December 2015 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

    Below is a summary of the activity reported for December 2015. The reported stories reflect: 6 guilty pleas or convictions in pending cases; over 14 years of newly imposed sentences for people involved in Ponzi schemes; at least 5 new Ponzi schemes worldwide; 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.

    Lori Ann Anderson, 53, was charged in connection with an alleged Ponzi scheme in which she solicited investments for the purpose of day trading. Anderson was the agent for SMTS Association, an investment business she ran out of her house.

    Fred Davis Clark Jr. aka Dave Clark, 56, the ex-CEO of Cay Clubs Resorts and Marinas, was found guilty of running a $300 million Ponzi scheme. The scheme promised nearly 1,400 investors returns from the refurbishment of properties into luxury homes, guaranteeing returns of 15% to 20%. Two other Cay Clubs executives, Barry Graham and Ricky Stokes, previously pleaded guilty and were sentenced to 5 years each.

    Homero Joshua Garza, 30, and his companies, GAW Miner, LLC and ZenMiner, LLC, were named by the SEC in an enforcement action charging them with fraud. The defendants were allegedly running a Ponzi scheme by selling Hashlets, which were advertised as the “world’s first digital cloud miner” of virtual currency. Over 10,000 investors invested at least $19 million over a four month period in mid-2014.

    Tracy Gilmond, 45, was charged by the SEC in connection with her role as a promoter of the ZeekRewards $850 million Ponzi scheme. Gilmond spoke at ZeekRewards’ events and solicited investors into the scheme for which she was paid more than $1.7 million in commissions.

    Alex Haxton, 27, pleaded guilty to charges that he ran a fraudulent Internet-based investment scheme that defrauded more than 100 victims.

    Vu H. Le aka Vinh H. Le, 39, and TeamVinh.com LLC was accused by the SEC of running a Ponzi scheme. The scheme allegedly involved the purchase of VPAKs and raised more than $3 million from at least 5,600 investors. Team Vinh was using the name ACCESS WEW, which stood for “A Crazy Cost Effective Self-Sustainable Wealth the Easier Way.” The scheme involved a commodities trading program over the internet, promising 5% weekly returns.

    Levi Lindemann, 39, was charged in connection with an alleged Ponzi scheme that defrauded about 50 investors out of about $2.5 million. Lindemann was a broker who operated an investment firm called Gershwin Financial Inc., which did business as Alternative Wealth Solutions. He had been sued by the SEC last year. Lindemann used over $2.5 million of the $4.3 million that he raised from investors for personal expenses and to pay promised returns to investors.

    Christopher Maguire, 33, pleaded not guilty to charges that he ran a $13.4 million Ponzi scheme.  Maguire is accused of defrauding people associated with several churches and religious organizations and promising them returns of 20% for a “proof of funds” loan business.

    Steven Andrew McKinlay, 58, and his wife, Krista B. McKinlay aka Kristi Kindred, 56, were arrested and charged with operating a $3 million Ponzi scheme through their company, God’s Sports Company. The company offered a prototype baseball bat that offered “leading performance and durability.” They are accused of defrauding more than 10 individuals and using much of the money on personal expenditures such as $10,000 per month rent for their home, their daughter’s wedding, and cars.

    Frederick Monroe, 59, pleaded guilty to charges that he defrauded at least 20 victims of more than $1 million. Monroe solicited funds from investors by promising that he would invest in bonds for their retirement.

    Paul Moore IV, 51, was sentenced to 5 years in prison in connection with a Ponzi scheme he ran through his alleged hedge fund, Coast Capital Management LLC.  Moore took in more than $2.8 million and spent about $1.7 million on himself.

    Wayne Palmer, 60, and his company, National Note of Utah LLC, lost the trial brought by the SEC against them in an enforcement action accusing them of running a Ponzi scheme. The court found that National Note had raised about $100 million from over 600 investors, promising them returns of 12% in a real estate scheme.

    Sann Rodrigues was found in contempt of court in connection with the TelexFree Ponzi scheme case. The SEC alleged that Rodrigues violated a freeze order and transferred more than $334,000 and real estate in violation of the asset freeze.

    Martin Shkreli, 32, was arrested for allegedly running a Ponzi scheme through his company, Retrophin. Shkreli has also been sharply criticized for raising the price of a live-saving drug more than fiftyfold through his other company, Turing Pharmaceuticals. Shkreli has pleaded not guilty. Shkreli resigned from Turing and was terminated as CEO of KaloBios Pharmaceuticals following his arrest.  Evan Greenbel, 42, a New York lawyer, is alleged to have helped Shkreli in his schemes. Both Shkreli and Greenbel pleaded not guilty.

    Joseph Signore, 51, his soon-to-be ex-wife, Laura Grand-Signore, 41, and his business partner, Paul Schumack, 57, were found guilty in connection with an $80 million Ponzi scheme that defrauded investors in a virtual concierge business run through JCS Enterprises. A fourth defendant, Craig Hipp, 54, was previously found guilty and is serving 7 years in prison. Investors would purchase a virtual concierge machine for a fee ranging from $2,600 to $4,500 and were promised returns ranging from 80% to 120% annually.

    Frank Spinosa, 54, was sentenced to 2½ years in prison for his role in the Scott Rothstein $1.2 billion Ponzi scheme. Spinosa used his position at TD Bank to falsely assure some of Rothstein’s investors that their money was safe.

    Marcello Trebitsch, 37, was sentenced to 2 years in prison and ordered to pay nearly $6 million in restitution for his role in defrauding 4 investors out of $5.9 million in a Ponzi scheme that he ran through Allese Capital LLC. The investment supposedly generated annual returns of 14% to 16% through a day trading of large cap stocks. Trebitsch is the son-in-law of Sheldon Silver, the former New York Assembly speaker, who was convicted recently in an unrelated corruption case.

    William Donnelly Yotty, 69, was sentenced to 4 years and 9 months in prison and ordered to pay more than $15 million in restitution to 240 investors who were defrauded in Yotty’s two Ponzi schemes. Yotty operated his schemes through companies including The Money People Inc. and Fortuno Millionaire Club. The schemes involved the purchase of debt instruments for a promise of 25% returns, and a real estate flipping scheme that promised returns of 200% to 300%.

INTERNATIONAL PONZI SCHEME NEWS

Australia

    Maureen Gael Johnston and Douglas Gordon Johnston were charged in connection with a fraudulent scheme run though Investman Nominees (USA) Pty Ltd. and Small Business Management Pty Ltd. Investors were defrauded into investing $1.5 million into property developments in the United States and Australia.

India

    M Srivivas, 63, and has wife, B G Pushpalatha, 55, were arrested in connection with an alleged scheme run through their financial company, Shreyas Groups. Shreyas Groups is an umbrella company associated with Shreyas Finance & Investments, Shreyas Chits, and Shreyas Souharda Co-operative Limited.

    Balasaheb Bhapkar, 56, was arrested in connection with an alleged scheme run through Sai Prasad Group of Companies. The company has interests in real estate, infrastructure, energy, food and films.

    Bijay Ketan Das, the director of High-tech Regional Cooperative Limited, was arrested for allegedly defrauded 5,000 investors.

    At least 18 different locations of Ramel Group of Industries were searched in connection with an alleged Ponzi scheme that raised over Rs 97 crore from investors.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

    The SEC prevailed on its request to get emails of Steve H Karroum, the president of FX & Beyond Corp. Karroum had asserted that the Fourth Amendment and the marital privilege barred the production of his emails.

    The Trustee of the Bernard Madoff Ponzi scheme sent out checks in the sixth distribution made in the case. The distribution raises the recoveries to victims to $9.16 billion so far, which is about 57% of the cash that they lost.

    A federal judge denied the request of Kingate Global Fund for a quick appeal of a ruling that left intact most of a lawsuit of the Madoff trustee’s clawback lawsuit for $825 million against the feeder fund.

    The Second Circuit declined to reinstate a lawsuit by The R.W. Grand Lodge of Free and Accepted Masons of Pennsylvania against Meridian Capital Partners Inc. relating to losses suffered in the Madoff scheme.

    The Madoff trustee sought to block a lawsuit by investors against Madoff investor Jeffery Picower, whom the trustee had settled with in 2011 in a $7.2 billion settlement.

    The receiver in the Arthur Nadel Ponzi scheme made an additional distribution totaling $3 million to about 350 investors, which brings the recoveries to nearly 47% of their losses.

    Investors in the Martin Sigillito Ponzi scheme lost their claims against two banks in connection with the scheme. 56 victims had sued St. Louis Bank and 91 victims had sued PNC Bank, but the court found that neither bank knew about the fraud being committed in the bank accounts controlled by Sigillito.

    Kroll LLC has agreed to pay a $24 million settlement in connection with the Allen Stanford $7 billion Ponzi scheme. A lawsuit had alleged that Kroll was grossly negligent in submitting a falsely positive report about Stanford.

November 2015 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

    Below is a summary of the activity reported for November 2015. The reported stories reflect: 3 guilty pleas or convictions in pending cases; over 77 years of newly imposed sentences for people involved in Ponzi schemes; at least 9 new Ponzi schemes worldwide; and an average age of approximately 54 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.

    Troy Barnes, 53, was indicted in connection with an alleged Ponzi scheme operated through Work with Troy Barnes Inc., which later changed its name to The Achieve Community.  Kristine Louis Johnson, 60, pleaded guilty to charges in June 2015. The scheme defrauded over 10,000 investors who lost at least $7 million, having been promised returns of up to 700%. At the time the scheme shut down for the self-stated reason that it could not handle “the volume of money we’re paying our members,” the company owed promised returns of about $51 million.

    John Paul Baron, 55, was sentenced to 6 years in prison in connection with a $3 million Ponzi scheme. Baron had promised annual tax free returns of 15% to 28%. Terrence McGill, 57, was previously sentenced to 23 months of house arrest in connection with the scheme.

    Ian Parker Bick, 20, was convicted on charges that he ran a Ponzi scheme defrauding over 15 investors out of nearly $500,000. Bick is the owner of Tuxedo Junction, an all-ages night club/juice bar. Bick used his other entities such as This is Where It’s At Entertainment, Planet Youth Entertainment, W&B Wholesale and W&B Investments, to solicit investments. Bick represented that he was buying electronics and reselling them for a profit and that he was organizing and promoting concerts.

    Scott A. Doak was barred by the SEC from the financial services industry in connection with his involvement in a Ponzi scheme through his company, OVO Wealth Management LLC. Doak founded OVO with William Apostelos. Apostelos’ other companies involved in the scheme were WMA Enterprises and Midwest Green Resources LLC. They raised more than $66 million from about 350 investors. Doak wound down OVO and directed clients to Apostelos’ companies, failing to tell them that he and others were unsuccessful in withdrawing their money, among other things.

    Joel Barry Gillis, 75, and Edward Wishner, 77, were sentenced to 10 years and 9 years, respectively, in connection with a 13 year long Ponzi scheme run though Nationwide Automated System Inc. (NASI). The scheme defrauded more than 1,300 investors out of at least $123 million, promising the investors returns of at least 20% from the sale and operation of ATMs. Investors could purchase ATMs that were then leased back to NASI in exchange for rent based upon a set price for each ATM transaction. Corporate records reflected more than 31,000 leaseback arrangements, but in fact only 253 ATMs were being serviced.

    Jon Michael Harder, 50, the former Sunwest Management CEO, was sentenced to 15 years in prison. Sunwest operated assisted living homes and defrauded more than 1,000 investors out of at least $120 million.

    Michael Holcomb, 72, Gary Holcomb¸ 70, Kristin Van Breeman, 42, and Jennifer Chalmers, 44, were indicted on charges that their family-owned insurance financing businesses, Berjac of Oregon and Berjac of Portland, were a Ponzi scheme. The scheme is believed to involve $40 million and more than 400 investors.

    James A. MacCallum, 44, was charged in connection with running an alleged Ponzi scheme that targeted more than 6 investors out of about $3.4 million. MacCallum, now a disbarred lawyer, had solicited investors while he was a practicing attorney to invest in real estate and life insurance policies through his company, Andrew Mitchell Holdings LLC. Investors were issued promissory notes bearing annual interest rates of at least 15%.

    Bernard M. Parker, 54, was charged by the SEC with stealing $1.2 million in an alleged Ponzi-like scheme that he ran through his company, Parker Financial Services. Parker represented to investors that he was using their money to purchase tax lien certificates and promised them high rates of return. Parker was a broker at Edward D. Jones & Co. at the time, and was terminated following a customer complaint.

    Richard Roop was jailed following contempt proceedings for his violation of orders to stop selling securities. Roop and his company, Bottom Line Results, had been permanently barred from the securities industry, but Roop continued to sell promissory notes to investors as an unlicensed broker. The funds from these sales were used to purchase distressed real estate without proper disclosure of risk and to pay off earlier investors.

    Matthew John Ryan saw his 10 year prison sentence affirmed by the Second Circuit. Ryan had pleaded guilty to running a real estate Ponzi scheme through his firm Prime Rate and Return LLC aka American Integrity.

    Anthony Saumell, 45, was sentenced to 3 years and two months in prison in connection with a Ponzi scheme run through his company, Gear Management Corp. Saumell guaranteed returns of 10% within 30 days from the supposed resale of aircraft parts.

    David Miguel Nanes Schnitzer aka David Banes, 47, was arrested in Belize in connection with the Stanford Financial Ponzi scheme. Nanes Schnitzer headed the Mexican arm of Stanford's Ponzi scheme, which allegedly defrauded investors in Mexico of $42 million. Although there are no criminal charges pending against Nanes Schnitzer in the U.S., the Stanford receiver has filed a civil lawsuit against him for breach of fiduciary.

    Jerry Stauffer, 66, has been soliciting victims of his alleged $1.5 million Ponzi scheme to help pay for private counsel in lieu of his public defender. Stauffer has been accused of running a Ponzi scheme in foreign exchange trading to generate returns of up to 10% monthly.

    James A. Torchia, 56, and his companies, Credit Nation Capital and Credit National Acceptance, were the subject of an SEC complaint accusing them of running a Ponzi scheme involving the sale of bogus promissory notes and selling interests in life settlements. The SEC complaint alleges that Torchia promised 9% returns and approximately $30 million was owed to note holders. The complaint also alleges that two companies he controls, Spaghetti Junction LLC and Willie’s West LLC, transferred hundreds of thousands of dollars to Torchia and his wife.

    Scott Valente, 58, was sentenced to 20 years in prison and ordered to pay $8.3 million in restitution for operating a Ponzi scheme that defrauded more than 100 investors out of more than $10 million. Valente ran his scheme through his investment company, the ELIV Group LLC, claiming that he had annual investment returns of 36% to more than 48% when in fact he was losing money each year.

    Hector Vega, 40, pleaded guilty to charges accusing him of running a Ponzi scheme in which he promoted music concerts.

    Sydney “Jack” Williams, 66, pleaded guilty to charges that he made a series of bank withdrawals. His wife, Lori Ann Williams, pleaded guilty a few weeks earlier.

    Tropikgadget FZE, Tropikgadget Unipessoal LDA, Compasswinner LDA, and Happy SGPS SA, operating under the $23.5 million Wings Network Ponzi scheme, were ordered to pay $36 million as fines and restitution to thousands of mostly Latino investors.

INTERNATIONAL PONZI SCHEME NEWS

Canada

    Rashida Samji, 61, sought a stay of charges relating to an alleged $110 million Ponzi scheme, claiming that the charges would violate her constitutional right not to be tried twice for the same offense. Samji was previously fined $33 million by the BC Securities Commission for defrauding more than 200 investors, and she was banned from the B.C.’s capital markets. Samji’s investors were advised that they were investing in a winery that was expanding into South America and South Africa. About 90 of the investors came to her through Arvindbhai Bakaorbhai Patel, a financial planner at Coast Capital Savings. Patel was previously charged in connection with the scheme.

England

    Phillip Harold Boakes, 56, was sentenced to 10 years in prison following his conviction in March for defrauding investors of at least £3.5m ($5.3m, €5m). Boakes promised investors returns of 20% or more through a foreign exchange spread betting program in his company, CurrencyTrader.

    Richard Rufus, 40, was found to have operated a Ponzi scheme that defrauded almost 100 victims out of almost £9 million. Rufus had collected more than £16 million, but lost more than £5 million through currency exchange trading and used more than £3 for himself. Restrictions were imposed on Rufus’s ability to borrow money and work in business for the next 15 years. It is unclear whether he will face criminal charges.

Germany

    The trial got underway of Jorg Biehl and five other executives of Infinus, which is believed to have run a Ponzi scheme defrauding 22,000 investors out of €312 million, or $336 million.

India

    Four directors of ASSDA - Nabarun Dutta, Jasim Hossain, Jamir Hossain and Asgar Ali – were arrested for allegedly raising money from the public illegally and misappropriating funds.

    The Supreme Court dismissed the bail plea of Matang Sing, who had previously been arrested in connection with the Saradha Ponzi scheme.

    Omkar Singh was arrested in connection with an alleged Ponzi scheme involving more than 15 crore, through the companies, Ambitious Diversified Projects Management Ltd. and OAK India Multi-State Credit Cooperative Society.

    Davanidhi Mohapatra, the managing director of Tresty Securities Limited, was arrested for allegedly defrauding investors out of Rs 10 crore.

    Two directors of Akashdeep Projects, Pinak Ranjan Choudhary and Tapas Pramanik, were arrested and were alleged to be “involved in criminal conspiracy with other directors.”

    Nirmal Infra Home Corporations Limited was raided in connection with charges that it defrauded investors of about Rs 50 crore. Nirmal claimed to have operations in real estate and hospitality businesses and promised high returns.

Philippines

    The SEC alleged that EmGoldEx, which was renamed at Global Intergold, was a Ponzi scheme, and that Prosperous Infinite Philippines Holdings, Corp., was later incorporated. The SEC issued a warning in advanced of a promotional event at which 2,000 people were expected to attend. Individuals alleged to be associated with the scheme are Kevin Miranda, Ryan Manuit, Charles Juiz Padilla, Rabel Ymas, John Rafael Calicdan, and Paul Alviar. Weng Faye Cabreros Cabusas aka Rowena Faye Cabusas, Gavino Mariano Tan, and Romell Enriquez Tan of Goldxtream Trading Co. were charged in connection with an alleged Ponzi scheme that promised returns of P25,000 for an investment of P5,000 after 11 days.

Thailand

    Over 20 million baht worth of assets were seized from Wannachai Boonchu, who alleged defrauded victims into investing in gold futures through a China-based company. The scheme defrauded over 1,000 people.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

    The trustee of Tim Durham’s Fair Finance Co. $208 million Ponzi scheme sought approval to distribute $18 million to investors. The distribution represents less than 9 cents on the dollar for the 5,000 investors. Fair Finance, founded in 1934 but acquired by Durham in 2002, bought finance contracts from fitness clubs, timeshare condominium developers and other firms that offered customers extended payment plans. Durham, who pulled out tens of millions of dollars for himself, is serving a 50 year prison sentence.

    Ernst & Young was found liable by a jury in a lawsuit filed by investment firm FutureSelect Portfolio Management Inc. for negligent audit reports of a Bernard Madoff feeder fund prepared by Ernst & Young. Ernst & Young had audited Rye Funds, which were managed by Tremont Group Holdings Inc., and contends that it followed generally accepted accounting principles in auditing the fund. The jury rendered a verdict of $20.3 million, with Ernst & Young liable for half of that amount, but the liability could reach nearly $25 million when prejudgment interest is added.

    A court declined to dismiss claims brought by investors in the Stanford Financial Ponzi scheme against Toronto-Dominion Bank, alleging that TD failed to conduct proper due diligence and was negligent in providing services to Stanford International Bank.

    A bankruptcy court has ruled that TelexFree LLC, TelexFree Inc. and TelexFree Financial Inc. were engaged in a Ponzi and pyramid scheme. The trustee had sought such a ruling as part of the proposed claims procedure process, but he will likely also use the ruling in connection with lawsuits to recover voidable transactions.

    The lawyer appointed by the court to defend thousands of net winners in the ZeekRewards case has established a website to communicate with the Net Winner Class in the case. The website can be found at http://www.zeeknetwinnerclass.com/index.

IRS Mail Fraud Instruct

What I would do is to first of all make copies of all of the correspondence that you have received including the envelope. Then do a google search (do not try to get this from irs.gov) for Form 4490 Proof of Claim 5 page Form and copy it down, but do not fill it in. Then I would send certified mail this form with a cover letter that tells them to fill out the form and get it back to you in 15 days sent to the last place that sent you a letter. Be sure to include your name and address and SSN on the cover letter and keep a copy of it and the Form 4490. After they do not respond (have not had one responded to yet) send a registered mail complaint to the universal postal union in Bern Switzerland stating that this agency is attempting to collect on a debt that they have refused to verify (cost about $25.) and are using the United States Mail to do it--mail fraud. You will need the correspondence from them including the envelope and use the copy of what you sent to the irs as an exhibit of what you sent to the irs.
(this is not legal or tax advice bla bla bla)

October 2015 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

    Below is a summary of the activity reported for October 2015. The reported stories reflect: 3 guilty pleas or convictions in pending cases; over 93 years of newly imposed sentences for people involved in Ponzi schemes; at least 4 new Ponzi schemes; and an average age of approximately 54 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.

    William Apostelos, 54, and Connie Apostelos aka Connie Coleman, 50, were indicted on charges relating to an alleged $70 million Ponzi scheme that defrauded over 480 investors. The Apostelos ran the scheme through their investment business, WMA Enterprises LLC, Midwest Green Resources LLC, and Roan Capital. Connie Apostelos also operated Coleman Capital Inc. and Silver Bridle Racing LLC. The investors are believed to have lost $30 million collectively.

    Eric Bartoli, 61, was extradited from Peru, after having been wanted by the FBI since 2003 for masterminding a $65 million Ponzi scheme. Bartoli had run his scheme through Cyprus Funds, Inc. and took money from more than 800 investors. It is believed that about $30 million was returned to investors by Bartoli, and the receiver over the scheme has made nearly $10 million in distributions to the victims.

    Chuckie Beaver, 52, was sentenced to 4 years and 9 months in prison for defrauded at least 30 victims out of about $2 million. Beaver owned Best Services Inc., which repaired industrial electronic equipment. He solicited investors to provide capital to supposedly buy materials to complete a large number of outstanding repair orders for major corporations. Beaver delivered fake documents to the investors, including bogus repair orders, and promised them returns of up to 100%.

    Charles A. Bennett, 57, pleaded guilty to running a $5 million Ponzi scheme that involved at least 30 investors. Bennett was once a lawyer at Skadden Arps Slate Meagher & Flom LLP, but later started soliciting investments in a supposed European real estate mortgage-backed securities scheme. The scheme first came to light after Bennett’s failed suicide attempt last year in which he revealed that “the bulk of the funds were used in classic Ponzi scheme fashion to pay off other supposed ‘investors’ and my absurd lifestyle.”

    John Steven Blount, 55, was sentenced to 19½ years in prison and was ordered to pay $4.3 million in restitution in connection with a $5.8 million Ponzi scheme through his company, Professional Consultants LLC. The scheme defrauded at least 73 investors by promising above-market returns from investments in fictitious companies, bonds and IRAs.

    Robert Cephas Brown Jr., 61, had his 10 year prison sentence reduced by about 5 ½ years as a result of his appeal to the Ninth Circuit. The appellate court found that the lower court had overreached in the use of the sentencing enhancements.

    John R. Bullar, 53, and his company Executive Management Advisors LLC, were permanently banned from future violations of the Commodity Exchange Act. They were also imposed with a restitution obligation in the amount of $31 million. Bullar was sentenced earlier in the year to 100 months in prison and ordered to pay about $6.2 million in restitution for running an $8.7 million Ponzi scheme. Bullar was also the sole owner and operator of Priapus Group, LLC.

    Steve Chen, and his companies, Gemcoin, its parent company, Alliance Financial Group, Inc., its subsidiary, US Fine Investment Arts, Inc., along with other related companies, Amauction, Inc., Aborell Mgmt I, LLC, Aborell Advisors I, LLC, Aborell REIT II, LLC, Ahome Real Estate, LLC, Alliance NGN, Inc., Apollo REIT I, Inc., Apollo REIT II, LLC, Amkey, Inc., US China Consultation Association, and Quail Ranch Golf Course, LLC, were the subject of an SEC complaint alleging that they were operating a fraudulent scheme. Investors were told that the companies owned amber mines in Argentina and Dominican Republic with assets of $50 billion. Chen and his companies allegedly raised at least $32 million from investors, claiming to have converted the holdings of the investors into “Gemcoins,” which was supposedly a digital currency secured by the amber holdings in the company. Chen told investors that the U.S government had purchased 705 of Gemcoins and that a 6,400% profit was guaranteed. An anonymous investor in Gemcoin filed a lawsuit making allegations against former Arcadia Mayor, John Wuo, who promptly resigned from his position stating “health and personal reasons.”

    Paul Sloane Davis, 74, was sentenced to 3 years in prison and ordered to pay $1.7 million in restitution in connection with a $2.4 million Ponzi scheme. The scheme was run with his partner Dianne Cobb, 58, through a company called DM Financial, and defrauded 21 investors.

    Gordon Driver, 58, was sentenced to 12½ years in prison and ordered to pay about $9.6 million in restitution in connection with his operation of a Ponzi scheme through Axcess Automation LLC and for his lying to the SEC under oath. The scheme took in about $17.4 million from about 150 people. Of those, 88 lost nearly $10 million. Driver had told investors that he was producing profits of 1% to 5% a week through a commodity futures trading program involving E-mini S&P 500 futures contracts.

    Jeffrey Heady, a former Phoenix policy officer, was sentenced to 5 years in prison and ordered to pay more than $1 million in restitution in connection with his Ponzi scheme that defrauded 15 victims out of more than $1 million.  Heady was selling bridge loan investments through his company, Investment Acquisition Group. He told investors he would use their money to buy and resell commercial properties, promising a return of 11% to 19% per year.

    Jenifer Hoffman, 51, was sentenced to 9 years in prison for defrauding more than 100 people out of more than $10 million. Hoffman used her company, Assured Capital Consultants, to solicit the investors into a scheme run with John Boschert, 43, and Bryan Zuzga, 37. Boschert and Zuzga both previously pleaded guilty and are serving prison terms of 9 years and 6 years, respectively.

    Michael William Kwasnik, 46, Joseph Michael Schifano, 49, and Daniel Francis McCorry, 59, were ordered to pay back $8.6 million to 73 elderly investors in a Ponzi scheme and an additional $5.4 million in penalties. They had promised 12% returns from the purchase of life insurance policies and interests in irrevocable life insurance trusts.

    Kurtis Keith Lowe, 63, and Robert Allen Blackburn, 49, were each sentenced to 5 years in prison and ordered to pay about $2.3 million in restitution, jointly and severally. Lowe and Blackburn pleaded guilty in July 2015 to charges relating to a scheme run through Omni Capital Management Trust. Lowe owned Omni and Blackburn recruited investors into the company, as well as two other bogus companies, Amwest Capital Management and National Fidelity Management. Lowe and Blackburn defrauded 21 investors out of more than $2.4 million.

    Patricia Maldonado was hit with a $50 million jury verdict in connection with her role as the former treasury manager of Stanford Financial. The receiver of Stanford Financial had alleged that Maldonado breached her fiduciary duties in connection with improper transfers from customer deposit accounts, including transfers of more than $200 million to a secret Swiss bank account that was used to pay bribes.

    James Hurst Miller, 67, was sentenced to 7 years in prison for his role in a Ponzi scheme run by developer Kelly Gearhart. Miller raised money for the scheme through his company, Hurst Financial Corp., acting as a middleman in recruiting investors.

    Jason A. Muskey, 39, was sentenced to 11 years in prison for his role in connection with a Ponzi scheme he ran through Muskey Financial Services that raised $2 million from 26 investors. He was also barred from the financial industry by the SEC.

    Dror Soref, 65, and Michelle Seward, 43, were charged with in connection with an alleged Ponzi scheme that defrauded nearly 140 investors to raise money for the film “Not Forgotten” through their company, Windsor Pictures LLC.

    Frank Spinosa, 54, pleaded guilty to charges that he provided false assurances to investors in the Scott Rothstein $1.2 billion Ponzi scheme. Spinosa was the regional vice president of TD Bank, which was found liable for $67 million to a group of investors who sued the bank for aiding and abetting Rothstein’s fraud. Spinosa had signed “lock letters” assuring the investors that their money was safe in TD bank accounts. More than two dozen people have been charged and convicted in connection with the Rothstein Ponzi scheme.

    R. Allen Stanford, 65, lost his appeal of his conviction and 110 year prison sentence. The Fifth Circuit rejected Stanford’s 10 arguments raised on appeal, including that: he was not competent to stand trial, the government did not prove its case; the sentence was too long; and the trial judge was biased toward the prosecutors. U.S. v. Stanford, 2015 U.S. App. LEXIS 18861 (5th Cir. Oct. 29, 2015).

    Michael Szafrankski, 37, was sentenced to 2½ years for his role in the Scott Rothstein Ponzi scheme. Szafrankski has been hired by several hedge funds to act as an “independent asset verifier” to vet the investments that Rothstein was promoting. Szafrankski became friends with Rothstein and then began soliciting investors for the scheme. It was alleged that Szafrankski brought over $200 million of new investments into the scheme.

    Alan James Watson, 50, and Michael S. Potts were ordered to pay more than $91.9 million in restitution and penalties in connection with a commodity pool Ponzi scheme run through Cash Flow Financial LLC. They also used Safevest LLC and Trade LLC as part of the scheme. The two were accused of soliciting at least $45 million from more than 600 investors.  Watson was previously sentenced to 12 years in prison.

    William J. Wells was arrested and also became the subject of a complaint filed by the SEC accusing him of running a Ponzi scheme through Promitor Capital Management LLC that defrauded more than 30 investors out of more than $1.5 million. Wells allegedly falsely told investors that he was a registered investment advisor and would invest their money in specific stocks. Instead, he invested in high risk options and had to bring in money from new investors to cover his losses. In response to an investors accusation that he was running a Ponzi scheme, Wells responded, “I’m an idiot and was trying to get some big trades to . . . make you more money.” Criminal charges were also filed against Wells.

    Lorie Ann Williams, 48, pleaded guilty to evading bank reporting requirements in connection with Ponzi scheme of Nevin Shapiro. Williams admitting to withdrawing $332,500 worth of cash in chunks of $9,500, intending to avoid the $10,000 threshold at which cash transactions must be reported. She withdrew the cash after lawsuits were filed against her husband, Sydney “Jack Williams, 66, the top recruiter in the Shapiro’s Capitol Investments Ponzi scheme, earning up to $18 million in interest and commissions. Sydney Williams had previously pleaded guilty to tax fraud for failing to report $6.4 million in income. Sydney and Lorie Ann Williams are now accused of conspiring to move funds shortly before Sydney filed bankruptcy in 2010.

    Daniel H. Williford, 57, was sentenced to 9 years and 2 months and ordered to pay $17.9 million in restitution in connection with a $44 million Ponzi scheme that took in money from more than 200 investors. Williford had promised investors that their funds would be invested in wireless internet equipment, internet towers and other facilities. Instead, Williford invested only $7.7 million of the victim’s money and used $32 million to make Ponzi scheme payments to earlier investors and to pay his personal expenses. More than 100 investors lost nearly $18 million in the scheme.

    Joseph Zada, 57, was found guilty last month for his role in a $50 million Ponzi scheme in which he told investors he was putting their money in oil and currency trading through a secret European board. Since then, and prior to his sentencing, evidence has come out that Zada has been receiving substantial financial assistance from Alex Molinaroli, the CEO of Johnson Controls Inc., in the form of housing and money. Prosecutors, in arguing that Zada may be a flight risk, say that Molinaroli has paid Zada’s legal fees, bought a mansion for Zada to live in, and offered to pay up to $20 million in restitution for Zada. Molinaroli says he gave money to Zada understanding that Zada was investing it and that he regrets ever meeting Zada.

INTERNATIONAL PONZI SCHEME NEWS

Canada

    Leanne Houle, 47, had charges against her dropped in connection with an alleged $3 million Ponzi scheme in which 22 investors had understood their money was being invested in high-return currency trading with tax-free returns of 15% to 28%. John Paul Baron, 55, had previously been convicted on charges relating to the scheme, and Terrence McGill, 57, had previously been sentenced to 23 months of house arrest.

China

    Fanya Metal Exchange is the subject of public protests, among other things, that it is a Ponzi scheme. It is estimated that thousands of Chinese investors have invested an estimated $6 billion into the company, believing that they were investing in a business that bought, sold and traded rare metals. China’s state banks had recommended Fanya to customers, national television stations tacitly endorsed the business, and local regulators approved it. Fanya has been in business since 2011, and it is reported that its prices were far disassociated from the global buying and selling of rare metals. Retail investors would lend money to buyers to pay for products and would get a “warehouse warrant” of the rare metals that their money had bought, pledging that the metals exist. The end buyers of the metal would pay investors daily interest of .003%, or 13.7% on an annual basis.

India

    The Central Bureau of Investigation arrested three directors of MPS Greenery Developers Ltd.: Shantanu Chowdhury, Prabir Kumar Chanda, and Madhusudan. They have been accused of conspiring with the managing director, P.N. Manna, to defraud poor investors in a Ponzi scheme and collecting Rs. 2,500 crore from the public with permission from any regulatory body.

South Africa

    The Reserve Bank applied to have the company Carmol be determined insolvent and to be liquidated. Carmol was allegedly a Ponzi scheme that promised returns of between 72% and 96% a year. Carmol claimed to be involved in the selling and distributing of Petrol and diesel products, but instead is alleged to have been running an unlawful deposit-taking scheme. Yunus Moola and Fathima Carawan are directors of Carmol.

Thailand

    The Department of Special Investigation seized assets exceeding 700 million baht from Digital Crown Holdings Limited, which is accused of running a Ponzi scheme that defrauded more than 8,000 people out of 900 million baht.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

    Victims of Steve Blount’s Ponzi scheme filed a lawsuit against Blount’s companies and JD Bank, alleging that the bank aided and abetted the fraud and added unwarranted legitimacy to the business. Blount was sentenced to almost 20 years in prior for the scheme that defrauded more than 70 victims.

    John R. Merlino Jr. won an appeal of a malpractice lawsuit brought against him by a couple who had invested $3 million with Merlino’s client, Antoinette Hodgson, who was convicted of running a Ponzi scheme.

    The trustee of the Bernard Madoff Ponzi scheme had his lawsuits dismissed that were seeking to recover payments made to foreign investment companies. The court found that since the transfers did not take place on U.S. soil, the U.S. Bankruptcy Code does not apply to them.

    The United States Supreme Court denied a petition for writ of certiorari filed by a group of investors in the Madoff scheme seeking review of a Second Circuit decision denying them the ability to collect inflation or interest on their losses. The Court upheld that the finding that the Securities Investor Protection Act does not allow the liquidating trustee to adjust investors’ net equity claims for inflation or interest. The Madoff trustee is now free to disburse $1.249 billion that he has been holding in reserve while the litigation over time-based damages was pending. Any customer who invested up to $1,161,000 will be made completely whole in the latest round of distribution payments.

    FutureSelect Portfolio Management Inc. began its jury trial against Ernst & Young, alleging that E&Y certified $4.2 billion in fake assets that Bernard Madoff claimed to have. The FutureSelect investors say they never would have invested but for the certification of E&Y of the financials of Madoff.

    The Madoff trustee began a trial against Andrew Cohen, a former Madoff employee, to recover $1.1 million on a fraudulent transfer theory.

    A court granted a request by the liquidator of Fairfield Sentry Ltd. to disapprove the sale of a $230 million claim against Madoff to a hedge fund.

    Three brokers have agreed to pay $2.75 million to settle arbitration claims relating to their role in investments purchased by Gregory McKnight, who was found guilty for running a $72 million Ponzi scheme. McKnight was previously sentenced to 15 years in prison for the scheme that involved more than 3,000 investors. McKnight promoted his scheme in a pooled investment program called Legisi, which promised returns of 15% to 18%.

    Huntington Bank sought a stay of a $72 million judgment obtained against it in connection with the CyberNet and Cyberco Holdings Inc. Ponzi scheme run by Barton Watson. The scheme promised investors returns for the use of their money to purchase computer hardware from Teleservices Group, Inc., a company also controlled by Watson. Huntington Bank had provided banking services to Watson and his companies, including a $17 million credit line on which more than $73 million payments were made. The bank’s good faith defense was rejected, with the court noting examples of the bank turning a blind eye to obvious red flags. The court found that the bank is entitled to a stay if it posts a bond of $80 million to cover the judgment and the $9 million of interest. Huntington Bank says that that bond would cost the bank $800,000 to $1.6 million.

    The TelexFree trustee has filed a motion seeking to institute an electronic claims process to deal with the hundreds of thousands of potential claims. The trustee believes there are likely in excess of one million claimants and that an exclusive online portal is the most practical and cost-effective means of managing the claims process.

    The ZeekRewards receiver sued MLM attorney Gerald Nehra and his law firm, Nehra and Waak, along with his partner, Richard W. Waak. The receiver alleges damages of at least $100 million, contending that they encouraged investors to participate in the scheme by knowingly allowing their names to be used to provide “a false façade of legality and legitimacy…”

The United States is actually a corporation 10-30-15

The U.S which many Americans claim to be a citizen of, especially on government documents, is the the United States most people think it is.  The United States is actually a corporation, and is not the same as the sovereign United States of America.  Corporations are "artificial persons".   Governments are corporations; Inasmuch as every government is an artificial person, an abstraction, and a creature of the mind only [an idea], a government can only interface with other artificial persons. The imaginary – having neither actuality or Substance – is foreclosed from creating and attaining parity with the tangible. The legal manifestation of that is that no government, as well as any law, agency, aspect, court, etc. can concern itself with anything other than corporate artificial persons and the contracts between them.

You make think, "This is impossible. We elect our president in this wonderful democracy! We vote for our leaders and represent us. They have our best interests in heart don't they?"  It's a nice thought, but is it actually true? No, it isn't. The government you willingly bow down to, is nothing more than a corporation. Acting as nothing more than employee, you cast your vote for the CEO of that Corporation. You may think that you elect politicians to represent you in your government, but that is not what you actually do.   That is part of a very carefully fostered illusion intended to keep you in your place and giving most of your earnings away.   Part of the secret is that what is supposed to be your 'government' is actually a privately owned, for-profit company and all that you do when voting, is help choose the serving officers inside that company.   It will never make the slightest difference to what happens in the future as the company policy and actions are controlled by the owners of the company and they are not influenced in any way whatsoever by what you want. You are nothing more than an employee. An entity used for the profit of the corporation.

Just in case you are not aware of it, the purpose of any commercial 'for-profit' company or corporation is to make money for it's owners (and shareholders if there are any).   The people whom you think of as 'The Government' don't do anything which earns money - instead, they take money from you and their main job is to make sure that you don't realize that they are in the same position as IBM which takes away a cool £256 million of your money every year."

Congress formed the United States Government as a Corporation in an Act called, "The District Of Columbia Organic Act of 1871." That means we are not talking about the national government of the United States of America. We are talking about the private corporation named, "The United States Government" (Corp U.S). It is also known as the "UNITED STATES" and "U.S"

In short, there is no ‘parity’ or ‘equality’ between a tangible ‘real’ Living Man of Substance and the idea or imaginative construction of a created form of government that has been cause to arise as an aritificial person, abstraction of a "fiction”. As such, there is no government that can concern itself directly with ‘in’ the affairs of the Living Man, as the Living [tangible] Man [of Substance] is superior in every regard and cannot be subordinated by the abstraction that is a mere idea operating in the form of "government”.

Note: "government” is either by mutual will and informed consent or agreement, OR is by proxy, default, or otherwise [ie. conquest, occupation, compelled, induced, or by misrepresentation, fraud, deceipt, obfuscation]

New Student Loan Servicing Guidelines Mandated by CFPB

As of 2015, one in seven student loan borrowers — or about 14 percent — defaulted on their student loans within three years of starting the repayment period after college was reported by the Chicago Tribune.

As the student loan debt seems to have ballooned out of control from 600 billion in 2006 to $1.2 trillion in 2015, the Consumer Financial Protection Bureau (CFPB) has recently reported widespread servicing failures on both the federal and private student loan borrowers.  As the CFPB noted, loan service providers play a vital role in providing borrowers key information about payments and account information. Millions of student borrowers reported to the CFPB the illegal servicing practices employed and the failure to provide the most basic level of services necessary to meet borrower's needs. 

Much of this comes as no surprise to most.  So, will the CFPB take action?  If so, will it be enough?  First, to make the loan process more simplified, the Department of Education in Fall 2016 will open registration three months earlier to allow parents and students to have a true cost of attending college while still in high school. In Sept 2015, the CFPB released the Joint Statement of Principles on Student Loan Servicing, which outlined new guidelines and recommendations that all loan service providers must abide. These recommendations were formed to create consistency, to hold service providers accountable and to help borrowers be more informed about their debt obligations.  At the heart if the Joint Statement is information transparency regarding payment terms that consumers have come to expect under other regulations subject to the Consumer Credit Protection Act.  Transparency has come along way in terms of disclosure with credit cards, for instance.

Improving disclosure in an understandable and meaningful way is not to be understated.  It is one vital step by the CFPB in its advocating for student borrowers, all of whom can be affected by unfair servicing practice and which will now be curtailed.

- JSM and Leighton Regis 

September 2015 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

    Below is a summary of the activity reported for September 2015. The reported stories reflect: 5 guilty pleas or convictions in pending cases; over 51 years of newly imposed sentences for people involved in Ponzi schemes; at least 3 new Ponzi schemes; and an average age of approximately 52 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it.

    Roger Stanley Bliss, 57, pleaded guilty to charges relating to his attempt to hide a sailboat after he was accused of running a $25 million Ponzi scheme by representing that he was trading exclusively in the shares of Apple. Bliss is also facing charges that he operated an investment club that took in money from about 708 investors, promising returns of up to 300%.

    Charles L. Erickson, 72, was arrested and accused of running a $3.4 million Ponzi scheme that defrauded at least 8 victims. Erickson allegedly took money from fellow members of his Ashland church in Massachusetts, claiming that the Holy Spirit revealed an investment strategy to him.

    Gregory G. Jones resigned as a lawyer in lieu of discipline by the State Bar of Texas. Jones was the subject of a disciplinary proceeding for his role in advising clients to invest in Edwards Exploration LLC and Edwards Operating Co. LLC. Jones represented that he knew the principal of the companies, Spencer Edwards, and that he was familiar with the business ventures. But the businesses were actually running a Ponzi scheme.

    George Lindell, 67, and Holly Hoaeae, 40, were found guilty in connection with a Ponzi scheme called “The Parking Lot” in which 166 people invested over $26 million and lost a net amount of $8.9 million. The scheme was run in connection with the operation of their business, “The Mortgage Store.”

    Stafford S. Maxwell, 46, was sentenced to 3 years and 9 months in prison and ordered to pay about $1.4 in restitution in connection with the Millennium Capital Exchange Inc. Ponzi scheme. Maxwell was the former Chief Executive Officer and former owner of Millennium who defrauded victims out of more than $2 million. The company was supposedly engaged in foreign exchange trading and promised investors returns of 48% to 72%.

    James E. Neilsen, 55, pleaded guilty to charges relating to a Ponzi scheme that defrauded investors out of $1.6 million. Neilsen ran the scheme through Neilsen Financial Services and Ulysses Partners LLC. He promised 9% to 10.5% returns to investors from supposedly investing their money in business ventures, but instead used the money to pay back earlier investors or on himself.

    Gina Palasini was indicted in connection with an alleged Ponzi scheme that defrauded 6 investors out of over $1 million. Palasini is already serving a 10 year prison sentence on related state charges. Palasini continued to sell accident, life and death insurance even after her insurance license was revoked in 2006. Palasini also promised her clients assistance in obtaining Medicaid or Veterans Affairs benefits and encouraged them to invest in annuities, sometimes promising them that they would qualify for benefits and 10% interest.

    Gaeton “Guy” Della Penna, 62, was sentenced to 5 years in prison and ordered to pay $2.8 million in restitution for his role in a Ponzi scheme in which he promised investors a 5% return plus principal repayment after 18 months.

    James Peister, 63, was sentenced to 6 years in prison for running a $17.9 million Ponzi scheme that defrauded 74 investors. Peister had sent fictitious account statements to investors and false financial statements to an independent auditor.

    Trendon Shavers, 33, pleaded guilty to operating a Ponzi scheme that involved the virtual currency, Bitcoin. Shavers ran the scheme through his company, Bitcoin Savings & Trust and claimed that he would pay investors 1% interest on their investment every 3 days, or 7% per week. Shavers had more than 750,000 Bitcoins worth about $4.5 million when he shut down the company in 2012. The SEC charged Shavers and ordered him to pay back $40.7 million in a civil lawsuit.

    Sunil Sharma was sentenced to 33 months in prison for running a Ponzi scheme through his companies, Gold Coast Holding and Safe Harbor Tax Lien Acquisitions. Sharma raised $8.36 million from 32 companies and told investors he would invest in bonds in emerging markets in Brazil, Russia, India, and China. Instead, he engaged in day-trading stock options and spent the investors’ money on a home, a Mediterranean cruise and lease vehicles.

    Jerry Smith, 52, saw his 40 year prison sentenced dismissed by an appellate court. Smith had pleaded guilty to charges relating to the Ponzi scheme run with his business partner, Jasen Snelling. The appellate court concluded that Smith committed one single act of criminal conduct by failing to register as a broker-dealer and that the proper analysis was not the number of times Smith transacted business. The court remanded for the trial court to re-sentence Smith with the court’s calculation to find that the total term Smith may receive is 10 years.

    Dror Soref, 75, was arrested in connection with an alleged Ponzi scheme run through Not Forgotten LLC. Soref, CEO of Skyline Pictures, is a film director known for making Weird Al Yanovic music videos, but is now accused of working with Michelle Kenen Seward, 42, in defrauding investors out of at least $11 million, promising them returns of 10% to 18%. Such returns were also promised by another company run by the two of them called Windsor Pictures LLC. It is estimated that at least 140 victims invested over $21 million with Soref and Steward.

 

    Frank Spinosa, 54, is scheduled to plead guilty to charges relating to his relationship to Scott Rothstein while he was a vice president at TD Bank. Spinosa was accused of making oral assurances to at least two investors that certain accounts contained hundreds of millions of dollar when these “locked” accounts actually only held about $100. Spinosa was facing many years in prison if convicted on all charges, but may only face a maximum of 5 years for the single count of wire fraud conspiracy.

    Kaveh Vahedi, 53, who was convicted of running a Ponzi scheme through KGV Investments and Countrywide Financial, was sentenced to 18 years in prison. The 18 year sentence was imposed despite the fact that the government was asking for an 8 year sentence and the probation office recommended 10 years. The scheme defrauded 31 investors who invested more than $12 million in supposed development projects on promises of a profit of 50% of their principal investment within 9 months. The sentencing judge call the scheme the “most heartbreaking, vicious fraud ever,” because Vahedi had defrauded cancer victims, the elderly, and others already in financial trouble, convincing them to mortgage their homes in order to invest.

    Charles Wooden, 48, and Hendrickx Toussaint, 44, were sentenced to 7 years and 3 years 10 months in prison, respectively, for their $5 million real estate Ponzi scheme run through Aeon Capital Management LLC. They provided fake documents to investors to conceal that the money was not used to purchase real estate as promised and fake bank account statements to reflect that investors’ money was still in escrow.

    Troy Wragg, 34, Amanda Knorr, 32, and Wayde McKelvy, 52, were charged with running a $54 million green energy Ponzi scheme through Mantria Corp. The SEC had filed a civil action against them and each of them were ordered to pay $37 million in 2012. The scheme promised as returns high as 484% from a green energy technology called “biochar” that would turn trash into fuel and “carbon-negative” housing developments. The scheme raised $54.5 million. Before the Ponzi scheme was shut down, former President Bill Clinton’s Clinton Global Initiative had honored Mantria for its effort to “help mitigate global warming.”

    Joseph Zada, 57, was found guilty of charges relating to a $50 million Ponzi scheme. The SEC had previously obtained final judgments against Zada and his company, Zada Enterprises LLC, in connection with a $27.5 million Ponzi scheme that defrauded at least 60 investors. Zada had promised 7% to 12% interest rates and promised some investors 48% returns in connection with oil-related investments in the Middle East.

    Brian Zuzga, 39, was sentenced to 6 years in prison and ordered to pay $10.7 million in restitution for his role in a Ponzi scheme that defrauded more than 100 victims out of more than $11 million. Zuzga had previously pleaded guilty to running the scheme through Assured Capital Consultants, along with Jenifer E. Hoffman and John C. Boschert.

INTERNATIONAL PONZI SCHEME NEWS

England

    Spencer Mitchell Steinberg, 45, and Michael Strubel, 53, are on trial for allegedly using fake contracts with the London 2012 Olympics to defraud £40m from friends and family. The two defendants, along with Jolan Marc Saunders, 39, who has pleaded guilty, told investors that Saunders Electrical Wholesaters Limited supplied electricals including trouser presses and kettles to major hotel chains. It is alleged that instead they used the funds to purchase expensive homes and vehicles.

India

    Shibonoy Datta and Ashok Saha were arrested in connection with the Rose Valley Ltd. Ponzi scheme.

    Chittaranjan Mohanty, Bikram Pradham and Manas Kanungo were arrested in connection with allegations that they were running a Ponzi scheme through Unique SMCS, a cooperative society that used 700 local youths as agents to collect money from people. Unique SMCS ran 5 schemes and promised investors that they would double their money in 5 years and get 7 times their money in 10 years.

    The Securities and Exchange Board of India imposed a record penalty of 72.7 billion rupees ($1.1 billion) on real estate developer PACL Ltd.

South Africa

    The National Consumer Commission has launched preliminary investigations into the following nine alleged Ponzi schemes: WorldVentures, Kipi aka Mydeposit241, Make Believe, NMT Investments, Instant Wealth Club, MMM South Africa, DIPESA, Sikhese (Pty) Ltd., and the Wealth Creation Club.

Thailand

    Thirteen defendants appeared in Criminal Court in Bangkok in connection with the alleged scheme of the Ufun Store. The scheme allegedly defrauded about 120,000 people out of more than 20 billion baht. The company had been granted permission to sell herbal drinks, fruit drinks and cosmetics last year, but is believed to have been operating a scheme to bring in new members rather than sell products. The defendants are Apicharat Saenkla, 40, Ratthawit Thiti-arunwat, 34, Chaithorn Thonglorlert, 41, Ritthidej Warong, 39, Monpan Thanabundit, 41, Peeraya Kanphrom, 26, Chotipat Wuthipanpokin, 38, Nipaporn Lamee, 36, Theerawat Patcharasuyayai, 21, Natwaran Uttamakaeo, 24, Chaisong Wanasbodiwong, 36, Kevin Lai, 48, and Yang Yuan Zhao.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES
 
    An appellate court upheld a $72 million judgment against Huntington Bancshares Inc. in connection with the Cyberco Holdings Inc. Ponzi scheme. The ruling upheld a bankruptcy court decision that found that Huntington ignored signs of wrongdoing and continued to allow a related company to move money in its accounts. Meoli v. Huntington Nat’l Bank, 2015 U.S. Dist. LEXIS 129909 (W.D. Mich. Sept. 28, 2015).

   
    The bankruptcy trustee of Fair Finance Company, a company run by Tim Durham, announced his intention to make a first distribution to victims of the Ponzi scheme. The distribution will be $18 million, or about 8% - 9% of the losses in the case. Nearly $230 million of claims were submitted in the bankruptcy case. Durham is serving his 50 year prison sentence and his co-conspirators Jim Cochran and Rick Snow were sentenced to 25 years and 10 years, respectively.

    Cleveland Cavaliers forward Mike Miller filed a lawsuit to recover the balance of his $1.7 million loss from the alleged Ponzi scheme run by Randy Hansen and Vincent Puma through RAHFCO Hedge Funds.

    A lawsuit was filed by about 30 investors against CommunityOne Bank in North Carolina in connection with the $40 million Ponzi scheme run by Keith Franklin Simmons, who was previously sentenced to 40 years in prison. Simmons was sentenced to 40 years after a jury trial last year in which he was found to have defrauded more than 400 investors who placed more than $35 million with Black Diamond.

    The Receiver in the R. Allen Stanford $7 billion Ponzi scheme won a summary judgment finding that 6 investors must return approximately $2 million in profits they received.

    A court approved a settlement between thousands of investors in the Allen Stanford scheme and BDO for the sum of $40 million.

    A class action attorney asked a federal court for permission to sue at least 20,000 net winners in the TelexFree Ponzi scheme. Daniil Shoyfer, a TelexFree promoter, would be the lead class-action defendant.

    3M, a multinational conglomerate ranked No. 101 on the Fortune 500 list, was denied its insurance claim seeking to recover funds in connection with its investment of its employee-benefit plan assets in the Ponzi scheme run by WG Trading Company. Even though 3M recovered all of its money invested through the receivership proceedings, it sought to be paid earning on those investments. A court ruled in favor of the insurance company, finding that 3M owned a limited partnership interest in WG Trading and that it did not own the earnings of WG Trading, so 3M’s insurers are not obligated to compensate 3M for a loss when it never possessed the earnings. 3M Co. v. Nat'l Union Fire Ins. Co., 2015 U.S. Dist. LEXIS 131197 (D. Minn. Sept. 28, 2015).

Your Federal Withholding

The 1099 is for reporting gambling proceeds won or lost at casinos. When we look at the Federal Reserve Note we find that is a promise to pay, but it is not payment, but is a future event, and a future event that has not happened yet amounts to speculation whether or not the promise to pay would actually occur. Thus the use of Federal Reserve Notes themselves are gambling proceeds and thereby a Suspicious Activity reportable on 1099-OID and other means of reporting. Thus whoever is getting a paycheck in US dollars is receiving an ISSUE that is reportable on 1099-OID, because; the Federal Reserve Note otherwise referred to as US dollars are evidence of speculation on a future event, (promise to pay), that is gambling on the
future event, as one does not know if that promise to pay will return to the source or not. It seems that it will not return to the “Source” unless it is reported on Federal Tax Form 1099 to enable the ISSUE to enter the Electronic Circuit in a journey to the “SOURCE”. Without entry therein it is doubtful that the promise to pay can occur. (The Tax Return).
So it seems that wherever a check is issued, is the “ISSUE” reportable on 1099-OID; or, where a cash item in a Federal Reserve Note is given and/or received, or a bond or other type security given in commercial paper that is payable in Federal Reserve Notes or US dollars, is the gambling proceeds reportable on 1099-OID.
The 1099 OID filing instructions refer to the “ISSUE” as the reportable item, and that is the check at the source that has not yet returned to the source. It can’t return to the source until it enters the closed circuit via the Federal Tax Form 1099 in its journey back to the “source”. One could say that the first issue, the check, being the “Source”, is the venue, and after filing 1099 on that issue, the item returning to the “source” I suppose the difference in the Source of issue and the item returning to source, (a tax), is the returning item, is charged electronically and travels in a CLOSED circuit back to the source for settlement in exchange!
When you receive a bill for a product you have used, and there was no check, therewith, for you to pay the bill, the amount of that bill is Withholding and is a Federal Withholding in possession of the person who gave you the bill without a check to pay it. Thus, the action for settlement is to report a tax liability assessed in a 1040 tax return, and tax the same as income tax on a 1099-OID filed, therewith. It is the IRS, then, who will tell the bill collector that the amount of the bill is a Federal Withholding. (the withholding in the bill is the amount of Federal Withholding admitted in the bill). The bill is evidence of that amount withheld, and without a check or money order to accompany the bill sent to you, the absence of the check or money order is the admission of Withholding for that amount.
So, there you have the reason to tell the bill collector the amount billed to you is a Federal Withholding, withheld by the sender of the bill, and is cause to assess the same on 1040 and [to] tax the assessment on a 1099-OID, therewith, for settlement and closing in exchange Treasury Direct #(SSN-yours)
What is said above should be all you need to take care of your bills. When you get the bill that did not include a check for you to pay [that] bill, that should be sufficient information for you to report the same on a 1040 and 1099-OID without any further correspondence. (the bill was given for the cost of a product your personal credit was used to create…by assuming the use [of the ghost account]. The 1040 is the assessment of that taxable income debt and the 1099-OID is the Tax Return to the source of your credit for settlement and closing in exchange Treasury Direct #(SSN-yours).
So, it is the tax refund that is the remedy and that makes the action in Small Claims Court unnecessary. I suppose it could be made a Court of Record by putting copies of the 1040/1099 into the court record, but it is the IRS Forms 1040/1099 that makes an Administrative Court the Court of Record with a remedy. The Administrative Court is that of the IRS. That is what the tax court record will consist of, and that is probably the only Article III Court of Record bound with Revenue in the New Venue.
The Bill gives information that makes it obvious the actual payment is withheld, so it is that Withholding that is your taxable income! The requests for the billing agency to file 1099-OID on the issue(s) seems to be alright, but so far the requests have been met with silence and that silence is taken as a Refusal and Dishonor and therefore cause to go ahead and file both the 1040 and the 1099-OID. The tax assessment (1040) can be done on receipt of the bill…when the bill did not include a check, therewith, to enable you to pay the amount due. The fact exists that the funds have been Withheld from you, expressed in the bill, because it requests you to pay those absent funds. Obviously, they have been Withheld and the Withholding is Federal
because of the Public Policy HJR-192. So, I think the funds can be reported as a Federal Withholding in possession of the named recipient on the 1099-OID.
It is your credit they use to pre-pay any plan to use the agency services. So, you might ask for the plan to use their services, and provide you the papers to file Federal Tax Form 1099-OID on the issues, to enable you to pre-pay the available services used to make settlement for closing in exchange Treasury Direct #(SSN-yours).
Request the plan to enable us to use their services pre-paid. That will require the use of 1099-OID. Maybe, when one gets a bill from a company or agency one can accept the bill and return it asking for the plan to enable him to make settlement by set-off or report the item/issue as taxable income and request your tax refund from IRS in tax recovery.
When we focus our attention on the Withholding, we see it as, in fact, Federal Withholding, by virtue of HJR-192 and subsequent legislation thereon; and we can report it as such when we get a bill, and there is no check therewith. Thus, they have withheld the payment, and the same is Federal Withholding. (They probably obtained use of the Withheld credit by assuming the use of the amount used and Withheld from us, and admitted the same was prepaid when they sent us a bill for the product of our own credit (the ghost)-That was identity theft!)