May 2019 Ponzi Scheme Roundup

Posted on 06-03-2019 by

Posted by Kathy Bazoian Phelps

Below is a summary of the activity reported for May 2019. The reported stories reflect at least 5 new Ponzi schemes worldwide; at least 2 guilty pleas, over 99 years of newly imposed sentences for people involved in 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.

Anthony Norman Carta, 57, was sentenced to 9 to 40 years for his role in a scheme that defrauded more than 100 victims out of nearly $660,000. Carta owned Freedom by Faith Ministries which used short sales, mortgage modifications and other real estate scams to defraud victims.

Jose Angel Aman and his company, Argyle Coin, LLC, were accused by the SEC of running an alleged Ponzi scheme. The scheme involved cryptocurrency, and $30 million of funds were taken from more than 300 investors on promises of huge returns through the reselling of wholesale diamonds. Argyle Coin claimed it had full backing in diamonds. Aman’s other companies, Natural Diamonds Investment Co. and Eagle Financial Diamond Group Inc., along with Harold Seigel and Jonathan H. Seigel, were also named in the action.

Christopher Dean Dougherty, 46, of California, who was arrested last month, was charged by the SEC with defrauding about 50 investors out of $7 million. Dougherty used his company, C&D Professional Services, Inc. dba C&N Wealth Management, to offer investments in tax-free “private placements” that purportedly provided quarterly dividends of about 5%.

Vincent P. Falci, 59, was sentenced to 15 years in prison for running a $10 million Ponzi scheme. Falci defrauded victims through the Saber Funds and Vicor Tax Receivable LLP, providing fake investment gains on every monthly statement. Falci claimed that investors funds were “conservatively invested” in tax liens, but he diverted the funds to himself instead.

Edwin Fujinaga, 72, was sentenced to 50 years in prison and ordered to pay nearly $1.2 billion in restitution in connection with the $1.5 billion Ponzi scheme run through MRI International. The medical billing collections scheme was run out of Las Vegas and defrauded thousands of Japanese investors. Two other former executives of MRI, Junzo Suzuki, 70, and Paul Suzuki, 40, were extradited from Japan and are awaiting trial.

Michael Sean Graham, facing charges in Arizona for running a Ponzi scheme, was arrested in Mexico. Graham allegedly defrauded investors out of $2 million by misrepresenting that he owned software that would provide consistent returns on the foreign exchange market. Graham was handed over to U.S. authorities following his arrest.

Kevin B. Merrill, 53, pleaded guilty to running a $394 million Ponzi scheme with his partner, Jay B. Ledford, 55. Both had originally pleaded not guilty, but Ledford is expected to change his plea to guilty as well. Cameron Jezierski, 28, pleaded guilty. Merrill originally formed Delmarva Capital LLC to buy debt portfolios, but he asked Ledford to create phony sales bills to entice investors and Merrill sold investors phantom debt portfolios. They returned $248 million to investors and pocketed about $150 million, spending it on lavish lifestyles. Merrill himself bought 25 luxury cars and 6 homes, among other things.

Vincent Mitchell, 58, pleaded no contest and was sentenced to 8 years in prison in connection with a Ponzi scheme that defrauded 11 clients of his estate planning practice. Mitchell was a lawyer who set up a limited liability company to accept funds from his clients who believed they were getting estate planning services.

Robert C. Morgan, Morgan Management, Morgan Mezzanine Fund Manager LLC, and Morgan Acquisitions LLC of New York, were sued by the SEC in a regulatory action seeking to halt their operation of an alleged Ponzi-like scheme. More than $110 million was raised from investors through the sales of securities directly to retain investors. The funds were to be used to acquire, manage or operate multifamily properties, and more than 200 investors were promised 11% returns. Morgan was also criminally indicted and allegedly directed employees to falsify financial documents to get bigger loans for the acquisition of apartment buildings. Morgan Management then solicited funds from investors to pay off the loans. Others allegedly involved in the scheme are Todd Morgan, Kevin Morgan, Frank Giacobbe and Patrick Ogiony. Investors are owed $463 million and it is believed that there are approximately $500 million worth of fraudulently obtained mortgages.

James A. Nickels, 68, was sentenced to 3 years in prison and ordered to pay more than $3 million in restitution. The scheme was run through Fiscal Concierge and collected more than $5 million from 37 investors.

Mark Nordlicht, accused of running a Ponzi scheme through Platinum Partners, spent one night in jail when a judge first revoked his $5 million bail and then ordered him released the next day. Nordlicht is on trial for allegedly running a scheme in which he defrauded investors by claiming that Platinum Partners had $1.7 billion.

David Pacheco of California and his companies, IPro Solutions LLC and IPro Network LLC were sued by the SEC on allegations that they operated a $26 million cryptocurrency Ponzi scheme. Investors would receive “points” that could be converted into a digital currency called PRO Currency.

Ariel Quiros, 63, and Bill Stenger, 70, were criminally charged in connection with an alleged immigration scheme run through the Jay Peak Ski Resort owned by Q Resorts Inc. and Q Burke Mountain Resort in northern Vermont. The scheme took in $200 million, promising foreigners the benefit of the EB-5 Immigration Investor Program, which allows foreigners who invest in U.S. companies to obtain green cards. The investors’ money was supposed to fund seven projects, including the resort’s expansion, an indoor water park, an ice rink, hotels, golf courses and a $200 million biotechnology plant. Quiros allegedly took $50 million of the funds to pay his income taxes and buy a luxury condominium in Trump Place in Manhattan.

Gabriel Ramos, 28, and Miguel A. Miranda Jr., 41, were charged with running a $500,000 Ponzi scheme that defrauded at least 11 investors. Ramos started raising funds through Social WebNet. Miranda, one of the early investors, solicited investors through his company, G/M Business Investments. They promised “huge profits” from investments with local small business borrowers.

Gaylean Dean Rust, 59, Denise Gunderson Rust, 59, and Joshua Daniel Rust, 37, were indicted on charges that their business, Rust Rare Coin, Inc., defrauded at least 500 investors out of $200 million. The Rusts are accused of defrauding investors in a silver trading program that started in 1996 and promised returns of 25% to 40% annually. They were not licensed to sell securities and issued false statements to investors that were not based on trades for silver. In addition to Rust Rare Coin, the Rust family owned and managed R Legacy Entertainment LLC; R. Legacy Racing, Inc.; R Legacy Investments LLC; R Legacy Ranch; and Legacy Music Alliance.

Fred Shipman, Whitney Shipman, and Winners Church International, had their assets frozen when they refused to turn over $1.7 million to the SEC. The SEC isn’t claiming that they orchestrated the scheme, but they have refused to turn over funds that the SEC says belongs to people defrauded in a $30 million Ponzi scheme.

James Siniscalchi of New York was charged by the SEC in connection with a ticket scheme that Siniscalchi rebranded. Siniscalchi is the cousin of Joseph Meli who pleaded guilty to securities fraud in connection with the scheme in a parallel criminal action. Siniscalchi rebranded the business and raised about $2.7 million from investors who were told their money would be used to purchase tickets to events like Broadway shows.

Leon Vaccarelli, 42, of Connecticut was found guilty in connection with a Ponzi scheme that defrauded investors out of more than $1 million in retirement funds. Vaccarelli is a former financial adviser and was a registered representative of The Investment Center, and was an investment adviser with IC Advisory Services, Inc. He also was the owner and only member of LWLVACC, LLC, and conducted business through an entity named Lux Financial Services.

INTERNATIONAL PONZI SCHEME NEWS

Australia

Authorities banned Jeff Worboys and Matthew Barnett, former executives of Halifax Investment Services from working in financial services for 5 years. They were officers of Australian Mutual Holdings when it was the responsible entity for Courtney House Capital Investment Fund.

Goldsky Global Access, Goldsky Asset Management Australia and Goldsky Investments were found to have been engaged in unlicensed investment activity following an investigation into the companies on suspicion that the sole director and shareholder, Kenneth Charles Grace, was operating a Ponzi scheme.

Douglas Johnston and Maureen Johnston were found guilty in connection with a “Ponzi-style” investment scheme they ran through the Collingwood Football Club. The scheme defrauded investors out of $815,000.

Authorities warned the public that OneCoin “could be involved in a scam.” The warning noted that OneCoin did not obtain two major licenses needed to offer investment services in the country. OneCoin is allegedly a crypto Ponzi scheme that has raised about $3.8 billion. Ruja Ignatova and Konstantin Ignatov have been arrested in connection with the alleged scheme.

England

Freddy David was banned from engaging in any regulated financial activity following his guilty plea and 6-year prison sentence for running a Ponzi scheme. The scheme was run though HBFS Financial Services Limited and defrauded 55 victims out of more than £14.5m. David promised investors returns of between 4% and 8% a year paid monthly if they kept their money invested for three to five years.

India

Nowhera Shaikh, Molly Thomas and Biju Thomas were arrested in connection with an alleged Ponzi scheme run by the Heera group. It is alleged that Shaikh operated 24 entities in the name of the Heera group and that the scheme defrauded more than 1 million investors.

Isle of Man

Paul Deighton pleaded guilty to running an investment scam through his accountancy firm, Haven Administration.

Nigeria

Authorities are warning the public not to invest in Loom Nigeria, which is believed to be a Ponzi scheme. Promoters of the scheme ask people to invest in low amounts of N1000 or N13,000 and promise returns as much as eight times the value of the investment in 48 hours. The scheme is spreading through WhatsApp groups.

Russia

Andrei Nikolenko, 45, and Tatyana Nikolenko were charged with running a Ponzi scheme that allegedly defrauded at least 17 people, promising them profits from iPhone and MacBook imports.

Singapore

Leong Lai Yee, 55, was sentenced to 14 years in prison for her role in running a $35 million Ponzi scheme that defrauded 53 people. Yee told investors their funds would be used to buy distressed properties and sell them at a profit and that their funds would be used to fund start-ups.

South Africa

Louis Jacob Tashakoane, 70, and his wife Komane Suzen Tshakoane, 55, are on the run following accusations that they ran an illegal investment scheme called Undercover Billionaires. Their son, Louis Tshakoane Jr., 29, was charged in connection with the alleged scheme. The Undercover Billionaires Facebook description said: “Undercover Billionaires is an exclusive business network of professionals who generate wealth with meaningful style.”

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

The Receiver in the Arthur Adams’ timber Ponzi case has sued a UPS store for its worker’s role in the scheme that defrauded about 300 investors out of $100 million.

Ruth Madoff settled claims brought by the trustee of the Bernard L. Madoff Investment Services Ponzi scheme case. She will pay back nearly $600,000 of funds she received before the Madoff scheme was revealed.

A $79 million award previously obtained by the Receiver in the Stanford International Bank Ponzi scheme has been vacated, and the Fifth Circuit has asked the Texas Supreme Court for direction on how to interpret the good faith defense under the Texas Uniform Fraudulent Transfer Act. The issue relates to whether the good faith exception requires a transferee on inquiry notice to conduct an investigation or show that an investigation would have been futile.

The liquidating agent for the Woodbridge Group of Companies real estate scheme filed a lawsuit against Comerica Bank, alleged that Comerica turned a blind eye to the suspicious activity.

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