Ponzi Scams

Ex-Head of Chicago Investment Firm Gets 6-Year Sentence for $9M Ponzi Scam

Published on: July 31, 2015 | by Shepherd Smith Edwards & Kantas, LLP

Neal Goyal, the former head of Caldera Investment Group and Blue Blue Horizon Asset Management, has been sentenced to six years behind bars for bilking over 40 investors of more than $9 million in a Ponzi scam. Prosecutors contend that over the eight years that the 34-year-old ran the scam, pretending to be a hedge fund manager, he made just limited trades and on only some of the funds. The majority of his victims were family and friends from his Hindu community.

Goyal told investors that the four private funds he managed would employ a long-short trading strategy. Instead, he ran a Ponzi scam, paying off earlier investors with new investors’ money.

He would go on to use over $2 million of their funds on his lavish lifestyle, including a $1.5 million home, luxury car leases, travel, and expensive dinners. He also put some of the money into his wife’s business ventures and his father-in-law’s failing tavern. He took his company staff on an all-expenses-paid vacation to the Dominican Republic. The group trip included a yacht and butler service at a five-star resort.
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SEC Stops Ponzi Scam that Targeted Portuguese and Spanish Communities

Published on: July 7, 2015 | by Shepherd Smith Edwards & Kantas, LLP

The Securities and Exchange Commission is filing fraud charges against DFRF Enterprises for running a Ponzi scheme and pyramid scam that targeted investors belonging to Portuguese and Spanish-speaking communities. According to the regulator, the company claimed to run over 50 gold mines in Africa and Brazil even though its revenues came solely from selling membership interests to investors.

The alleged scammers raised over $15 million, bilking at least 1,400 investors. The owner of DFRF, Daniel Fernandes Rojo Filho, allegedly took over $6 million of this money to pay for personal expenses, including luxury vehicles and other lavish spending.

The regulator contends that in 2014, Filho and others started selling memberships in DFRF. Investors were recruited through a pyramid-like scam, with commissions paid to earlier investors for recruiting new members, much like a Ponzi scheme.

Many of these sales took place through meetings with prospective investors in hotel conference rooms, businesses, and homes, mostly in Massachusetts. The investment opportunity was also promoted on video through the Internet. In less than a year, membership sales rose from under $100,000 in June 2014 to over $4 million for the month of March 2015.
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Federal Judge in Texas Says Law Firms Must Face Lawsuit Seeking Creditor Payments in Stanford Ponzi Fraud

Published on: June 27, 2015 | by Shepherd Smith Edwards & Kantas, LLP

Four years after Allen Stanford’s $7 billion Ponzi scam was uncovered in 2009, investors who lost money in the scheme are still trying to recover their funds. The 65-year-old Stanford is serving 110-years behind bars for selling investors bogus high-yield CD’s through his Stanford International Bank based in Antigua. Prosecutors said he used customers’ money to fund his expensive lifestyle.

This week, U.S. District Judge David Godbey in Dallas said that law firms Proskauer Rose and Chadborne & Parke will have to contend with claims brought by a committee of these investors and Ralph S. Janvey, the court-appointed receiver for Allen Stanford’s companies.

Chadborne and Prosakuer had sought to have this lawsuit, which seeks to hold the two law firms liable for legal malpractice, dismissed. The plaintiffs contend that Thomas Sjoblom, who worked at the two firms, allegedly obstructed regulator probes into the Ponzi Scam and helped Stanford conceal the SEC’s investigation from auditors.

Now, the Texas-based judge has decided that Janvey and the investor committee can pursue claims of negligent supervision, professional negligence, civil conspiracy, and aiding and abetting fraud against the two firms. Judge Godbey stated that the allegations suggest that Sjobolm knew that Stanford was potentially running a Ponzi scam, and this awareness was imputed to both firms. Godbey said that the plaintiffs have alleged that the defendants knew that Stanford was engaged in sufficient wrongdoing.
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Former Stockbroker Pleads Guilty to Fraud Involving $6M Ponzi Scam

Published on: June 8, 2015 | by Shepherd Smith Edwards & Kantas, LLP

Sunil Sharma, a former stockbroker who hasn’t been part of the securities industry for over 10 years, has pleaded guilty to fraud charges. The 68-year-old is facing 20 years behind bars for starting what prosecutors claim was a $6 million Ponzi scam that ran from 2008 to 2014.

He allegedly raised $8.36 million from over 30 investors, paying old investors with new investors’ money. According to officials, Sharma misappropriated some $2.5 million of investor funds for his own spending, including a cruise trip, leases for expensive cars, and a down payment on a house.

Investors received statements showing gains even as Sharma continued to lose their funds. He falsely claimed that investors were putting their money in safe investments when really the day trading strategy he employed was high risk.

Thousands More Investors in Bernard Madoff Ponzi Scam Could Get Financial Recovery

Published on: May 31, 2015 | by Shepherd Smith Edwards & Kantas, LLP

According to Richard Breeden, the special master of the Madoff Victim Fund, about 11,000 more investors who sustained losses in the Bernard Madoff Ponzi scam could recover some of their funds. He also said that the number could possibly double as the U.S. government assesses more of the claims.

Breeden said that as of the middle of this month his office had looked at over 34,000 of the more than 63,700 claims it had received from investors who were claiming $77.3 billion of losses. They are from 135 countries.

The Madoff Victim Fund is holding $4.05 billion in investor compensation and is separate from the compensation being distributed by Irving Picard, who is the trustee of Bernard L. Madoff Investment Securities LLC. While Picard has been compensating investors who directly placed their funds with Madoff, Breeden is working to compensate investors who had accounts at feeder funds and other entities that then sent their money to Madoff for investment.

Ex-Sonics Special Assistant Accused of $4M Wire Fraud, Ponzi Scam

Published on: April 29, 2015 | by Shepherd Smith Edwards & Kantas, LLP

Steve Gordon, who used to be the special assistant to the Seattle SuperSonics basketball team, has been charged with federal wire fraud. Gordon is accused of using false pretenses to initiate at least $4 million in business deals. The criminal charges come after a 10-month probe by the Federal Bureau of Investigation.

Gordon, who also worked with the Minnesota Timberwolves and the Portland Trail Blazers, is accused of creating a Ponzi scam that involved at least 30 investors. Newer investors’ money was allegedly used to pay earlier investors their promised returns.

The wire fraud count accuses him of using misrepresentations, fraudulent promises and false pretenses, and concealing material facts to solicit money from investors. He also purportedly used his friendship with ex-Microsoft SCEO Steve Ballmer by falsely claiming that the billionaire was his partner and financial backer. However, according to the fraud charges, Ballmer never promised to give Gordon any money.

SEC Sues Ex-New York Giants Cornerback Over Alleged Ponzi Scam

Published on: April 8, 2015 | by Shepherd Smith Edwards & Kantas, LLP

The U.S. Securities and Exchange Commission is suing a former New York Giants player for allegedly helping to run a Ponzi scam. According to the regulator, Will Allen and his business partner Susan Daub raised over $31 million from investors, promising them profits from loans made to professional athletes. Allen and Daub managed Capital Financial, which was compromised of several companies.

The SEC said that the alleged financial scam took place from 7/12 through 2/15 and involved over 40 people investors, who were told they could make up to 18% in interest. The Commission contends that Allen and Daub misled investors about the circumstances, terms, and the existence of certain loans.

For example, according to the complaint, last year, at least two dozen investors handed over approximately $4 million that was supposedly going to go toward a $5.6 million loan for an NHL player. They were given a copy of a promissory note and loan agreement that was supposed to have been signed by both Allen and the player. The player was to make monthly payments.

Ponzi Scams: Madoff Victims to Get $93M, Fraud Lawsuits Name Insurance Brokerage Head in $10M Scheme

Published on: March 24, 2015 | by Shepherd Smith Edwards & Kantas, LLP

Investors who were bilked in Bernard Madoff’s Ponzi scam will be getting back another $93 million. Madoff Trustee Irving Picard said that Defender Limited and related entities have consented to give back that amount, which they received from investing with the Ponzi mastermind. As part of the agreement, the $93 million will be withheld from the over $422 million that Defender is waiting to get back for its own losses in the scam.

To date, Picard has gotten back over $10.6 million of investors’ $17.3 billion in principal. This is the latest deal reached between the trustee and a so-called feeder fund. These funds pooled investor money and then sent the cash Madoff’s way. Bogus returns were issued to the funds, which gave the money to their individual investors.

Picard contended that the parties behind the Defender fund were aware, or if not then they should have been, that Madoff’s company was a fraud. The $93 million is representative of all the money that Defender withdrew from its fund from its formation in 2007 until the end of 2008 when Madoff liquidation proceedings began. As part of the agreement, parties involved with Defender will cooperate with Picard to get back the $550 million. Picard has also reached deals with feeder funds Premo Fund, Herald Fund SPC, and Senator Fund SPC.

Ex-Green Bay Packers’ Bruce Wilkerson Awarded $2M Against Resource Horizons Group Over Ponzi Scam Involving Rogue Broker

Published on: March 16, 2015 | by Shepherd Smith Edwards & Kantas, LLP

Bruce Wilkerson, the former tackle of the Green Bay Packer, has been awarded $2 million against Resource Horizons Group. The ex-NFL player lost $650,000 in an alleged Ponzi scam run by Robert Gist, an alleged rogue broker at the Georgia-based financial firm.

Unfortunately for Wilkerson the former pro football player is unlike to get his money back, which was a substantial chunk of his net worth. The now defunct broker-dealer closed shop in November after it was slapped with more $4 million in judgments in two arbitration awards that it could not afford to pay. The Financial Industry Regulatory Authority has suspended the firm for not complying with the award, as well as canceled its license.

The arbitration awards are also linked to Gist, who in 2013 consented to pay $5.4 million to resolve Securities and Exchange Commission charges accusing him of running the Ponzi scam and converting the money for personal use over a 10-year period. At least 32 customers were allegedly bilked.

SEC Cases: Brothers-In-Law Charged in Louisiana Insider Trading Scam, NY-Based Broker-Dealer Accused of CDO Liquidation-Related Fraud, & Colorado Ponzi Scam is Halted

Published on: February 20, 2015 | by Shepherd Smith Edwards & Kantas, LLP

The Securities and Exchange Commission is charging former VP of The Shaw Group’s construction operations Scott Zeringue and his brother-in-law Jesse Roberts III with insider trading. Zeringue has already agreed to settle the regulator’s charges by consenting to pay disgorgement of ill-gotten gains plus a penalty.

The SEC says that the insider trading took place in 2012 when Zeringue, while working at The Shaw Group, became privy to confidential data about the company’s upcoming acquisition by Chicago Bridge & Iron Company. Prior to the announcement of the deal, he bought 125 shares of Shaw stock and asked Roberts to buy for him, too. Roberts went on to tip others and they collectively made close to $1 million in illicit profits.

Meantime, parallel criminal charges have been filed against Roberts. Zeringue has already pleaded guilty to the criminal charges against him.