Friday, July 31, 2015

July 2015 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps


    Below is a summary of the activity reported for July 2015. The reported stories reflect: 10 guilty pleas or convictions in pending cases; over 166 years of newly imposed sentences for people involved in Ponzi schemes; at least 11 new Ponzi schemes involving over $112 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.

    Alisa Adler, 54, was charged with running a Ponzi scheme the involved a real estate development business run through ASG Real Estate Services Group. She solicited investor funds to supposedly purchase and develop real estate but instead used the money to make Ponzi scheme payments and for her personal expenses.

    Will Allen, 36, was indicted for his involvement with a Ponzi scheme run with Susan Daub, 55, through Capital Financial Partners LLC.  The scheme involved $31 million and supposedly provided high interest short term loans to athletes. More than 40 people invested in the scheme and were promised 18% returns.

    John Steven Blount, 54, pleaded guilty to charges relating to a $5.8 million Ponzi scheme that he ran through his company, Professional Consultants LLC. Blount offered investments in fictitious companies, bonds and IRAs. The scheme defrauded at least 73 investors to which he sent false account statements.

    Michael M. Burke had his law license suspended for 18 month by the New Hampshire Supreme Court for his role in the FRM Ponzi scheme.

    Hernan Del Valle, 61, was charged in connection with an alleged meat exporting Ponzi scheme that involved $750,000. Del Valle ran a firm called Lion Trading Corp. in which it supposedly shipped meat products to 9 businesses in the Dominican Republic. Valle submitted false invoices to banks to obtain loans and then used the cash to pay off earlier loans.

    Todd Dyer, 51, already facing charges that he ran a $1.5 million Ponzi scheme through Midwest Farmland Properties and American Farmland Properties, was indicted in connection with a particular transaction in which he stole funds from an investor promising that he had other investors and universities ready to fund an additional $25 million. Dyer had previously received a 70 month sentence in 1999 for a Ponzi scheme. 

    Michael R. Enea, 60, was sentenced to 2 years in prison for his $2.1 million Ponzi scheme that defrauded at least 10 people. Enea had promised investors annual returns between 20% and 35%.  The scheme was run through his business, Credit Card Equipment Plus Inc. Enea had spent $1.35 million of the $2.1 million to pay false returns to investors and spent the rest on himself.

    Daniel Fernandes Rojo Filho, 47, and his company, DFRF Enterprises, were charged by the SEC with operating a combined pyramid and Ponzi scheme. The alleged scheme targeted Spanish and Portuguese-speaking communities, and investors were told that DFRF’s gold mines in Brazil and Africa would realize a return of 100% on each kilogram produced. The scheme allegedly raised more than $15 million from at least 1,400 investors. The SEC complaint ties Filho to Sannderley Rodrigues de Vasconcelos, who has been tied to the TelexFree scheme. Others charged in connection with the scheme were Wanderley M. Dalman, 49, Gaspar C. Jesus, Eduardo N. Da Silva, 40, Heriberto C. Perez Valdes, 46, Jeffrey A. Feldman, 56, and Romildo Da Cunha. Filho was then arrested after he was captured outside of a Boca Raton restaurant.

    Edwin Fujinaga, 68, Junzo Suzuki, 66, and Paul Suzuki, 36, were criminally charged with their roles in the MRI International Inc. Ponzi scheme that defrauded thousands of Japanese victims. The scheme involved $1.5 billion, and investors were told that their investments would be held by a third party escrow agent in Nevada. Investors were promised that their money would be used to purchase medical accounts receivable. Meanwhile, the SEC obtained a judgment against June Fujinaga and the Yunjo Trust to return $2.4 million in ill-gotten gains.

    Dorian Garcia, 30, pleaded guilty to running a $7 million Ponzi scheme. Garcia was accused of defrauded 80 victims out of $4.7 million through his businesses, DG Wealth Management, Macroquantum Capital LLC and UKUSA Currency Fund LP.

    Kelly Gearhart, 54, was sentenced to 14 years in prison following his guilty plea that he misrepresented information about his Vista Del Hombre real estate project through Hurst Financial Corp. Gearhart was accused of defrauding more than 250 investors out of $15 million. James Hurst Miller Jr. is scheduled to be sentenced in October.

    Stephen Bruce Gordon, 62, was sentenced to 4 years and 2 months in prison for running a $4 million Ponzi scheme. Gordon was once a high profile basketball trainer who worked for the Seattle Supersonics. He admitted to running schemes that defrauded about 30 investors.

    Neal Goyal, 34, was sentenced to 6 years in prison and ordered to pay $9.2 million in restitution in connection with a $9 million Ponzi scheme that he ran through his companies, Blue Horizon Asset Management LLC and Caldera Investment Group. Goyal created false statements to give to investors to support his supposed trading business, in which he promised returns of at least 17% per year.  He stole money from his family and friends in his Hindu community. He raised more than $11 million from at least 35 investors.

    Jenifer E. Hoffman pleaded guilty to charges in connection with the $11 million Ponzi scheme that defrauded 100 investors. Hoffman had been charged along with John Boschert and Bryan T. Zuzga for their involvement with the scheme run through Assured Capital Consultants, LLC. They had represented that the investments would provide weekly returns of up to 50% and would be invested in Assured Capital’s offshore, confidential trading program.

    Charles D. Jones, 61, was sentenced to 6 years in prison for stealing more than $9 million from his clients in a Ponzi-like scheme. Jones ran the scheme through his company, Charles D. Jones Capital Management Inc.

    Phillip A. Kramer and Timothy C. Constantine were found guilty of defrauding NHL players and other investors. The two defendants ran at last four separate schemes: Hawaii Real Estate Investment, Eufora LLC, Global Settlement Fund, and Sag Harbor.

    Paul Konigsberg, 79, was spared prison time following his guilty plea last year to conspiracy charges and falsifying books and records in connection with the Bernard Madoff Ponzi scheme. Konigsberg has said that he “had no knowledge that Bernard Madoff was a diabolical monster masking himself in the clothing of a self-made billionaire.” Konigsberg, an accountant, was accused of looking the other way as Madoff employees amended information on some of his clients’ transactions. The judge agreed that what Konigsberg did was "seriously wrong" but that he did not know that Madoff was defrauding investors out of $20 billion. The judge found that he had earned leniency through his cooperation.

    Shaine Joseph LaVoie, 46, was sentenced to 20 years in prison and ordered to pay more than $820,000 in restitution for a Ponzi scheme involving close out clothing and a fictitious apparel company. LaVoie had turned down a 5 year plea deal. There were 12 victims who were promised 100% returns in 3 months.

    Charles Maguire, 33, is the subject of many civil complaints, at least one of which alleges that Maguire was running a $13.4 million Ponzi scheme that defrauded individuals associated with Christian churches and organizations. Maguire represented that he ran a financial company, Vivid Funding LLC, that provided "proof of funds" letters for corporations. Corporations would supposedly use his bank accounts to show they had assets when applying for bank loans. Maguire also had another company, M-Development Inc., that was supposedly involved in mobile application software. William Peterseim has been identified by the U.S. Attorney's office has being a financial advisor involved with the scheme.  Maguire has not yet been criminally charged.

    Claude Darrell McDougal, 56, was sentenced to 6½ years and ordered to pay about $2 million in restitution for running a Ponzi scheme that defrauded over 25 investors out of more than $2.5 million. He promised investors returns of 6% to 15% and that their money would be invested in securities in the form of promissory notes offered by US Financial Alliance Consultants, LLC.

    Sean M. Meadows, 42, was sentenced to 25 years in prison for running a Ponzi scheme that defrauded about 55 victims out of more than $10 million. Meadows solicited funds through his investment adviser business, Meadows Financial Group, and he promised he would invest funds in bonds, real estate or other investments and pay 10% returns.

    Stavroula Mendez, 68, Lazaro Mendez, 42, and Marie Mendez, 49, were sentenced to 135 months, 108 months, and 57 months, respectively, in connection with a $27.8 million mortgage fraud Ponzi scheme. The defendants owned condominium developments and would locate straw buyers. They would then submit falsified mortgage applications to secure home loans to purchase condo units in the development that they owned. When they units sold, they would retain both the profits on the sale and control over the units.

    Paul Lee Moore IV, 51, pleaded guilty to charges relating to a Ponzi scheme that defrauded investors out of about $2 million. Moore ran his securities scheme through Coast Capital Management LLC. The SEC also charged Moore in connection with the scheme.

    Eric Nicholas Morgan was charged in connection with an alleged Ponzi scheme that he ran through his company, Liquid Ninja. Neither Morgan nor Liquid Ninja are licensed in the state of Indiana. Liquid Ninja marketed a new energy drink and investors were promised 7.5% returns for two years for investing in the company. At the end of two years, investors were told they could either redeem their principal or receive a 15% interest in the company. The money was used by Morgan for his own personal expenses, and Liquid Ninja has closed its business.

    Leigh Morse, 59, was denied her request to have her restitution obligation of $1.7 million reduced or eliminated. Morse was involved as the dealer in the Salander-O’Reilly Galleries Ponzi scheme. Morse had been found guilty in 2011 of defrauding artist estates and foundations by misleading them about the status of works that the gallery sold or traded away. Morse has proclaimed her innocence and claims that she cannot pay the restitution.

    Dee Allen Randall, 64, was ordered to stand trial in connection with an alleged Ponzi scheme that defrauded about 700 people out of $72 million.  Randall was the owner of Horizon Mortgage & Investment, Horizon Financial & Insurance Group and Horizon Auto Funding, and his agents sold “Horizon Notes” that promised 9% to 17% returns for the supposed use of investor funds to finance car loans and real estate.

    Keith Everts Rode, 48, was sentenced to 70 months in prison in connection with the Ponzi scheme run through GLR Growth Fund, which Rode ran with John Geringer and Christopher Luck, 58. The scheme promised returns of 17% to 25%. Geringer and Luck were already sentenced to 12 years and one month and 10 years and 8 months, respectively.

    Guillermo M. Sanchez, 60, his daughter Isabel C. Sanchez, 36, and son-in-law Gustavo Giral, 38, were indicted in connection with an alleged $10 million Ponzi scheme that involved fake merchandise sales and a factoring scheme.

    Michael Szafranski, 37, pleaded guilty to charges relating to the Scott Rothstein $1.2 billion Ponzi scheme. Szafranski was accused of deceiving his clients in encouraging them to invest in Rothstein’s scheme

    Perry Sawano, 51, was sentenced to 28 years in prison in in connection with a Ponzi scheme that defrauded 28 investors out of $4.4 million. Sawano operated his scheme through Integrity Financial Consulting.

    Malcolm Segal, 69, was accused by the SEC of conducting a Ponzi scheme that defrauded at least 6 people out of $3 million. Segal is a financial advisor that is accused of using investor money to pay for a Florida condominium, vacations and other personal expenses. He ran his own branch office of Aegis Capital Corp., operating under the name of J& M Financial. Before that he was a financial adviser at Cumberland Brokerage Corporation. Segal purchased CDs but did not put them in his clients’ names; rather, he maintained control over them and redeemed at least 76 of the 134 CDs purchased, using $5 million proceeds for Ponzi-like payments and for his own expenses.

    Justin T. Spearman, 27, was arrested on charges that he ran a multi-million dollar oil and gas Ponzi scheme. Spearman operated his company, Justin T. Spearman Petroleum Land Services LLC, in Texas.

    Bogdan K. Stepien, 34, was indicted on charges that he ran a Ponzi scheme through his day trading business.  The indictment alleges that Stepien defrauded 8 people and that he sent them bogus trading account statements and spreadsheets.

    Richard L. Thompson, 60, was charged with defrauding investors in his $2 million real estate Ponzi scheme. The scheme was run through Latten Management LLC. Thompson represented that his company owned three properties in Tennessee and that he would develop them into vacation destinations. Thompson never put properties in the name of the business.

    Marcello Trebitsch aka Yair Trebitsch, 37, pleaded guilty to operating a Ponzi scheme that defrauded investors out of about $6 million through his company, Allese Capital LLC. Trebitsch is the son-in-law of the former New York Assembly Speaker Sheldon Silver. Trebitsch promised investors annual return of 14% to 16% from day trading large cap stocks.

    Charles S. Wang and Francis Y. Yuen pleaded guilty to charges relating to the eAdGear Ponzi scheme. The SEC had charged eAdGear on September 2014 alleging a $129 million scheme.

    Carl David Wright was fined $1 million by the CFTC for defrauding 16 customers in a commodities Ponzi scheme. Wright was previously sentenced to 4 years in prison for the scheme.

    Bingqing Yang, and her company Lucia International Group LLC, were charged by the SEC for running a $68 million Ponzi scheme that targeted Chinese Americans in California. Her other companies, Luca Resource Group LLC and Luca Energy Fund LLC, were also charged. The scheme used the E-B 5 Immigrant Investor Program to solicit funds.  The SEC’s complaint also names Lei (Lily) Lei, Luca’s former vice president of business development; Anthony V. Pollace, former CFO; and Yong (Michael) Chen, owner of Entholpy EMC dba Mastermind College Funding Group. Lucia was represented to be a successful oil and gas company and returns of 20% to 30% were promised to investors. It is believed that George W Bush was paid $200,000 by Lucia to speak at a 2012 “energy summit.”

INTERNATIONAL PONZI SCHEME NEWS

Bulgaria

    Tsvetan Vasilev denied charges that he ran Corporate Commercial Bank as a Ponzi scheme.

Canada

    The Alberta Securities Commission has started publishing the names of individuals and entities that have been fined for financial-related crimes but have not paid the fines and penalties. The list current contains over 100 names that have failed to pay over $100 million in the aggregate.

    Gary Sorenson, 71, and Milowe Brost, 61, were sentenced to 12 years in prison following their conviction for operating a Ponzi scheme which that defrauded up to 2400 international investors of between $100-400 million. The two promised investors of $99,000 they would receive annual returns of 34% and that the $99,000 would turn into $1 million within eight years.

    Regulators warned that Nix Investment is not licensed to carry out business in Ontario. The company’s website shows signs of being a Ponzi scheme, stating, “We invest in Stock, Index, Commodities, Bitcoins and Forex. We aim for a 10-15% return per month which is 300% per year. So investment of $100 with us for 5 years can yield you more than $20000-25000. Recommend investment ($100-500).”

    Douglas Warren Welder was disbarred for his role as a lawyer representing a corporation that was operating a Ponzi scheme. Welder was not the perpetrator of the scheme but failed in his duties as a lawyer by not advising investors that he was not protecting their interests.
 
India

    Three directors of Bishal Group, which is accused of running a Ponzi scheme, were taken into custody. The directors are Ratan Chowdhury, Sujit Krishnapada Acharjee and Kanta Dubey.

Israel

    A check-cashing scheme that affected the ultra-Orthodox community in Bnei Brak was disclosed. The alleged scheme was run by Yaakov Domb, who defrauded individuals and businesses out of tens of millions of shekels that they had invested with him. Domb has disappeared without a trace.

New Zealand

    David John Hobbs agreed to never again direct a New Zealand company and to not provide financial advice or brokering services in the country. Hobbs was previously found to have breached laws in operating 14 schemes that involved over AUD $50 million.

    Hamish McIntosh, a lawyer who was ordered to repay $454,000 in profits that he received from the Ross Asset Management Ponzi scheme, has filed an appeal to the ruling. The liquidator of the scheme is considering cross-appealing.

Philippines

    The Securities and Exchange Commission is investigating Arnel Gacer and his company, Flag Prosperity Marketing Inc. aka Freedom Life Advanced Global Prosperity Marketing Inc. The SEC believes that the company recruits investors to invest in one to 15 slots, where one slot amounts to P1,500 and has a promised return of P2,200.

Spain

    Twenty people were arrested in connection with an alleged Ponzi scheme run by Unetenet. The scheme reportedly defrauded 50,000 investors out of 50 million euros.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

    A court approved a settlement between the SEC and the receiver for Diversified Lending Group under which DLG will disgorge $163 million to end the SEC's civil suit.

    The trustee of the Deepal Wannakuwatte and IMG Inc. Ponzi scheme sued two real estate developers, Jack Sweigart and Larry Carter, alleging that they knew or at least should have known about the fraud that caused more than 100 investors to lose $150 million. The trustee alleges that the scheme could not have grown to its size without the letters of credit supplied by Sweigert, Carter and their companies, JTS Communities and Bristol Insurance Co. The trustee also sued two of Wannakuwatte’s lenders, Bridge Bank of Santa Clara and General Electric Capital Corp. Wannakuwatte was sentenced to 20 years in prison last year.

    The estate of Gladys C. Luria is seeking a $7.4 million refund from the IRS in connection with a false tax return filed by Bernard Madoff at Lurie's death claiming that she was with $32 million. Lurie's estate says that $7.4 million of the estate tax paid should be refunded because the balance of her Madoff accounts at the time of her death were actually zero. Madoff and his brother, Peter Madoff, were to co-executors of her estate. The estate argues the Madoff knowingly filed a false tax return to clever up his fraud.

    More than 100 investors from around the world have filed a class action lawsuit against Pearce & Durick, a law firm which was the escrow agent for North Dakota Developments LLC. The alleged Ponzi scheme defrauded people out of $62 million. The lawsuit alleges malpractice in that the law firm failed to advise investors that they were investing in unlawful securities.  The scheme involved 980 investors from 66 countries.

    BMO Harris Bank agreed to pay $16 million to settle litigation arising from the Thomas Petters Ponzi scheme. The lawsuit, filed by the major feeder funds in the scheme, Palm Beach Finance II LP and Palm Beach Finance Partners LP, alleged that M&I Marshall & Ilsley Bank, which BMO acquired, was complicit in the fraud.

    TD Bank agreed to pay $20 million to settle a class action lawsuit in relation to a Ponzi scheme that defrauded over 1,000 European investors out of more than $223 million. The investors had bought life settlements marketed through Quality Investments, a Dutch company. It was alleged that the bank had failed to report suspicious activity in connection with the scheme.

Tuesday, June 30, 2015

June 2015 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

    Below is a summary of the activity reported for June 2015. The reported stories reflect: 3 guilty pleas or convictions in pending cases; over 140 years of newly imposed sentences for people involved in Ponzi schemes; at least 7 new Ponzi schemes involving over $240 million; and an average age of approximately 51 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it.

    Thomas Abdallah, 51, and Mark George, 58, of Ohio, pleaded not guilty to charges that they ran a Ponzi scheme, along with Jeffrey Gainer, 51, through KGTA Petroleum Ltd. The three allegedly defrauded 70 investors out of $17 million. They promised investors returns of up to 5% per month, or 60% per year, for investments in oil and fuel.

    William D. Allen, 36, and his business partner, Susan C. Daub, 55, were criminally charged in connection with an alleged $32 million Ponzi scheme. Allen played for three NFL teams over his 12 year career, including the Giants, Dolphins and Patriots. Allen and Daub are accused of running a Ponzi scheme through their company, Capital Financial Partners Enterprises LLC, which was making high-interest, short-term loans to professional athletes. The company loaned out only $18 million of the $32 million it collected from investors. The FBI has said that $4.1 million went to Allen personally and $61,080 to Allen’s casino accounts.

    Jonathan Arrington, Michael Kratville, and Michael Welke were sentenced to 5 years, 4 years and 3 years, respectively, in connection with a $4 million Ponzi scheme involving 114 investors. The 3 men had pleaded guilty earlier in the year. The scheme involved commodities and foreign exchange.

    Charles B. Blackwelder, 70, had his attorney license suspended by the Indiana Supreme Court. Blackwelder is serving a four year prison sentence for running a $19 million Ponzi scheme through his firm CFS LLC in which he defrauded elderly victims. Blackwelder and his daughter, Cara Grumme, were accused of defrauding more than 300 elderly victims.

    John R. Bullar, 53, was sentenced to 8 years and four months in prison and ordered to pay $6.2 million in restitution in connection with a Ponzi scheme that he ran through Executive Management Advisors LLC. The scheme defrauded more than 46 victims, who were promised high returns and told their money was safe. Bullar claimed to invest in precious metals, bonds and foreign currency but actually “invested virtually nothing,” prosecutors said. Bullar also told investors he had devised a computer system that monitored the market for potential losses and, prosecutors said, claimed he "had been offered millions of dollars" for it.

    Tim Durham was resentenced after two of the charges against him were dismissed on appeal. Durham had appealed his original sentence of 50 years for running a Ponzi scheme through his company, Fair Finance Co. The scheme defrauded 5,200 victims out of $200 million. The appellate court found that the prosecution had failed to enter key documents. At his re-sentencing, Durham was again handed a 50 year sentence.

    Charles L. Erickson was charged with running a Ponzi scheme that defrauded at least 25 investors out of about $3.5 million. Erickson, who recruited from his church, claimed that the Holy Spirit had given him a proprietary day-trading system for a volatile type of futures contract. He guaranteed returns of over 96% to be paid over two years.

    Joseph Greenblatt, 53, was sentenced to 10 years in prison for writing bad checks to his victims. Greenblatt is already serving 18 years in prison in connection with a $31 million Ponzi scheme through Maywood Capital Corp. Greenblatt promised investors high returns on investments in inner-city commercial properties.

    Scott Anderson Hall, 50, was sentenced to 10 years in prison in connection with a $3 million Ponzi scheme that defrauded 48 victims. Hall promised investors large returns, sometimes over 12% from investments in his company, Abaco Securities International. He set up the company, which was a sham offshore investment company, in the Turks and Caicos Islands.

    Christina Hernandez, 43, was sentenced to 3 years of probation for her role in a Ponzi scheme that took in more than $100 million. Hernandez posed as a JP Morgan employee to assist Michael Goldberg in a scheme that defrauded investors out of more than $30 million. Goldberg misrepresented to investors that Chase had granted him a contractual right to purchase foreclosed and seized business assets from a Chase Foreclosure Manifest, which he would then supposedly resell at a profit, from which he would guarantee returns of up to 20% in about 90 days. Goldberg further represented that Chase would refund the purchase price of any asset that couldn’t be resold so there was no risk to the investor. Goldberg pleaded guilty in 2010 and was later sentenced to 10 years in prison.

    Wendell A. Jacobson, 61, and Allen R. Jacobson, 36, were charged in connection with an alleged Ponzi scheme run through the real estate investment firm called Management Solutions. The father and son used their membership in The Church of Jesus Christ of Latter-day Saints to lure in 400 investors and raise more than $200 million. They promised investors that they would buy apartment complexes at discounted prices, then renovate and sell them within five years.

    Kristine Louise Johnson, 60, was charged in connection with an alleged $7 million Ponzi scheme that defrauded more than 10,000 victims. The alleged scheme, run through a sham internet company called “The Achieve Community,” promised investors a 700% return in a 3 to 6 month period of time. Investors were paid back about $2 million during the scheme. Troy A. Barnes, 52, of Michigan was also charged in connection with the scheme. The scheme was previously operated under the name “Work with Troy Barnes Inc.” Johnson pleaded guilty to the charges.

    Herbert Ivan Kay, 57, was sentenced to 5 years in prison after being convicted on charges relating to a Ponzi scheme in which he marketed and sold investments in residential and commercial developments in Mexico. Kay was also ordered to pay $8 million of restitution to his victims.

    Stafford S. Maxwell, 46, pleaded guilty to charges relating to a multimillion Ponzi scheme that he ran through Millennium Capital Exchange, Inc. The scheme was a foreign exchange market trading program in which he promised his victims high fixed rates of return.

    Everett C. Miller, 45, was sentenced to 10 years in prison for a Ponzi scheme to which he pleaded guilty in 2013. The scheme, run through Miller’s company, Carr Miller Capital LLC, defrauded investors out of $5 million. He promised investors 7% to 20% returns through the sale of unregistered securities.

    Frederick E. Monroe Jr., 59, was charged with running an over $1 million Ponzi scheme through Capital Financial Planning. Monroe allegedly solicited money from clients to invest in bonds but never invested the money. Monroe pleaded not guilty.

    Randy Poulson, 44, pleaded guilty to charges that he ran a Ponzi scheme through his companies, Equity Capital Investments LLC and Poulson-Russo LLC. Poulson promised to pay the mortgages of distressed homeowners facing foreclosure if they sold their homes to him. He obtained deeds to more than 25 homes, put renters in the homes, and then stopped making the monthly mortgage payments. Poulson also brought in investors, promising then 10% to 20% returns, for investments in properties that Poulson claimed he would rehabilitate, rent out and then sell.

    Daniel Christian Stanley Powell, 33, was sentenced to 10 years in prison in connection with his $5.2 million Ponzi scheme. Powell centered his scheme around a sham “reverse life insurance” company. Powell represented to investors that his company, Christian Stanley Inc., owned policies worth $1.9 billion, but in fact did not own a single insurance policy.

    Premier Asset Management and its principals and employees, Gerald Lawler, Nicola Lawler, Mariam Williams, Claude L. Collins Sr., and Patrik Granec, were the subject of a temporary cease and desist order by the Massachusetts Securities Division and the Alabama Securities Commission. Premier solicited investments funds through Craig’s List and, at least in one instance, promised a 100% return in as little as 48 hours. One investor was assured that the account was 100% secure.

    William Allen Risinger was indicted on charges relating to an alleged $4.5 million oil and gas Ponzi scheme. Risinger allegedly sold fraudulent royalty interests relating to oil and gas wells through his entity known as RHM Exploration. Investors were invited to invest in ventures, such as the RHM-Sinton Joint Venture.

    Steven B. Rodd, 49, who previously served time for soliciting investors into Lou Pearlman’s $300 million Ponzi scheme, was arrested for drowning a rabbit. Rodd was observed tossing a rabbit into a hotel pool and watching it down, so has been charged with animal cruelty. Rodd’s involvement with the Pearlman Ponzi scheme related to his solicitation of over $32 million in investments to hundreds of Florida investors, for which he served a 3 year prison term.

    Keith Michael Rogers was accused by the Alabama state security commission of running a Ponzi scheme. Rogers is a financial advisor who is accused of defrauding investors out of millions of dollars and using $2.5 million for his personal expenses.

    Sunil Sharma, 68, pleaded guilty to running a Ponzi scheme that started as a risky day-trading strategy. Sharma set up Gold Coast Holding LLC to trade options and then later set up Safe Harbor Tax Lien Acquisitions. Sharma raised $8.36 million from 32 investors and paid $2.12 million in returns to earlier investors.

    Louis J. Spina, 58, was sentenced to 79 months in prison in connection with his $20 million Ponzi scheme. The scheme defrauded 42 investors through his company, LJS Trading LLC, and promised returns of 9% to 14%. Spina had been sentenced to 3 years and 5 months in prison for a bank robbery to which he had pleaded guilty in 2014. The judge in the Ponzi scheme criminal matter ordered that the two sentences be served consecutively, that Spina pay back $12.7 million, and that he forfeit over $800,000.

    Paul Sullivan, 50, was sentenced to 4 years and 7 months in prison and ordered to pay $1.9 million in restitution for a Ponzi scheme that defrauded investors out of about $1.9 million. Sullivan made investments for his clients that result in losses. In order to repay them, he solicited new investments with promises of high rates of return.

    Phil Donnahue Williamson, 48, of Florida, was charged by both the SEC and criminally in connection with an alleged Ponzi scheme run through Sterling Investment Fund LLC and Sterling Financial Partners. The scheme targeted retired teachers and police officers and promised investors returns of 8% to 12% for investments in distressed real estate. It is alleged that the scheme defrauded at least 17 investors. Williamson voluntarily surrendered and agreed to settle the SEC charges by paying about $750,000 in disgorgement of ill-gotten gains.

    Bryan Zuzga entered into a plea agreement in connection with a $25 million Ponzi scheme he was accused of running along with Jenifer E. Hoffman and John Boschert. The scheme was run through Assured Capital Consultants and defrauded about 100 victims. Zuzga was accused of impersonating a Florida attorney and assuring investors that their money was safe in an escrow account. Boschert pleaded guilty last year.
 
INTERNATIONAL PONZI SCHEME NEWS

Cambodia

    Seven more people believed to be involved with the Empire Big Capital alleged scheme were arrested, bringing the total to 14. The company was registered in Hong Kong, but had vacated its offices a few months ago. The individuals have been charged with fraud in Cambodia.

Canada

    More than 600 victims have sent in letters in connection with the sentencing of Gary Sorenson, 71, and Milowe Brost, 61. The two men were both found guilty of defrauding more than 2,400 investors out of $100-$200 million between 1999 and 2008.

England

    Geoffrey Langdale, who is currently serving a 6 year prison term for running a Ponzi scheme, was told that he must repay £272,729.86 or face a further three years behind bars.

India

    Five suspects were arrested in connection with the Win Realcon scheme that allegedly defrauded investors. The suspects are Mahitosh Ganguly, Joy Bhowmick, Rajib Debnath, Partha Pratim Roy and Raju Dey.

    Leena Maria Paul and her partner Sekar Chandrashekhar, along with Adil Akhtar Jaipuri, Akhtar Hussain Jaipuri, Salman Rizvi and Nasir Jaipuri, were arrested on charges that they defrauded over 1,000 investors by promising them 300% returns on their investments.

    Authorities located 180 bank accounts of Rose Valley and recovered Rs. 36.91 crore. Earlier this year, the company’s chairman, Gautum Kundu, was arrested in what is alleged to be a Ponzi scheme. Amit Banerjee was arrested in connection with the scheme as well.

Indonesia

    Kamal Tarachand was arrested in an alleged Ponzi scheme involving a fraudulent tissue paper business. Investors were promised between Rp 50,000 and Rp 200,000 ($3.7 - $15) per day in return for every Rp 1 million ($75) invested in the company. Tarachand represented that his company was making money by selling advertising space on the back of the tissue paper packets that his company produces.

New Zealand

    A court of appeal found that an investor in the David Ross Ponzi scheme was required to return fictitious profits received from the Ross Asset Management Ponzi scheme. The investor had invested $500,000 but had received back $954,000 so was required to pay back $454,000. There are almost 200 investors who received about $30 million of fictitious profits who are now facing claims to return those profits

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

    About 30 victims of the Philip G. Barry Ponzi scheme filed a lawsuit against JP Morgan, TD Bank, HSBC, and M&T Bank, seeking $11.1 million plus $25 million in punitive damages for the banks’ alleged failure to detect the fraud in the face of over 1,000 bounced checks and large repetitive transactions. Barry was convicted in connection with his $40 million Ponzi scheme that he ran through Leverage Group, Leverage Option Management Co. Inc., and North American Financial Services. The scheme defrauded about 800 victims.

    The Seventh Circuit ruled that liquidators in the British Virgin Islands cannot lift an injunction to disburse funds from the Nikolai Simon Battoo $340 million Ponzi scheme that had defrauded 800 investors. Battoo had defied an injunction issued in an SEC action against him and BC Capital Group in 2012 by transferring assets to the control of the liquidators.

    The trustee of Bernard Madoff’s business entered into a settlement with feeder funds, Ariel Fund Ltd. and Gabriel Capital LP, once run by J. Ezra Merkin. The settlements will free up $35.4 million for distribution to Madoff’s customers, and the funds will receive about $145 million in payments to catch with distributions made to other customers. The settlements do not resolve the trustee’s claims against Merkin himself or his related entities, Ascot Funds and Gabriel Capital Corp.

    The Bernard Madoff trustee announced a settlement with Plaza Investments International that will result in recovery of $140 million. The settlement will bring the total available to repay customers $10.874 billion. The trustee had sought $235 million from Plaza and its investment manager, Notz, Stucki Management (Bermuda) Ltd. Plaza will also be allowed its $405 million claim.

    The United States Supreme Court rejected the Bernard Madoff trustee’s appeal of a decision that blocked the trustee from recovering nearly $2 billion in direct recoveries. The Second Circuit had affirmed lower rulings finding that Section 546(e) applied to bar the trustee from seeking recovery of transfers made to Madoff’s customers.

    A district court declined to dismiss the claims of the receiver of Stanford Financial against two law firms, Chadbourne & Parke and Proskauer Rose. The receiver claims that Thomas Sjoblom, a lawyer who worked at both firms, obstructed investigations by the SEC and other regulators. The receiver may pursue negligence, aiding and abetting fraud, negligent supervision and civil conspiracy claims.

    Equity Trust Company, a company that offers self-directed IRAs, was charged by the SEC for its involvement with the $5 million Ponzi scheme run by Ephren Taylor and Randy Poulson. Equity Trust is alleged to have ignored red flags in connection with the investments. The scheme defrauded more than 100 investors out of $5 million that was invested through accounts at Equity Trust.

    The TelexFree trustee reported to the court on the status of his administration of the case. He reported that he has identified over 900,000 accounts that were registered with TelexFree, approximately 68,000 of them which appear to have profited from the scheme. The trustee believes that they may have profited an average of over $20,000 each, meaning over $1 billion in potential recoveries to be sought. The trustee has recovered approximately $16 million to date in the case.

    The court presiding over the Zeek Rewards receivership case ordered NxSystems to turnover $9 million to the receiver. NxSystems is an “e-wallet” account company. An e-wallet allows Internet users the ability to make electronic transactions, such as PayPal.

    The Zeek Rewards receiver settled with attorney Kevin Grimes, the Grimes & Reese law firm and a Grimes-related entity, MLM Compliance VT LLC, for $1.175 million. The receiver had alleged that they had received $843,000 from the sale of a “bogus compliance course” and that Grimes had received $342,510 less than a week before Zeek Rewards shut down. Grimes and the entities did not admit any wrongdoing in connection with the settlement.

    The Zeek Rewards receiver announced that he will be making a second partial interim distribution to the affiliates who hold allowed claims. Combined with the first partial interim distribution, the receiver believes this will return 60% of the allowed claim losses. The receiver is using the rising tide methodology of distribution which he described as follows: “two investors put $10,000 into the scheme and each will receive $6,000 total, whether it was received from the scheme itself, or from distributions from the receivership, or a combination of both.”