Thursday, March 31, 2016

March 2016 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

    Below is a summary of the activity reported for March 2016. The reported stories reflect: 7 guilty pleas or convictions in pending cases; over 120 years of newly imposed sentences for people involved in Ponzi schemes; at least 11 new Ponzi schemes worldwide involving more than $400 million; 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.

    Aequitas Capital Management and its founder and CEO, Robert Jesenik, executive vice president, Brian Oliver, and chief operating officer, N. Scott Gillis, were the subject of SEC charges that they were running a “Ponzi-like” scheme. The company agreed to the appointment of a receiver about one month after it had announced layoffs and hired a consulting firm to help it wind down the business. Aequitas stopped making payments on over $300 million in private notes that it sold to investors. Aequitas had entered into an agreement to buy hundreds of millions of dollars’ worth of student loans from Corinthian Colleges, which itself ended up in bankruptcy. The Corinthian notes may have accounted for 74% of Aequitas’ debt-buying business and had been paying $4 million to $7 million to Aequitas prior to defaulting on the obligations to Aequitas. Aequitas promised interest to investors of 5% to 15% on the $350 million it brought in from investors from January 2014 to January 2016.

    Robert Arrowood and his company, 2001 Trinity Fund LLC, were banned from the securities industry in Oklahoma. Arrowood operated an oil and gas lease firm, Trinity Resources Inc., in what is alleged to be a Ponzi scheme. Arrowood is alleged to have spent investors’ money on vacations and a motorcycle. The scheme defrauded about 30 victims, who were promised that their investments would mature in less than 60 days with a return rate of 90 percent.

    John Bivona, 75, and Frank Gregory Mazzola, 49 were charged by the SEC with running a Ponzi-like fraud through the firms Saddle River Advisors LLC and SRA Management Associates LLC. The SEC alleges that Bivona raised $53.4 million from investors by promising to invest in early- to late-stage technology companies that had not yet conducted initial public offerings. The SEC alleges that Bivona diverted $5.7 million for his personal use and that substantial sums were transferred to his nephew, Mazzola.

    Darrlye Douglas was arrested in California in connection with an order for civil contempt of court. Douglas allegedly had access to ZeekRewards database but has not returned it as ordered. Douglas may also be involved with a new scheme known as Auction Attics.

    Charles Leif Erickson pleaded guilty to charges that he stole about $3.5 million for a church congregation in a Ponzi scheme. Erickson said that the “Holy Spirit” guided him in a unique method for day trading in which he sold unregistered investments in trading futures to at least 25 people, promising them 4% per month, or 96% over two years.

    Daniel Fodiman, 52, was sentenced to up to 6 years in prison for his TJ Maxx Ponzi scheme. Fodiman told investors that he was purchasing merchandise to resell to TJ Maxx, but he in fact never sold anything to TJ Maxx.

    Claus C. Foerster, 55, was indicted on charges that he was running a Ponzi scheme through SG Investment Management. It is alleged that the company was “totally fictitious” and that he defrauded clients out of about $2.8 million while acting as a financial advisor.

    Charles Caleb Fackrell, 35, was charged in connection with an alleged Ponzi scheme that defrauded 20 people into investing $1.4 million. Fackrell ran his scheme through entities he controlled under the name “Robin Hood,” promising investors guaranteed returns.

    Dorian Garcia, 31, was sentenced to 6½ years in prison in connection with a Ponzi scheme that defrauded 111 investors. The scheme took in about $8.5 million, and about $5 million is still owed to the investors. Garcia at one point promised an investor a return of 300% to 600%. He spent investors’ funds on a lavish lifestyle including luxury cars, an expensive home and a personal chef. 

    Ian C. Gent, 73, was sentenced to 6 years in prison for conspiracy in assisting Guy W. Gane and Watermark Financial Services in running a Ponzi scheme. The scheme promised investors 10% returns in real estate investments, but Watermark never actually bought any property. Joseph F. Lagona was also convicted in connection with the scheme and was sentenced to 11 years in prison.

    Allen R. Hess, 51, pleaded not guilty to charges that he was running a Ponzi scheme that defrauded over 30 victims out of more than $700,000. The alleged scheme involved foreign currency and overseas oil.

    Francisco Illarremendi, 46, had his appeal of his sentence upheld by the Second Circuit. U.S. v. Illarramendi, 2016 U.S. App. LEXIS 4840 (2d Cir. Mar. 15, 2016). The court found that despite evidence showing investor losses exceeding 200 million, the district court had cautiously focused on Illarramendi’s gains, which totaled over $20 million, in calculating the sentence.

    Mark A. Jones, 63, was charged by the SEC with running a $10 million Ponzi scheme that supposedly generated profits from bridge loans to businesses in Jamaica. Jones is the former chairman and VP of Global Gateway Solutions Inc. and was charged with defrauding retirees in his “bridge loan” Ponzi scheme. He promised investors 15% to 20% interest per year and raised about $10 million from at least 21 investors. His assets were frozen and he was arrested on related criminal charges. Jones owns 49% of Global Gateway and his partner, Jacqueline Sutherland, owns the other 51% and is the current president of the company.

    Levi David Lindemann, 40, pleaded guilty to running a Ponzi scheme that defrauded approximately 50 investors out of more than $2.5 million. Lindemann ran the scheme through Alternative Wealth Solutions and provided counterfeit secured notes to investors as proof of their investments.

    David Christopher Mayhew, 43, was sentenced to 26 years in prison in connection with a Ponzi scheme that defrauded at least 11 people out of more than $2 million. Mayhew posed as a Christian who targeted churchgoers. Mayhew’s partner, Ronald Earl McCullough, 44, is at large and authorities continue to try to locate him. They called their enterprise “God’s Business Empire,” “GB Empire,” and “Empire Investments.”

    Jaymes Meyer, 47, pleaded guilty to charges related to the ZeekRewards and Rex Ventures LLC Ponzi scheme. Meyer was the CEO of Preferred Merchants LLC, a financial services firm that controlled about $17.4 million of Rex Ventures’ assets. Meyers originally told the SEC that he did not control any Rex Ventures’ assets, but has now admitted that he wired about $4.8 million from a Rex Ventures’ trust account into an account under his control within an hour of learning about the SEC investigation. Meyer used the money to purchase homes for himself and for other expenses.

    Daniel Nase and his company, BIC Real Estate Development Corp., were charged by the SEC for fraud for running an alleged Ponzi scheme. Nase, who was not registered with the SEC or state regulators, sold investments in real estate and promissory notes and then placed title to properties in his name, his wife’s name, or a family trust. He also used investor funds for personal expenses. When Nase learned of the SEC investigation, he placed stolen assets back into the company to make it appear that he was increasing his equity stake in the company.

    Derek A. Nelson was sentenced to 19 years in prison a day after being convicted of running a $37 million Ponzi scheme through Capital Mountain Holding Corp

    Aaron E. Olson filed a motion asking to delay the start of his prison sentence so he can finalize a $100,000 granite sale. At least $50,000 is to go to the victims of his alleged scheme that he ran through AEO Associates and KMO Associates. Olson is to be soon sentenced on tax evasion charges.  

    Gina Palasini, 54, pleaded guilty to one charge in connection with an alleged Ponzi scheme that she ran. Palasini, who was indicted on 19 federal counts last year, admitted to defrauding a man, Joseph Babb, through the U.S. Mail by sending him a withdrawal form and a supposed interest payment of about $3,300. Her scheme claimed to help citizens obtain Veterans Affairs of Medicaid benefits, and the total victim losses in the scheme are believed to be $2 million. Palasini is currently serving 10 years on a felony charge of false pretense and has received another 10 year sentence for another false pretense charge, as well as a 3 year sentence for a bad check charge.

    Daniel Rivera and his brother, Matthew Rivera, were charged by the SEC with running Ponzi scheme through a real estate venture called Robbins Lane. The Robbins Lane website recommended that investors sell their retirement assets to invest in the venture as the opportunity would give “the senior investor a guaranteed monthly income.” The scheme involved $2.7 million and targeted unsophisticated elderly investors.

    Keith Michael Rogers, 42, pleaded guilty to charges that he ran a Ponzi scheme that took in more than $2.5 million from investors. Rogers was an investment advisor who was accused of misleading investors by misrepresenting that their investment funds would be used to lawfully generate a return.

    Yamila Salvia, 38, was charged with running a Ponzi scheme that involved plane-ticket sales to Cuba. Salvia solicited investments in her purported business to buy discounted bulk airline tickets to Cuba and then reselling them at a profit. She promised investors returns of 12% to 20%.

    Steven C. Scudder, an attorney, was charged with aiding and abetting the alleged Ponzi scheme run by William Apostelos with the assistance of Apostelos’ sister and her daughter, Rebekah E. Fairchild and Rebekah L. Riddell.

    Joseph Signore, 51, was sentenced to 20 years in prison for running an $80 million Ponzi scheme. Signore’s ex-wife, Laura Grande, 42 was sentenced to 7 years. Paul Schumack, 58, was sentenced to 12 years in connection with the scheme. The scheme was run through JCS Enterprises in which 1,800 investors were promised returns from the supposed sale of video concierge machines. A fourth defendant in connection with the scheme, Craig Hipp, 55, went on trial last year and is serving 7 years in prison.

    Shirley Sooy, 65, pleaded guilty to running a Ponzi scheme through her group of companies known as TransVantage Solutions of Somerville, which were freight payment, logistics and shipping businesses. TransVantage, which Sooy took over from her late husband, would take in billions of advance payments from shipping companies. TransVantage was to audit the transactions and then release the funds to the carriers that delivered the goods. Sooy spent millions of dollars on personal expenses, and the companies were left with $42 million in losses.

    Michael J. Stewart, 68, was sentenced to 14 years in prison and ordered to pay about $9.2 million in restitution in connection with a Ponzi scheme that he ran through Pacific Property Assets. The scheme caused losses of $169 million for hundreds of investors. Stewart ran the scheme with John J. Packard, 65, who pleaded guilty in 2014. They refinanced mortgages and sold properties but were unable to do so at a profit so began using money from new investors to pay earlier investors.

    Michael Szafranski, 37, had his prison sentenced reduced from 30 months to 20 months due to his “substantial assistance” in the prosecution of Frank Spinosa in connection with the Scott Rothstein Ponzi scheme.

    William J. Wells, 42, pleaded guilty to charges that he defrauded 30 victims out of more than $1.5 million. Wells had misrepresented that he was successfully trading stocks and options though his company, Promitor Capital LLC. Wells lost a lot of money in unsuccessful trades and used the rest to fund his personal lifestyle, including payment of credit cards and private school tuition.



    IM Forex, which is affiliated with the massive Ponzi scheme run by AC Inversiones, was charged for allegedly defrauding over 1,500 investors. The firm promised investors returns of 6% per month if they invested over $15,000 and did not withdraw the funds for over a year. The principal of IM Forex, Rodrigo Gonzalez, asserts that the case is a “witch hunt” against investment companies. Allegations were also made that AC Inversiones had misappropriated over $75 million. AC Inversiones filed bankruptcy.


    A court has sentenced Jiang Hongwei, 32, to life imprisonment for his role as the head of Guangdong Bangiia Leasing, which ran a scheme that defrauded 230,000 victims out of about HK 11.86 billion. The scheme lured elderly investors in more than 60 cities to buy memberships and to fund phantom loans. The investors were offered returns as high as 47%. Twenty-three others were sentenced in connection with the scheme to terms ranging from 3 to 14 years.


    Phillip Boakes had 2 years added to his 10 year sentence due to his failure to pay a confiscation order made at the time of his sentencing. Boakes was sentenced last year following conviction for defrauding at least 30 investors of £3.5 million. Boakes had offered investors returns of 20% on foreign exchange investments in his company, CurrencyTrader.

    Alan Smith, 57, was sentenced to 4 years in connection with a Ponzi scheme that defrauded 40 investors out of £500,000. Smith defrauded women that he met on a dating website into investing in his telecommunications company. He promised them 70% returns.


    The alleged Ponzi scheme run by Gerard Lheritier was shut down on allegations that he defrauded 18,000 people in France. Lheritier sold shares in rare manuscripts and letters with a supposed value of nearly 1 billion euros through his company, Aristophil. The company employed hundreds of sales staff and offered returns of 40% over 5 years, or 8% per year. 


    Police have alleged that Ramesh Jena has ties to Green India, a Ponzi scheme.

    Sanjay Das Burma was accused of having links to Artha Tatwa (AT) Group, a company accused of running a Ponzi scheme. Das Burma is said to be holding a vehicle for the head of AT, Pradeep Sethy.

    Firoz Khan, the managing director of Safex Infra India Pvt Ltd, was arrested on allegations that he defrauded investors out of more than Rs 15 crore.

    Amit Soni, 34, Ashok Sharma, 33, Rakesh M., 33, Nikunj Kumar, 29, Avinash Shah, 32, and Ankit Kandel, 34, were arrested in connection an alleged scheme through the company Onet.


    The trial of Marcin and Katarzyna P. began in which they are accused of running a $225 million Ponzi scheme through their investment firm, Amber Gold. They had promised clients rates of up to 16% per year for investments in gold or other precious metals. On the first day of trial, there was a false bomb alarm, and Marcin refused to answer all questions, including his own lawyer’s.


    Russian President Vladimir Putin signed into law a government bill introducing criminal punishment of up to 6 years of prison for organizing Ponzi schemes. The law provides for criminal liability for Ponzi scheme organizers for obtaining more than 1.5 million rubles ($21,800) in assets belonging to individuals and companies.

South Africa

    Prinasen Dhaver, 29, his parents Dr. Jay Dhaver and Dhanalutchmee Dhaver, his brother Deshan Dhaver, and his estranged wife, Selena Dahver, 26, were all charged in connection with a Ponzi scheme involving R28 million. Aaron Chetty, 27, Hareshmann Baboolal, 31, and Gonicela Rayvan Pillay, 44, were also charged in connection with the scheme. It is alleged that Dhaver, Chetty Baboolal and Pillay solicited investors to invest in entities and trusts they created and that the funds would be used in the trade of diesel and petroleum products by Innovatech International Solutions. Investors were promised returns of 2% to 8%. Innovatech invested some of the money in Carmol Distributors, which is in a liquidation proceeding.


    A couple known as “Shi” are accused of defrauding over 1,000 investors in a high-yield investment scheme that promised a 250% return on Bitcoin invested.


    The Fourth Circuit affirmed the lower court’s ruling that Florida Congressman Alan M. Grayson, and his trust, AMG Trust, cannot sue Cyprus-based Vision International People Group PL because the company did not have sufficient contacts with the U.S. Grayson sought to bring claims against Vision International for its involvement in the Derivium Capital LLC Ponzi scheme.

    Many of the claims brought by the trustee of the Bernard Madoff Ponzi scheme were dismissed in a ruling that narrowed the scope of his complaint to recover $220 million in transfers made to Legacy Capital and Khronos LLC. Picard v. Legacy Capital Ltd. (In re Bernard L. Madoff Securities LLC), 2016 Bankr. LEXIS 777 (S.D.N.Y. Mar. 14, 2016).

    A district court certified a class of investors who seek to pursue claims against MRI International, Inc., Edwin J. Fujinaga, Junzo Suzuki, Paul Musashi Suzuki, LVT, Inc. dba Sterling Escrow. Takiguchi v. MRI International Inc., 2016 U.S. Dist. LEXIS 36129 (Mar. 21, 2016). The case is brought on behalf of 8,700 investors who invested with MRI International.

    A court denied the motion of Mizuho Bank Ltd. to dismiss claims brought by a proposed class of investors accusing the bank of defrauding clients of Mt. Gox, a now defunct bitcoin exchange. The lawsuit alleges that the bank contributed to the fraud by refusing to process outgoing transfers of investors’ funds while continuing to accept deposits.

    The Eighth Circuit ruled that Marlon Quan, a hedge fund manager, must pay back $81 million in profit he received for aiding Thomas Petter’s Ponzi scheme. SEC v. Quan, 2016 U.S. App. LEXIS 5202 (8th Cir. Mar. 22, 2016). Quan had sought a new trial, but the SEC sought a disgorgement order. The appellate court found that the jury instructions in the lower court were sufficient and that the district court was authorized to order disgorgement. Quan’s companies, Acorn Capital Group LLC, ACG II, LLC, and Stewardship Investment Advisors LLC, were co-defendants in the action.

    A jury verdict was issued in the case of Feldman v. Raggi & Weinstein LLP CPAs & Consultants in connection with the Ponzi scheme run by Ira Pressman and PJI Distribution Corporation. The bankruptcy trustee of Pressman and PJI had alleged that the accounting firm was “willfully blind” to evidence of their clients’ wrongdoing, which allowed the Ponzi scheme to grow. The trustee alleged that the firm prepared tax returns and financial statements that they knew were misleading, and then Pressman used this false financial information to obtain bank financing and solicit investments into the scheme. Pressman is currently serving an 8 year sentence.

    The Supreme Court denied the petitions for certiorari seeking to overturn the convictions of two former Stanford Financial Group executives for their role in the Stanford Ponzi scheme. Gilbert Lopez Jr. was the former chief accounting officer for Stanford Financial Group and Mark Kurht was a former executive as well. 

    The Fifth Circuit dismissed investor claims against law firms Proskauer Rose LLP and Chadbourne & Parke LLP in connection with the Allen Stanford scheme.  Troice v. Proskauer Rose LLP, 2016 U.S. App. LEXIS 4480 (5th Cir. Mar. 10, 2016). The court found that the lawsuit was barred by attorney immunity. About 18,000 investors claimed that the law firms knew that Stanford was selling fraudulent certificates of deposits.

    Former U.S. Ambassador to Ecuador, Peter Romero, was ordered to return $788,655 to the receiver of the R. Allen Stanford Ponzi scheme. Janvey v. Romero, 2016 U.S. App. LEXIS 4835 (5th Cir. Mar. 16, 2016). Stanford had paid Romero to be his international adviser for 8 years. The Fifth Circuit rejected Romero’s claims that the receiver did not timely file the complaint.

    The trustee of TelexFree reached a settlement with PricewaterhouseCoopers for repayment of $115,000 that was paid by TelexFree to Pricewaterhouse prior to the filing of the TelexFree bankruptcy case.

Monday, February 29, 2016

February 2016 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

    Below is a summary of the activity reported for February 2016. The reported stories reflect: 10 guilty pleas or convictions in pending cases; over 108 years of newly imposed sentences for people involved in Ponzi schemes; at least 10 new Ponzi schemes worldwide involving more than $8.6 billion; 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. And please remember that I am just relaying what’s in the news, not writing or verifying it.

    Terina K. Carney aka Terina Humphey, 50, was sentenced to 3 years in prison for her role in a Ponzi scheme to which she plead guilty. Carney ran the scheme through her company, Riverside Lease LLC, and told investors that their money would go to a business as a short term loan while the business awaited funding from a bank. Carney took in about $700,000 and kept about $400,000 of that amount for herself. 

    Whileon Chay, 39, and his company, 4X Solutions, Inc., were ordered to pay about $10 million in penalties and disgorgement in connection with a commodities scheme. Chay and 4X solicited $4.8 million from at least 10 participants, promising them 24% to 36% returns per year.

    Fred Davis Clark Jr., 57, was sentenced to 40 years in prison for his role in an alleged $300 million Ponzi scheme run through Cay Clubs Resorts and Marinas. The court also ordered Clark to forfeit $303.8 million for defrauding a bank and $3.3 million for obstructing the SEC’s investigation. The scheme, which took in more than $300 million from about 1,400 investors, offered returns for investments in the development of luxury resorts.

    David Richard Dance, 64, was sentenced to 4 years in prison for a Ponzi scheme that defrauded 10 victims out of $3.2 million. Dance was an “exchange facilitator” who purportedly held money for people that had sold investment properties until they reinvested the money in other properties. Dance invested the money with a developer, Brett Amendola, who defrauded Dance.

    Rebekah E. Fairchild, 53, and Rebekah L. Riddell, 30, pleaded guilty to charges relating to their role in a $30 million Ponzi scheme that defrauded more than 450 investors. Fairchild is the sister of William Apostelos, 54, and Riddell is her daughter. They were the receptionist and administrative assistant in Apostelos’ scheme. Apostelos and his wife, Connie Apostelos aka Connie Coleman, 50, are free on bond while they await their criminal trial. The Apostelos operated many companies, including WMA Enterprises LLC, Midwest Green Resources LLC, Roan Capital, Coleman Capital Inc., and Silver Bridle Racing LLC.

    Sidney M. Field was ordered to pay up to $16 million in reimbursements and penalties for his role in the $1.76 billion Medical Capital Holdings Inc. Ponzi scheme. The scheme had involved the sale of promissory notes with a promise that the money would be used to fund the medical device business. 

    John Fox, owner of Premier Cru dba Fox Ortega Enterprises, filed for bankruptcy while the FBI continues to investigate the wine entrepreneur. Premier Cru filed bankruptcy last month listing $70 million in debts owed to more than 9,000 customers and only about $6.8 million in wine inventory. Fox filed for bankruptcy this month claiming zero to $50,000 in assets and $50 million to $100 million in debts. Premier Cru sold wine at very low prices to customers who were willing to wait for future delivery or would pay “pre-arrival” of the wine. The wines were supposedly rare wines that were still in the bottling process. The trustee in the Premier Cru has confirmed that there are about 35,000 bottles of wine and that American Express is the largest creditor since it refunded charges made by customers for wines they did not receive.

    Robert Allen Helms and Janniece S. Kaelin were indicted on charges that they ran an $18 million Ponzi scheme through Vendetta Royalty Partners Ltd. and Iron Rock Royalty Partners LP. The alleged scheme defrauded at least 80 investors and involved oil and gas royalties which the companies had supposedly acquired, but which they had not. The indictment alleges that Vendetta transferred $2 million to Haley Oil Co., which Helms and Kaelin controlled. Haley Oil then transferred the money back to Vendetta.

    Allen R. Hess, 51, was arrested on allegations that he ran an alleged Ponzi scheme by convincing investors to invest in oil overseas. Hess pretended to be a knowledgeable investor to convince the investors to invest in his scheme.

    Jason Keryc, 38, was sentenced to 9 years in prison and ordered to pay $179 million in restitution for his role in the Agape World Inc. Ponzi scheme that defrauded about 5,000 investors. Keryc had been convicted by a jury and was found to have helped bring in more than $611 million from about 1,600 investors into the scheme. Keryc took about $9 million in commissions. The scheme, run by Nicholas Cosmo, defrauded more than 3,800 investors out of more than $370 million. Cosmo is currently serving his 25 year prison term.

    Tanisha Melvin, Ambert Mathias, and Marcia Caulder pleaded guilty to charges in connection with a Ponzi scheme run through Smith Advertising run by Gary Truman Smith. The three woman admitted to creating false invoices which allowed Smith to bring in new investors to pay off investors who wanted to get out of the scheme.

    Frederick E. Monroe Jr., 59, was sentenced to 5 1/3 to 16 years in prison for his involvement in $5 million Ponzi scheme that defrauded more than a dozen investors. Monroe was a vice president at Capital Financial Planning, where he had wealthy clients invest millions of dollars with him.

    James E. Neilsen, 55, was sentenced to 8 years in prison for operating a Ponzi scheme through Neilsen Financial Services and Ulysses Partners, LLC. The scheme defrauded investors out of more than $1.6 million and had promised investors returns of 9% to 10.5%.

    Gina Palasini, 54, who is awaiting sentencing in connection with a Ponzi scheme, was sentenced to 10 years in prison on a bad check charge. Palasini’s scheme involved her claims that her companies helped clients obtain veterans affairs and Medicaid benefits.

    Robert Rocco, 48, was sentenced to 51 months in prison after pleading guilty to running a $5 million Ponzi scheme through his company Limestone Capital Services. Limestone purportedly provided wholesale financing of cigarette purchases for a tobacco shop on a Native American Reservation. The company also supposedly provided credit card services to retail users seeking to purchase cigarettes from the Reservation. Investors were promised returns of 15% to 18%. More than two dozen investors were defrauded in the scheme. Rocco also defrauded at least one victim through his other company, Advent Equity Partners.

    Jonathan E. Rosenberg, 47, pleaded guilty to his involvement in a $148 million Ponzi scheme. Robert Feldman, 68, and Douglas A. Kuber, 55, previously pleaded guilty to their participation in the scheme. Richard Shusterman, 53, has pleaded not guilty. The scheme involved Rosenberg’s and Kuber’s company, Account Receivable Services LLC, which contracted with Feldman’s company, International Portfolio, Inc., to purchase and collect accounts receivable from hospitals. IPI acquired the accounts receivable, bundled them into investment portfolios, and then sold the portfolios to ARS at a discounted rate. Rosenberg owned three other companies that also recruited investors for medical accounts receivable portfolios - JER Receivables, LLC; International Portfolio Access, LLC; and Receivable Partners, LLC.

    Michael Schmidt, 60, was sentenced to 3 years in prison for defrauding 30 victims out of more than $744,000. Schmidt told his investors that they were investing in Toner Depot, a business which had contracts with Tennessee Eastman Company.

   Michael Skupin, 54, was charged with possession of child sexually abusive materials, larceny and racketeering in connection with a Ponzi scheme he was running as a gifting scheme called Pay It Forward. Victims would make $10,000 cash investments and would eventually be paid out of new investors’ money. Skupin’s computer was searched in connection with the investigation, which led to the child pornography charges. Skupin maintains his innocence in connection with the charges.

    Jerry Stauffer, 67, was convicted in connection with a $1.8 million Ponzi scheme that defrauded about 15 investors. Stauffer promised investors 5% returns but instead used their money for personal expenses and to pay returns to investors.

    United Development Funding was raided by the FBI on allegations that it was running a $1 billion Ponzi scheme. After the raid, the publicly traded shares of United Development Funding IV fell more than 50%. The allegation is that the company created new real estate investment funds to pay investors in old real estate investment funds.

    Charles S. Wang, 53, and Qian Cathy Zhang, 53, were ordered to disgorge $2.019 million and pay civil penalties in connection with the eAdGear Holdings Limited and eAdGear Inc. scheme. Francis Y. Yuen, 54, and Laurata P. Chan, 55, were ordered to disgorge $1.571 million. 

    Sydney “Jack” Williams, 67, was sentenced to one year and one day in prison for evading bank reporting requirements. The sentence was the same given to his wife, Lorie Ann Williams, for trying to conceal assets in a bankruptcy case resulting from their involvement in the $930 million Nevin Shapiro Ponzi scheme. Williams had been paid $12 million in commissions and fees in connection with the scheme, but was not charged criminally in connection with that scheme. He had, however, previously received a one year sentence for failing to report $6.4 million in taxes. They withdrew just under $10,000 at a time to avoid reporting the cash withdrawals from their bank accounts. 



    The alleged Ponzi scheme run by Gunter Lang, 75, has collapsed. Lang was an unlicensed financial trader who lost about $7 million of investor funds. It is believed that 32 investors invested with Lang, who used the online platform, IG Markets.

    A judge found that Arena Capital, traded as BlackfortEx, was running a “simple Ponzi scheme.” Arena Capital, which has been in receivership since last May, has about 1110 clients who are owed about $7 million. Arena was run by Jimmie McNicholl, and the company was shut down last May.


   Doris Elizabeth Nelson, 56, was fined $37 million for her Ponzi scheme run through Little Loan Shoppe. The scheme defrauded 121 investors who invested $19 million. The scheme promised investors returns of 40% to 60%. Nelson pleaded guilty in 2014 and was sentenced to 9 years in prison. Nelson was fined 8.5 million for the money lost by investors and another $18.5 million in penalties.


    Chinese authorities accused Ezubao Ltd. and its parent, Yucheng International Holdings Group Ltd. of running a Ponzi scheme. Ezubo was an online peer-to-peer financing platform that pitched high-yield investments. Twenty-one executives, including founder Ding Ning, 34, and former Ezubao president Zhang Min, were arrested on suspicion of defrauding at least 900,000 investors out of $7.6 billion. Two excavators were used to uncover about 1,200 account books. Investors were promised annual returns, ranging from 9% to 14.6%.


    CWM FX took in about $73 million from investors who had been promised monthly returns of 5%. CWM FX was an online foreign exchange trading partner of Chelsea Football Club. The defrauded victims consisted of about 450 Gurkhas and Nepalese community members.

    Jolan Marc Saunders, 39, Michael Dean Strubel, 54, and Spencer Mitchell Steinberg, 46, were found guilty of conspiracy to defraud investors through Saunder’s company, Saunders Electrical Wholesale Ltd. Strubel was found guilty of abetting Saunders by soliciting investors. They represented that the company was supplying electrical goods to respected hotel chains and that it had a contract with the Olympic Village for the 2012 London Olympic Games. The scheme involved £45 million.

    Peter Pimley, 67, and his wife Wendy Pimley, 60, were accused of running a Ponzi-like scheme that defrauded more than a dozen investors.

    Geoffrey William Langdale, 64, who is already serving a 6 year prison sentence, was banned from the Insolvency Service when it was determined that he dishonestly obtained £2.3 million from clients. Langdale ran the fraud through his company, Langdale Accountants Limited, and told investors their funds would be invested in a high interest bearing savings account and could be withdrawn on 90 days’ notice.


    Allegations were made that Freedom 251 smartphone is a Ponzi scheme. The phone, being sold for $3.67, is being touted as the world’s cheapest smartphone, causing some to say it is too good to be true.

    Kamalakant Dhupati, the director of Adarsh Group, was arrested on charges that he ran a Rs 50 crore Ponzi scheme that defrauded investors.


    Aviv Talmor, the controlling shareholder of Utrade, was arrested on charges that he defrauded 600 clients in an investment program. Utrade, which had no license for managing investment portfolios, allegedly made false presentations to persuade clients to invest. The investors were provided access to a virtual account that falsely represented the amount in the account. It is believed that there are about $12 million of losses.


    Patrizio Benvenuti, an Argentine Vatican priest, was accused of running a $34 million Ponzi scheme along with Christian Ventisette. Benvenuti was put under house arrest in Italy earlier this month, and Ventisette was arrested in Madrid. Benvenuti held dinners, boasting of his Vatican connections, and persuaded about 300 million to put money in an investment fund and to donate to charity. The scheme was discovered when Benvenuti’s housekeeper started receiving paperwork at her home referring to a trust that had been set up in her name. Police have seized property, bank accounts and other items worth $11 million, including a luxurious Tuscan villa.


    Sim Tee Peng, 39, was sentenced to 7 years and 5 month in prison in connection with a Ponzi scheme that took about $1.8 million from 21 victims. Peng took money from individuals who believed they were paying conveyancing fees in connection with their purchase of properties.


    The Seventh Circuit upheld the 50 year prison sentence of Timothy Durham. U.S. v. Durham, 2016 U.S. App. LEXIS 1780 (7th Cir. Feb. 3, 2016). Durham had been convicted in connection with his Fair Finance Co. Ponzi scheme that defrauded 5,000 investors out of $200 million. The Seventh Circuit had previously ordered the lower court to re-sentence Durham when it found that the government presented insufficient evidence to support $300,000 in alleged transfers. The lower court then found that this wouldn’t have made a difference in the length of the sentence.

    The trustees of the Fairfield Sentry funds were denied their attempt to intervene in a proposed $55 million settlement between PricewaterhouseCoopers LLP and a class of investors relating to the Bernard Madoff scheme.

   The trustee of the Bernard Madoff scheme sought to block a proposed $64 billion class action lawsuit against Jeffry Picower, asserting that the class action is barred by a 2011 settlement. The complaint had previously been dismissed as being derivative of the trustees claims, but the plaintiffs now contend they have direct claims.

    The trustee in the Bernard Madoff case asked permission to amend his complaint against accountant Steven Mendelow so that he can add allegations that Mendelow knew that Madoff was not making stock trades. Rather, the trustee alleges that Mendelow received “special financial benefits,” including a 17% return on some of Mendelow’s accounts, in exchange for Mendelow referring new investors to Madoff.

    Mizuho Bank filed a motion to dismiss a lawsuit by clients filed in Illinois accusing it of aiding the Mt. Gox scheme. The Japanese bank says there is no basis for the claims and that the case should be heard in Japan.

    The Ninth Circuit upheld the lower court’s dismissal of claims against Stonefield Josephson Inc. in connection with the Private Equity Management Group, or PEMGroup, Ponzi scheme. Mosier v. Stonefield Josephson, Inc., 2016 U.S. App. LEXIS 3118 (9th Cir. Feb. 23, 2016). The appellate court agreed that the receiver could not sue on behalf of the defrauded investors regarding Stonefield’s audits because there had not been a showing of “reasonable reliance” and causation.

    The Financial Crimes Enforcement Network (FinCEN) and the Office of the Comptroller of the Currency (OCC) issued a $4 million joint penalty against Gibraltar Private Bank and Trust for “substantial” anti-money laundering deficiencies. The bank was found, among other things, to have failed to file at least 120 suspicious activity reports involving about $558 million in transactions in connection with the Scott Rothstein Ponzi scheme. Rothstein was sentenced to 50 years in prison in connection with his Ponzi scheme.

    The former CEO of Gibraltar Private Bank, Steven Hayworth, sued the bank, alleging fraud and breach of contract and seeking $40 million in damages. Hayworth alleges that he was used as a scapegoat by the bank’s board of directors and pressured into leaving after Gibraltar settled several of the lawsuits relating to the Scott Rothstein Ponzi scheme.

    The receiver of the $7 billion Allen Stanford Ponzi scheme is seeking to distribute another $50 million to victims, bringing the total distribution to about 2.5% of the victims’ claims.

    Chadbourne & Parke agreed to a settle claims by investors in the R. Allen Stanford Ponzi scheme. The terms of the settlement are confidential. The firm of Proskauer Rose and Stanford’s former lawyer, Thomas Sioblom remain as defendants in the case. Separately there are other class actions moving forward against Greenberg Traurig and Hunton & Williams.

   The assets of two promoters of the TelexFree scheme were frozen. A court froze the assets of Danill Shoyfer and Scott Miller, although neither has been charged by the SEC.

    The ZeekRewards receiver is seeking to recover $13.2 million from payment processing companies, Payza and Payment World.