September 2018 Ponzi Scheme Roundup

Posted on 10-03-2018 by
Tags: Ponzi Scheme

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for September 2018. The reported stories reflect at least 8 new Ponzi schemes worldwide; about 38 years of newly imposed sentences for people involved in Ponzi schemes; 4 guilty pleas or convictions, 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.

Stanley Bates was sentenced to 15 years in prison in connection with the Ponzi scheme run through FourWinds Logistics with co-conspirator state senator Carlos Uresti. Bates had previously pleaded guilty. Uresti was sentenced to 12 years in prison earlier in the year, and Gary Cain was sentenced to 5 years in prison. All three men were ordered to pay back their victims more than $6.3 million.

Bitconnect, Magma Foundation and Pension Rewards Platform were the subject of cease and desist orders sought by the North Dakota Securities Commissioner. The action is part of an initiative known as “Operation Crypto Sweep,” which is a multi-jurisdiction investigation and implementation effort involving about forty U.S. and Canadian security regulators. Bitconnect has previously received such orders from regulatory authorities in Colorado, North Carolina and Texas.

Wade T. Caughman, 51, of South Carolina, pleaded guilty to charges that he ran a Ponzi scheme. Caughman told investors that he had lucrative auto sales leads from local credit unions and that investors would make $800 in interest for money loaned to finance the purchase of cars that were sold to credit union members. He created fictitious auto loan and purchase paperwork to persuade investors.

Homero Joshua Garza, 33, the former CEO of GAW Miners, was sentenced to 21 months in prison and ordered to pay $9.2 million in restitution in connection with the cryptocurrency scheme involving PayCoin. GAW Miners had guaranteed investors a $20 floor price for PayCoin, but the highest price paid was $15.92. GAW, short for “Geniuses at Work,” also ran its own cloud-based wallet service (Paybase), cloud-based mining service (ZenMiner), and online discussion board (HashTalk).

Jeffrey Goldman, 52, and Christopher Eikenberry, 49, of Michigan, were charged on allegations that they were running a day-trading scheme through Nonko Trading that defrauded customers out of at least $1.4 million. Nonko targeting inexperienced traders and provided them with accounts that merely simulate actual trading. The customers’ deposits were used for personal expenses and to make Ponzi payments. The SEC had previously charged four other individuals and two entities in connection with the fraud. Naris Chamroonrat and Adam Plumer have settled the charges. Criminal charges against the other two, Yaniv Avnon and Ran Armon, are pending.

James E. Hocker, 48, was criminally charged on allegations that he was running a Ponzi scheme involving about $1.5 million. He had previously been sued by the SEC in connection with the scheme run through James E. Hocker & Associates involving the sale of insurance products and annuities. Hocker allegedly defrauded about 25 individuals and promised them returns of between 10% and 30%.

Claud R. “Rick” Koerber was found guilty on charges relating to one of the biggest Ponzi schemes in Utah history. Koerber raised almost $100 million in connection with the fraudulent real estate scheme that he ran through his companies, Founders Capital, Franklin Squires Investments and Franklin Squires Cos.

Nemelee Liwanag Jiao, 47, was sentenced to 8 years in prison for running a Ponzi scheme that defrauded 39 investors out of about $1.9 million. The scheme victimized Filipino, African, Indian and Korean fellow medical workers. Jiao sent funds to the Philippines and bought luxury items for herself.

Kevin B. Merrill, 53, Jay B. Ledford, 54, and Cameron R. Jeziersky, 28, were indicted on charges relating to an alleged $364 million Ponzi scheme in Maryland that defrauded at least 400 victims. The three individuals invited investors to buy consumer debt portfolios from which they would profit from debt payments and flipping of the portfolios. The three men and their five companies, including Global Credit Recovery LLC, Delmarva Capital LLC and Rhino Capital Holdings LLC, were also named in a lawsuit filed by the SEC. Prosecutors allege that about $197 million was repaid to investors and about $148 million is still owed to investors.

James Bernard Moore, 57, was arrested in connection with a $17 million Ponzi scheme. Moore and his company, Universal Voicetech, Inc., were also named in a lawsuit filed by the SEC accusing them of selling fraudulent investments. The scheme related to misconduct by Renwick Haddow, 50, and his company Bar Works, Inc. Moore and his network of sales agents raised over $5 million from at least 100 investors.

LaVerne “Vern” Moter, 50, of Colorado pleaded guilty to charges that he was running a $2.6 million real estate Ponzi scheme. Moter was supposedly buying undeveloped land in Arizona through his company, American Undeveloped Real Estate Fund. Investors were promised interest between 5% and 12% per year.

Jonny Ngo, Donato “Mick” Baca Jr., and NL Technology, LLC were sued by the SEC on allegations that they were running a Ponzi scheme. One day later, Ngo and NL Technology entered into a consent judgment agreeing to pay back $4.5 million, without admitting or denying the allegations in the complaint. The SEC alleged classic Ponzi scheme factors, such as false promises that funds would be used in a wholesale electronics import business; false promises of security; exorbitant returns for short periods of time; no meaningful legitimate business activity; and the use of new money coming in to pay prior investors and themselves, rather than for the alleged business. The scheme defrauded over 350 investors and had raised $61 million by promising returns of 5% to 15% every two weeks to 45 days.

Perry Santillo, 38, was previously charged by the SEC with running a Ponzi scheme that defrauded 637 investors and raised $102 million. Santillo, along with Christopher Parris, 38, Paul Larocco, and John Piccarreto, are accused of running the fraudulent scheme. The FBI is actively interviewing victims.

Michael Scronic, 46, of New York, was sentenced to 8 years in prison and ordered to pay more than $22 million in restitution in connection with a Ponzi scheme that defrauded 45 people out of $22 million. Investors were promised returns in the Scronic Macro Fund. Scronic had previously pleaded admitted to the scheme.

Mark S. Scott, a former partner at Lock Lorde and founder of MSS International Consultants Ltd., a private equity fund headquartered in the British Virgin Islands, was arrested and pleaded not guilty to charges that he helped launder $400 million in connection with an international cryptocurrency Ponzi scheme known as OneCoin.

Roger Dale Williams, a preacher in Kentucky, was sentenced to 63 months in prison and ordered to pay about $1.4 million in restitution after pleading guilty to running a fraudulent investment scheme that netted him $2 million. The scheme was run through Dash Holdings and more than 50 people were defrauded. Williams offered investments in stock purchases, start-ups, and bonds, and he provided investors with false IRS forms.

Michael Wright, 42, pleaded guilty to charges that he, along with co-defendant Craig Carton, ran a ticket Ponzi scheme. They were accused of soliciting investors to fund a business of buying and reselling blocks of tickets to music, entertainment and sporting events. Joseph Meli is currently serving 6½ years in prison for the scheme. Carton has pleaded not guilty.

INTERNATIONAL PONZI SCHEME NEWS

China

Ten people were sentenced in connection with an $8 billion Ponzi scheme. Xu Qin, a founder of Zhongjin Capital, was given a life sentence, and nine others were given sentences ranging from five to 12 years.

India

Prakash Uttekar, 58, and Venkatraman Natrajan, 60, were arrested in connection with the Royal Twinkle Star Club scheme. The company’s managing director, Omprakash Goenka, was arrested earlier this year. About 18,000 investors are believed to have been defrauded.

Vivek Bhardwaj, the brother of Gain Bitcoin founder Amit Bhardwaj, was brought in for questioning about the scheme.

Authorities in Arizona and Illinois wrote to India’s Criminal Investigation Department seeking assistance in recovering laundered assets for victims in connection with the Bitconnect cryptocurrency scheme. The scheme is believed to have defrauded investors out of $5.66 billion by promising them 800% returns per annum. Indian authorities are investigating whether they have authority to seize assets.

Nigeria

Micheno Multipurpose Cooperative Society is reportedly running a Ponzi scheme and has stopped paying investors.

Philippines

Marcelino Ramojal, 51, and his son, Tishiri, 28, were arrested in connection with an alleged Ponzi scheme run through I-SURE and Maximum Care Solutions. Authorities are still looking for Marcelino’s wife, Flordefe, and another son, Cliff.

Russia

Authorities found that a group of companies operating under the name Cashberry were running a Ponzi scheme.

South Africa

Jaco Jordan, 52, was charged on allegations that he ran a Ponzi scheme that defrauded about 120 victims by convincing them to invest half of their pension money into his scheme. He promised them they would double their money through their investments.

Thailand

Victims of an alleged Ponzi scheme run by Khon Kaen, 46, sought to have her arrested. The scheme involved 300 investors who were promised large returns but were cheated out of 40 million baht.

Uganda

Police arrested Simon Musinguzi and Daniel Kalyango in connection with an alleged scheme run by Adsan Enterprises that allegedly defrauded investors out of Shs812. The scheme involved cryptocurrency ventures. Adsan had started as a company that supplied chicks to poultry farmers at a subsidized price but later began channeling money into cryptocurrency.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

A group of 836 foreign investors sued People’s United Bank in connection with the Jay Peak Ski Resort Ponzi scheme. The investors allege that the bank misappropriated their funds.

Investors are seeking to certify a class in a case against GAW Miners LLC and ZenMiner LLC in an alleged cryptocurrency Ponzi scheme involving the sale of “miners” of virtual currency.

Notice of a previously sealed lawsuit brought by the SEC against 1 Global Capital LLC and its former CEO, Carl Ruderman was made public. The lawsuit accused them of fraudulently raising more than $287 million and misappropriating at least $35 million of that.

Proskauer Rose agreed to pay $63 million to settle claims brought by investors in the R. Allen Stanford Ponzi scheme.

A court ruled that U.S. securities laws can be used to prosecute fraud cases relating to cryptocurrency offerings. The decision relates to charges that Maksim Zaslavskiy fraudulently took at least $300,000 from investors in a cryptocurrency scheme called REcoin, which he claimed was backed by real estate, and another cryptocurrency called Diamond, which he claimed was backed by diamonds.

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