Posted by Kathy Bazoian Phelps
Below is a summary of the activity reported for May 2016. The reported stories reflect: 3 guilty pleas or convictions in pending cases; over 129 years of newly imposed sentences for people involved in Ponzi schemes; at least 8 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, 54, was sentenced to one to 15 years in prison for each of three felonies in connection with a $1.7 million Ponzi scheme that defrauded 46 investors. Anderson ran an investment business called SMTS, which she said stood for “Show Me the Savings” or “Stock Market Trading Services.” This was the second time that Anderson was sentenced. In 1992, she was sentenced in a similar case which caused her to lose her securities license for embezzling $140,000 from Farm Bureau Insurance policy holders.
Charles Bennett, 57, a former corporate lawyer at Skadden, Arps, Slate, Meagher & Flom, was sentenced to 5 years in prison for running a $5 million Ponzi scheme. Bennett had left a suicide note before trying to kill himself which revealed the scheme that defrauded 30 friends and family members. Bennett survived the suicide attempt.
Louis Martin “Marty” Blazer III was accused of running a Ponzi scheme involving $2.35 million of funds invested in his company, Blazer Capital Management. Blazer is alleged to have taken money from 5 clients, at least two of which were professional athletes, promising them returns from investments in two movie projects.
Gerard Frank Cellette, 51, pleaded guilty to charges that he ran a Ponzi scheme through his printing business, Minnesota Print Services, and was sentenced to 35 years in prison. Cellette had claimed to have printing contracts with major corporations and promised investors 10% to 15% returns. The scheme took in $250 million. Co-defendant Adam Jay Boskovich pleaded guilty last year and was sentenced to one day in jail.
Alcibiades Cifuente, 33, and Jennifer Wee Cifuentes, 35, were charged by prosecutors alleging that they ran a Ponzi scheme that defrauded approximately 25 victims out of about $600,000. The scheme involved foreign currency and commodity markets.
Chad Roger Deucher, 43, was indicted on allegations that he defrauded investors in his real estate firm out of $16 million in a Ponzi scheme. Deucher allegedly ran the scheme through his property management company, Marquis Properties LLC, and promised returns as high as 22%. He had collected about $28 million from 250 investors and transferred millions of dollars into his business and personal interests that were unrelated to the acquisition or rehabilitation of property. Deucher and Richard Clatfelter, the Marquis executive vice president, had been sued by the SEC in January.
Catherine Ann “Cathy” Finberg was the subject of an order freezing her investment accounts on allegations that she ran a $1.3 million Ponzi scheme.
Kevin Carl Fortney, 55, was convicted of lying to a federal court about hiding assets for his brother-in-law, Roger Stanley Bliss, 57, who was involved in a Ponzi scheme. Bliss had violated an asset freeze order by giving his 17 foot catamaran to Fortney.
Jaswant S. Gill aka Jason Gill, and Javier Rios, 33, were charged by the SEC with running a Ponzi scheme through their companies JSG Capital Investments LLC and JSG Capital LLC. The scheme allegedly defrauded about 200 investors out of $10 million by promising to buy pre-IPO shares in companies like Airbnb and Uber.
Wenxing Huang aka “Di Peng” aka “Fatty,” 33, was charged with operating an alleged $6.9 million Ponzi scheme. Huang is the owner of Ju Ding, Inc., an investment company that brought in funds from about 400 investors who thought they were investing in technology based on graphene, a layer of pure carbon that is only one atom thick.
David B. Kaplan and his three entities, Synchronized Organizational Solutions LLC; Synchronized Organizational Solutions International Ltd.; Manna International Enterprises Inc., were the subject of charges by the SEC that they were allegedly running a Ponzi scheme. The scheme allegedly raised $15.8 million from at least 26 investors by promising investors an offshore investment opportunity. The Water-Walking Foundation Inc., Lisa M. Kaplan, The Water Walking Foundation, and Manna Investments LLC were named as relief defendants.
Amanda Knorr, 33, pleaded guilty to a $54 million Ponzi scheme run through Mantria Corp. Knorr ran the scheme with Troy Wragg. The scheme promised returns from green energy technology that was never developed. More than 300 investors were defrauded.
Christopher Maguire, 33, pleaded guilty to charges that he ran a $13.4 million Ponzi scheme through his company, Vivid Funding. Maguire told investors that he had a “proof of funds” loan business and that he had a software company called M-Development. Maguire represented that he could make a 20% profit on funds.
Frank Mazzola, 49, had his request to unfreeze his assets denied. Mazzola, his uncle John Bivona, 75, and the investment funds, Saddle River Advisors and SRA Management Associates, were the subjects of an asset freeze requested by the SEC in which the SEC alleged that they had raised more than $53 million from investors in pre-IPO tech companies. Mazzola asked the judge to unfreeze $13,280 per month to cover living expenses and $35,450 to pay off debt, but the Court denied the request since Mazzola had asserted the Fifth Amendment and refused to disclose assets or income.
William Risinger, 44, was sentenced to 13 years and 4 months in prison and ordered to pay more than $3.7 million in restitution for his role in three oil, gas and mineral schemes. Risinger was the owner of RHM Exploration LLC and had lost an estimated $500,000 while gambling in late 2015 and early 2016.
Keith Michael Rogers, 42, was sentenced to 10 years following his guilty plea in March to defrauding investors out of $2.5 million.
Richard Shusterman, 53, was convicted by a jury on multiple counts relating to a Ponzi scheme that defrauded investors and lenders out of $278 million. Shusterman sold fraudulent investment portfolios of debts that were purportedly owed by hospital patents. Shusterman conspired with Robert Feldman and ran the scheme through the companies, International Portfolio, Inc. and United Consulting Inc. Two other individuals, Jonathan Rosenberg and Douglas Kuber, operated Account Receivable Services LLC and agreed to promote the sale of the debt portfolio.
Lawrence Paul “Larry” Stephens, 52, was arrested on allegations that he ran a $4.5 million Ponzi scheme. The victims were 4 individuals and a couple. Stephens had been doing accounting and handling bookkeeping for clients through Brylaw Accounting Firm for years but did not have an accounting license. Brylaw is still open but was placed on probation in September.
Donell Thomas lost his motion to vacate his 94 month prison sentence arising from a Ponzi scheme involving short terms real estate sales in the Chicago area. United States v. Thomas, 2016 U.S. Dist. LEXIS 63955 (May 16, 2016).
INTERNATIONAL PONZI SCHEME NEWS
Canada
Virginia Mary Tan, 64, and her husband Patrick Eng Tien Tan, 73, are accused of running a $40 million Ponzi scheme that defrauded 50 investors. Their son, Marcus Soon-Keen Tan, has also been named in some of the civil claims pending against them. Investors were promised 12% to 24% interest in connection with the payday loan business and other finance investments.
Rashida Samji, 63, already facing a $33 million fine, was found guilty on charges relating to a $110 million Ponzi scheme. The scheme defrauded more than 200 investors who believed they were purchasing an investment in a winery that did not exist.
China
Xu Qin, 35, a top executive at Zhongjin Capital Management (Wealthroll Asset Management Co.), confessed on state television to operating “an extremely typical Ponzi scheme.” Qin had been arrested last month on his way to get married, along with at least 20 other executives, for defrauding more than 25,000 investors out of $6.1 billion. Some have said that public confessions in China are often forced and can violate due process rights.
England
Spencer Steinberg, 46, Michael Strubel, 54, and Jolan Saunders, 40, were sentenced to 6 years nine months, 7 years, and 7 years, respectively, for their role in a £79.5 million Ponzi scheme run through Saunders Electrical Wholesalers Limited. The scheme defrauded about 91 victims, whose money was used to buy expensive yachts, property and cars for the three defendants. Investors were told that the company supplied electrical goods to major hotel chains such as Marriott and Hilton.
India
Subash Srichandan, one of the directors of Ashirbad Multipurpose Cooperative Ltd., was arrested on charges that he defrauded investors out of about Rs 10 crore.
The Ponzi scheme known as IAmAuctioningDirect, which was run by Ingula Investments, has collapsed. The scheme was operated by Norman Mhlongo and defrauded 36,000 people by promising them daily interest of 3%.
Thailand
Immigration police took British man, Mark Hallett, 48, into custody for allegedly overstaying his visa. Hallet is wanted in the UK for his role in an alleged Ponzi scheme.
NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES
TD Ameritrade and Integrity Bank & Trust were added to a proposed class action filed by investors of Aequitas Management LLC, which already named Deloitte & Touche LLP and Sidley Austin. Investors allege that the firms should be held accountable for “$600 million in alleged losses suffered by more than 1,500 investors.”
Amir Isaiah, the court-appointed receiver of Coravca Distributions LLC, filed a lawsuit against JPMorgan Chase Bank alleging that it aided an international Ponzi scheme that promised profits from Venezuelan and U.S. currency trading. The scheme’s operators, Rosa Aguirre and Diego Corado, allegedly raised money from about 2,000 investors.
The Ninth Circuit affirmed the lower courts’ decisions denying a motion to compel arbitration in lawsuit filed by the bankruptcy trustee of EPD Investment Company LLC seeking to avoid fraudulent transfers. Kirkland v. Rund (In re EPD Investment Company, LLC), 2016 U.S. App. LEXIS 8519 (9th Cir. May 9, 2016). The court found that the trustee’s clams were core matters and that he was not bound by the arbitration agreements.
Steven Hoffenberg, 76, previously sentenced in 1997 to 20 years in prison in connection with a Ponzi scheme, sued Jeffrey Epstein for $500 million, alleging that Epstein was a co-conspirator in the Ponzi scheme.
The Second Circuit affirmed a decision that dismissed claims of Ritchie Capital Management LLC against General Electric Capital Corp. in connection with the Tom Petters Ponzi scheme. Ritchie Capital Management LLC v. General Electric Capital Corp., 2016 U.S. App. LEXIS 8628 (May 11, 2016). The court found that Ritchie Capital lacked standing to bring the claims for conspiracy and aiding and abetting.
As Chadbourne & Parke agreed to pay $35 million to settle claims of investors of R. Allen Stanford’s scheme, a new class action was filed against Proskauer Rose claiming $5 billion in damages.
The trustee of the TelexFree bankruptcy case filed a lawsuit against Gerald Nehra and the Nehra and Waak law firm, alleging that they were “actively involved” in promoting the Ponzi scheme.
A claims bar date has been established in the TelexFree case for September 26, 2016. An electronic claims portal has been established at TelexFreeClaims.com. The notice of the claims bar date can be found at: http://www.kccllc.net/telexfree/document/1440987160531000000000001.
The ZeekRewards receiver obtained permission from the court to pay certain foreign affiliates by wire since they were unable to cash checks from the U.S.-based receivership.
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