big Coin Pay, Inc. were sued by the CFTC who alleged that My Big Coin ran a cryptocurrency scheme that defrauded investors out of $6 million. Investor funds were transferred into personal bank accounts and used for personal expenses and the purchase of luxury goods. The cryptocurrency, identified as MBC, was nonexistent and was not traded on any of the multiple it exchanges it claimed to be, but instead the company misrepresented that it was actively trading at fictitious trading prices. The company also falsely claimed that the coin was backed by gold and was partnering with MasterCard.

Dillon Michael Dean of Colorado and his UK-registered company The Entrepreneurs Headquarters Ltd. were sued by the CFTC accusing them of operating a Ponzi scheme involving bitcoin. The scheme allegedly solicited $1.1 million in Bitcoin from more than 600 investors. Dean allegedly misrepresented that investors would be pooled and invested in products including binary options. After the one million-dollar mark in Bitcoin was reached, Dean stopped paying investors and closed down the company’s social media. Dean then allegedly launched a similar Ponzi scheme under the new name, Real Trade Profits. 

Justin Tyler Greer, 36, was arrested on allegations that he was running a $1.5 million cattle scheme. Greer managed cattle owned by ranchers in California, Wyoming and Colorado. The ranchers were missing hundreds of cattle, and it is believed that cattle owned by investors were illegally sold and moved to other states.

Dermis Hernandez, 41, was arrested and charged with running a Ponzi scheme  while he was working as a cop. Hernandez defrauded investors in a Costa Rican investment scheme, claiming he was making loans to property owners in Costa Rica. Hernandez targeted active and retired cops and promised 24% returns.

Jack Hogan, 78, was sentenced to 12 years in prison for a Ponzi scheme that defrauded about 80 investors out of $8.2 million. Hogan held himself out to be a financial planner and sold whole life insurance policies at exorbitant prices. He then encouraged his clients to borrow against the accrued value of their policies and invest in a promissory note program that would give them a 10% return or higher.

Patrick K. McDonnell and his company Cabbage Tech Corp. were sued by the CFTC who alleged that the company was running a digital currency trading scheme.  Cabbage Tech operated under the name “Coin Drop Markets” and promised investors returns of up to 300% return on investment in less than a week.

Joseph Meli, 43, had his sentencing delayed to give him time to prepare. Meli had pleaded guilty to one count of securities fraud in connection with the ticket-selling scheme involving shows like Hamilton and Adele. Meli had been accused of defrauding about 130 investors out of $95 million.

Yasuna Murakami, 44, pleaded guilty to charges that he ran a Ponzi-like scheme through Massachusetts-based MC2 Capital Management LLC and MC2 Canada Capital Management LLC. Murakami defrauded investors through his hedge funds, MC2 Capital Canadian Opportunities Fund, MC2 Capital Partners Fund, and MC2 Capital Value Fund.  In a related lawsuit, the SEC has said that Murakami and his partner, Avi Chiat, defrauded more than 50 investors out of $15 million.

David Perez Jr. and Bebe Ann Ramirez, 43, pleaded to guilty to a Ponzi scheme they ran through USA Now.  A third defendant, Marco Antonio Ramirez, 47, remains in custody in Nigeria where he was arrested in connection with the scheme. The scheme was run through the EB-5 visa program offered by the U.S. Citizenship and Immigration Services, which was terminated for USA Now in 2014. At least $5 million was taken from foreign investors seeking to secure resident status in the U.S.

Steven Condon Peters, 44, who was arrested and indicted in December on charges that he was running a Ponzi scheme through VisionQuest Capital LLC, has denied the charges. The SEC has also filed an action, alleging that Peters fraudulently obtained $15 million through his investment firm.

Bart Sidney Posey Sr., 50, pleaded guilty to charges that he ran a health insurance Ponzi scheme through his companies, American Trade Association and Smart Data Solutions. Posey admitted that he defrauded consumers by denying legitimate health insurance claims, selling an insurance product that was not backed by a legitimate underwriter, and embezzling millions of dollars of insurance premiums paid to his company by victims.

Benjamin Myung Sik Rose, 32, was sentenced to 4 years in prison in connection with a house-flipping Ponzi scheme. Rose had previously admitted that he was not a licensed contractor and had falsified bank statements to make it appear that he was selling houses and making profits. The scheme involved more than $450,000.

Nancy Spinks, 46, was sentenced to 10 years in prison and ordered to pay $8.6 million in restitution in connection with a Ponzi scheme that she ran through Millennium Title in Texas. Spinks referred to herself as the “Millennium Mobster” and skimmed money from the business to fund an elaborate lifestyle.

USI-Tech, a Dubai-registered company that claims to sell Bitcoin packages, has been placed on fraud alert by authorities in the U.S. and Canada. USI-Tech was the subject of an emergency cease and desist order from the Texas State Securities Board last month for “engaging in fraud.” Affiliates of the company are speaking out in support of the company in Guam.

INTERNATIONAL PONZI SCHEME NEWS

Australia

Toni Iervasi, 53, is alleged to have defrauded investors out of $209 million in a Ponzi scheme. The scheme allegedly defrauded 780 creditors through his businesses, Courtenay House and Courtenay House Capital Trading Group. He promised investors 25% returns.

Louise Dalli and Claire Gauci Borda, the daughters of John Dalli, appeared in court along with Charles Ray Jackson and Robert Mitchell McIvor, to face charges that they ran an alleged Ponzi scheme. Two others accused in connection with the scheme, Eloise Marie Corbin Klein and Elizabeth Jackson, did not appear for the hearing. The scheme was allegedly run by Klein who solicited funds from elderly Christians posing as a missionary and convincing them to invest in a supposed African mining project. The funds instead were funneled into Tyre Ltd. and Corporate  Group, two Maltese companies owned by Louise Dali and Borda.

Bulgaria

OneCoin offices were raided and documents and servers were seized from “One Network Services,” a Bulgarian company serving as a representative and distributor of OneCoin. The company is registered officially in the United Arab Emirates as “OneCoin Ltd.,” but also allegedly operates in England, Ireland, Italy, the United States, Canada, Ukraine, Lithuania, Latvia, Estonia and other countries.

Canada

Wade Robert Closson, 47, has pleaded guilty to 17 of 83 charges that he ran a Ponzi scheme through Optam Holdings Inc. and Infinivest Mortgage Investment Company. The scheme offered second mortgages to investors and allegedly defrauded about 125 victims out of $10.8 million. Closson used about $5.6 million of the funds to pay returns to investors, $3.9 million for other projects, and about $800,000 for his personal use.

China

Huang Dingfang and Cai Keyi were convicted of running a Ponzi scheme through Longyan E-commerce Co. Ltd. Investors were promised annual returns of more than 250% if they invested 4,000 yuan. Investors were defrauded out of 15.6 billion yuan ($2.4 million). About 200,000 investors were defrauded. Ding Wenping, chief financial officer, and Sun Shijia, its president, were sentenced to 12 and 10 years, respectively.

A group of investors were arrested for organizing illegal gatherings and disturbing public order regarding the Ponzi scheme run through Qbao.com. Zhang Xiaolei, 49, who controlled Qbao.com, turned himself in to authorities in December. The website had about 1 million active users daily and unpaid principal of about $4.7 billion. The scheme had raised about $7.8 billion from 900,000 investors.

India

India’s Finance Ministry cautioned investors they are “entirely at their risk and should best avoid participating” in digital currency investments, likening them to “Ponzi schemes.”

Abhay Gandhi was convicted of running a scheme through Abhay Intraday Strategy Expert and was sentenced to 18 months in prison. Gandhi used 100 agents to attract small investors into the scheme.

Prashant Dash, the head of Seashore Group was arrested one day after his release. Dash was out on bail for just that one day before he was arrested in connection with another scheme.

An individual known under the aliases Wajid SK, Abdul Wajid and Javid Patel is accused of defrauding 200 investors out of over Rs 300 crore. He promised them 10% to 20% returns from his supposed investment firms, Capital Plus and Capital Infrastructure. The investors were told that those firms invested in share market, forex and cryptocurrency.

India has sent tax notices to tens of thousands of people who have dealt in cryptocurrency after a survey showed that more than $3.5 billion worth of transactions have been conducted over a 17- month period.

Japan

Coincheck suffered a hacking attack and lost $534,000,000 of virtual assets. Coincheck froze deposits and withdrawals for all cryptocurrencies except Bitcoin.

Thailand

The assets of Qingduan Zhang, 38, were seized as Zhang is a suspect in a major Ponzi scheme case in China. The scheme involved investing in a telecommunications business in which very high returns were promised. Four other suspects were also detained: Huang Jinke, Zewn Pu, Aim-on Chitchak, and a man identified only as Chi Tong or Atong. 

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

A new study of cryptocurrency scams found that between June 2011 and November 2016 there was a new scam nearly once a day. A total of 1780 scam have been reported on cryptocurrency message boards.

A group of investors filed a lawsuit against Comerica Bank in connection with the alleged $1.2 billion Ponzi scheme run by Woodbridge Group of Companies LLC. The investors have alleged that the bank ignored glaring red flags in Woodbridge’s bank accounts. In the bankruptcy case of Woodbridge, the motions of the SEC and the Creditors Committee seeking the appointment of a Chapter 11 trustee were withdrawn in light of the appointment of a new board of directors for the company. The interim Chief Restructuring Officer and management company resigned, and the new board reached a compromise with the creditors and SEC.