Ponzi Scams

Securities Fraud Cases: Ponzi Scam Operator Sentenced to Prison, Fund Manager Pleads Guilty, Ex-Options Trading Instructor Allegedly Misappropriated Investor Funds, & $1.7M Financial Scam Leads to 10-Years Behind Bars

Published on: May 26, 2017 | by Shepherd Smith Edwards & Kantas, LLP

SEC Charges Man Accused of Running $10M Ponzi Scam
Mark Anderson Jones, whom the US Securities and Exchange Commission has charged with fraud, has been sentenced to 70 months in prison in a parallel criminal case. Jones pleaded guilty to running a $10M Ponzi scam.

According to the SEC, Jones solicited investors in a number of US states, as well as in Washington DC. He did this by issuing promissory notes, as well as providing personal guarantees to clients that were willing to invest in The Bridge Fund, which supposedly lent money to Jamaican businesses that were waiting to get commercial bank loans.

However, rather than investing their money the way he said he would, Jones used a portion of investors’ cash to pay his own expenses as well as make Ponzi payments.

Massachusetts Hedge Fund Manager Faces Criminal and Civil Fraud Charges Over Alleged Multi-Million Dollar Ponzi Scam

Published on: May 25, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Over the weekend, Yasuna Murakami, a Cambridge-Massachusetts based hedge fund manager, was arrested and charged with wire fraud. Murakami, who managed MC2 Capital Management LLC, is accused of misappropriating investors’ funds in a Ponzi-like scam. The arrest and criminal charges come a few months after the state’s regulator, Secretary of the Commonwealth William Galvin, filed his own administrative case against Murakami for the fraud.

Prosecutors are accusing the hedge fund manager of seeking to bilk investors. The MC2 Capital Canadian Opportunities Fund was supposed to grant American investors exposure to a Donville Kent Asset Management-supervised fund. Instead, Murakami allegedly misused investors’ money to pay for his bills, including purchases at expensive department stores, as well as to make his own investments in the fund.

He is accused of using investors’ money to pay other investors in two other MC2 hedge funds and allegedly misappropriating money from those funds. Under the charging statute, If convicted, Murakami could face up to 20 years in prison, supervised release, a fine, and be ordered to pay up to two times the gross loss or gain.

Thousands of Madoff’s Ponzi Scam Victims Have Yet to Get Any of Their Money Back

Published on: May 24, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Eight years after Bernard Madoff was sentenced to 150 years in prison for defrauding investors in a $65 billion Ponzi scam, thousands of his victims have still not seen any of the money that they lost. These investors’ claims are being handled by Madoff Victim Fund administrator Richard Breedon, whose firm RCB Fund Services was retained by the federal government to give $4B back to them.

Breeden had estimated last year that up to 40,000 victims would get their first recovery checks by the end of 2016. That didn’t happen. Now, he has stated that the initial distribution will happen this year and will be larger than what would have gone out previously. Claims processes and inadequate paperwork by some investors were some of the reasons cited for the delay.

It is Breedon’s job to recommend to the federal government which claims to reject or pay. His fund accepts recovery claims from all of types of investors who entrusted their money to Madoff, including feeder funds. Breedon’s fees come out of investors’ recovery.

Securities Cases: Verto Capital Settles Life Settlement Charges, Couple File Broker Fraud Claim Against NY Life Securities, JCPenny to Settle Texas Class Action Lawsuit for $97.M, & Cetera Admits to Charging Investors More For Mutual Funds

Published on: May 8, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Financial Firm and Its CEO Settle Life Settlement Fraud Charges
The US Securities and Exchange Commission announced that Verto Capital Management and its CEO William Schantz III have settled civil charges accusing them of running a Ponzi-like scam involving life settlements. As part of the settlement, Verto Capital and Schantz will pay over $4M.

According to the regulator’s complaint, the two of them raised about $12.5M through promissory note sales that were supposed to pay for the firm’s purchase and sale of life settlements. The notes were sold mostly through insurance brokers in Texas.

Investors who were religious were the main target of the alleged fraud.They were allegedly told that that the securities were short-term investments that were at low risk of defaulting.

Securities Cases: Texas Woman Accused of Bilking 35 Investors, Ex-NJ Investment Adviser is Found Guilty of Fraud, and Insurance Agent Pleads Guilty in $8.2M Promissory Note Scam

Published on: April 30, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Grand Jury Indicts Texas Woman in $1M Ponzi Scam
A federal grand jury has indicted Nemelee Liwanag Jiao on two wire fraud counts for allegedly running a Texas Ponzi scam that cost investors over $1M. At least 35 investors were bilked.

According to the indictment, Jiao, a Texas resident, had investors back promissory notes that were supposedly issued by two non-profit schools in the Philippines when, in reality, she was using their money on herself. Jiao told investors she represented both Lord of Peace Learning Center and Shepherd’s Light Learning Center and she got them to invest their money in the promissory notes after promising 10-100% in returns. She also promised that they would get back their principle plus interest within 30-days to a year of investing.

The indictment against Jiao stated that she will have to forfeit all proceeds if convicted. She faces up to 20 years in prison for wire fraud, as well as a $250K fine.

Securities Fraud: Ex-Broker Gets Prison Sentence for $1.2M Elder Financial Fraud, Massachusetts Man Admits to Bilking Neighbors, & More Than Two Dozen 27 Parties Under Fire Over Alleged Stock Promotion Scams

Published on: April 17, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Former Wells Fargo and LPL Financial Broker Receives 41-Month Prison Term for Elder Financial Fraud
Robert N. Tricarico, an ex-broker for both Wells Fargo Advisors (WFC) and LPL Financial (LPLA), will serve 41 months behind bars and pay restitution of over $1.2M after he pleaded guilty to elder financial fraud. The Securities and Exchange Commission, which brought a civil case against Tricarico, has barred him from the securities industry.

Court documents note that from 1/2010 to 6/2013, Tricarico was the financial adviser for a sick and elderly investor. He misappropriated over $1.1M from her by writing a number of checks to himself without the client’s consent, misappropriated checks written to her, liquidated her coin collection, and used her funds for his own expenses.

He has also admitted to bilking two other victims of $20K when he falsely represented that their money would go toward a business venture. He kept their money for himself.

Austin Oil and Gas Financiers Plead Guilty in Texas-Based Securities Fraud Case

Published on: April 13, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Business partners Janniece Kaelin and Robert Allen Helms have pleaded guilty to bilking investors of up to $20M in a Texas-based Ponzi scam. The oil and gas financiers used the funds raised for energy ventures to cover their own expenses from 1/2010 to 12/2013.

The US Securities and Exchange Commission filed a securities fraud lawsuit against Kaelin, Helms, and their companies Iron Rock Royalty Partners LP and Vendetta Royalty Partners LTD in 2013. According to the regulato, they misled investors about their professional experience, meantime raising almost $18M that were supposed to go toward royalty interests in oil and gas.

Included among the alleged purchases they made: using investors’ money to pay for a 3 1/2-week trip around the world and paying for the more than $247K wedding of Kaelin’s daughter in Hawaii.

Securities News: Deutsche Bank Unit Ordered to Pay $150M for Libor Rigging, FINRA Bars Broker Indicted in NY Pension Fund Scam, and Hedge Fund Manager Who Lost Investors’ Money In Madoff Ponzi Scam Commits Suicide

Published on: March 30, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Judge Orders Deutsche Bank Subsidiary to Pay $150Mfor Libor Rigging
A federal judge is ordering Deutsche Bank Group Services, a subsidiary of Deutsche Bank (DB), to pay $150M for its involvement in an interest rate manipulation scam. The London unit pleaded guilty last year to rigging the London Interbank Offered Rate benchmark.

The fine comes two years after Deutsche Bank settled Libor rigging allegations with US and British regulators for $2.5B. According to prosecutors, derivatives traders at the German bank and at other banks colluded together to manipulate LIBOR rates to preference their trading positions.

Libor rigging allegations are not the only claims that Deutsche Bank has been contending with. Recently, the German Bank reached a $7.2B settlement with the US DOJ over its part in the 2008 global financial crisis. Meantime, NY and British officials ordered Deutsche Bank to pay $630M in fines because of alleged money laundering that occurred in Russia.

Rhode Island Investment Adviser Goes To Prison Over $21M Ponzi Scam

Published on: March 20, 2017 | by Shepherd Smith Edwards & Kantas, LLP

ClearPath Wealth Management owner and president Patrick Churchville has been sentenced to seven years in prison for bilking investors in a $21M Ponzi scam. He also must pay restitution and perform 2,000 hours of community service.

Churchville also was charged by the Securities and Exchange Commission in 2015 over the scam, which the regulator said cost investors at least $11M in losses. According to the SEC, Churchville and his company used newer investors’ money to pay earlier investors, used investor funds as loan collateral for investments, for paying back the loans, and for investments that would benefit ClearPath. He also stole about $2.5M of investors’ money to buy a waterfront home. Churchville employed misleading accounting tactics and engaged in deceptive actions to hide the fraud.

In 2013, when a lot of ClearPath investors began asking for distributions on their investments, he delayed the scam by lying to them about the investments. Meantime, investors were persuaded that at least part of their investments were still fine even though the funds were gone.

Securities News: SEC Orders Voya to Pay $3.1M For Not Disclosing Mutual Fund Sale-Related Payments, FINRA Bars Ex-Waddell & Reed Broker, and Alabama Pension Fund Loses Millions in Ponzi Scam

Published on: March 15, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Voya Accused of Not Disclosing Revenue Received for Mutual Fund Sales
The US Securities and Exchange Commission said that Voya Financial Advisors (VOYA) would pay approximately $3.1M to regulators and investors for not telling customers about revenue the firm was paid related to a mutual fund program that didn’t bill transaction fees. Voya’s clearing broker-dealer paid the firm a percentage of the money made from the mutual fund sales. This was information that should have been shared with investors.

Also, since 2014, Voya and the third-party brokerage firm were involved in a separate agreement under which Voya provided certain administrative services in return for a percentage of service fees involving certain mutual funds. The regulator said that these payments were a conflict because they gave Voya incentive to preference these funds over other investments, which could have impacted what the firm recommended to advisory clients. As part of the settlement, Voya will pay about $2.6M of disgorgement, approximately $175K of interest, and a $300K penalty. The firm is not, however, denying or admitting to the SEC’s findings.

Fired Waddell & Reed Broker is Barred from the Securities Industry
The Financial Industry Regulatory Authority has barred an ex-Waddell & Reed Inc. broker from the industry. Paul D. Stanley was fired from the firm last year for allegedly violating its policies regarding supervision, compensation, and conduct.