Articles Posted in Ponzi Scams

Basketball Benefactor Accused of Texas Securities Fraud and Ponzi Scam that Targeted High-Profile Coaches Found Dead

Published on: July 19, 2011 | by Shepherd Smith Edwards & Kantas, LLP

David Salinas, a well-known University of Houston and Rice athletics benefactor, was found dead in his home over the weekend. The Galveston County medical examiner’s office is calling the 60-year-old’s death a suicide. Salinas’ death comes amidst allegations of Texas securities fraud, including his suspected involvement in a Ponzi scam that allegedly victimized high-profile athletics coaches. Select Asset Management, a Houston financial services firm that worked with Salinas, notified its clients that the US Securities and Exchange Commission has subpoenaed information from its files, as well as from those of J. David Financial Group, which is a Salinas business.

Coaches that invested with or gave testimonials to Salinas include Baylor coach Scott Drew, ex-Rice coach/current Texas A & M- Corpus Christi coach Willis Wilson, ex-Arizona coach Lute Olson, Texas Tech coach Billy Gillispie, Nebraska coach Doc Sadler, and others. According to Chron.com, one ex-NCAA coach is claiming that Salinas asked him for a “significant” amount of money to invest. In return, Salinas would direct players from Houston Select to the coach’s school. The former coach says he refused to get involved.

Salinas is the founder of Houston Select Basketball. Players that have contributed include Joseph Jones from Texas A & M, Dexter Pittman from Texas and NBA’s Miami Heat, Demetri Goodson from Gonzaga, Jawann McClellan from Arizona, and Cartier Martin from Kansas State and the Washington Wizards.

J David Insurance Group, which is also a Salinas business, is associated with Select Asset Management. The latter company’s CEO Brian Bjork is a Houston Select Founder, while its vice president Greg Muse is secretary of Houston Athletics Foundation, which is a nonprofit corporation that raised donations for University of Houston Athletics. Salinas served as the foundation’s director.

Our Houston securities fraud lawyers represent investors throughout Texas who have lost money in Ponzi scams and as a result of other kinds of financial fraud.

Related Web Resources:
Basketball benefactor found dead, Chron.com, July 19, 2011
Tom Penders talks about Salinas scandal, ESPN, July 19, 2011
Houston Select Basketball

More Blog Posts:
Texas Securities Fraud: SEC Halts Alleged Ponzi Scheme in the Dallas-Fort Worth Area, Stockbroker Fraud Blog, March 2, 2011
Texas Congressmen Seek Answers from SEC Chairwoman Regarding Conflict of Interest Related to Madoff Debacle, Stockbroker Fraud Blog, March 8, 2011
Michael Kenwood Capital Management, LLC Principal Pleads Guilty to Securities Fraud Involving Ponzi Scam, Institutional Investor Securities Blog, March 17, 2011 Continue Reading ›

Madoff Trustee Files Securities Lawsuit Against Safra National Bank of New York Seeking to Recover Almost $111.7M for Ponzi Scam Investors

Published on: May 12, 2011 | by Shepherd Smith Edwards & Kantas, LLP

This week, Madoff trustee Irving Picard has filed a securities complaint against Safra National Bank of New York. Picard is seeking to recover about $111.7 millions for the investors who lost money in the Bernard Madoff Ponzi scheme.

The funds he is trying to get back were allegedly transferred to Safra by a number of Fairfield Greenwich Group funds. Fairfield Greenwich was the largest feeder fund to Madoff’s financial scheme, and Picard says that the commercial banking unit should have or knew about the different irregularities involved in investing through Bernard L. Madoff Investment Securities.

In his securities complaint, Picard says that Fairfield Sentry Ltd. made $95.9 million in improper transfers to Safra and that the remaining moneys came from feeder funds Fairfield Sigma Ltd. and two Kingate Management Ltd funds called Kingate Euro Fund Ltd. and Kingate Global Fund Ltd.

In addition to filing the complaint against Safra, which is a unit of a Brazilian private bank, Picard reached a settlement with the liquidators of the Fairfield Greenwich funds, who have agreed to give up claims their investors lost $1 billion. Instead, Picard and the liquidators will join forces to pursue the owners of Fairfield Greenwich. Both parties have agreed to divide future recoveries from an alleged fraud by fund operators and others. Most of the proceeds, however, will go to the Madoff Ponzi scam victims.

Picard has filed over 1,000 securities lawsuits, and he is trying to recover about $100 billion. So far, he has recovered over $7.6 billion, with most of it tied up in litigation.

Related Web Resources:

Safra National Bank of New York Sued For $111 Million By Madoff Trustee, Bloomberg, May 10, 2011

Irving H. Picard, Madoff Trustee

More Blog Posts:
Morgan Keegan & Co. Inc. Must Pay $250K to Couple that Lost Investments in Hedge Fund with Ties to Bernard L. Madoff Investment Securities, Stockbroker Fraud Blog, March 16, 2011

Texas Congressmen Seek Answers from SEC Chairwoman Regarding Conflict of Interest Related to Madoff Debacle, Stockbroker Fraud Blog, March 8, 2011

SEC, NASD, FINRA & SIPC: New SEC Report Card on Madoff Catastrophy Further Reveals How Investor Protection Is Severely Flawed!, Stockbroker Fraud Blog, September 3, 2009

Venezuelan Workers Fall Victim to Francisco Illarramendi’s Ponzi Scam

Published on: March 30, 2011 | by Shepherd Smith Edwards & Kantas, LLP

Our Stockbroker Fraud Blog and our Institutional Investor Securities Blog have been following the story of Michael Kenwood Capital Management, LLC principal Francisco Illarramendi, who recently pleaded guilty to securities fraud, investment adviser fraud, and conspiracy to obstruct justice, and wire fraud. Now, news that the Ponzi scam, which targeted clients overseas, may be impacting workers in Venezuela.

Illarramendi is Venezuelan-American. According to National Public Radio/AP, he was in charged of investing hundreds of millions of dollars from a state oil workers’ pension fund. Now, the Venezuelan government is attempting to recover what it can from the employee retirement fund for Petroleos de Venezuela, which put forth about 90% of the investment. Rafael Ramirez, Venezuela’s oil minister, says that any pension fund losses would be made up by the oil company. Per The Wall Street Journal, officials from the petroleum workers union are claiming that about $500 million was invested.

The monetary scope of the Ponzi scheme has not been verified. The Securities and Exchange Commission, however, has said that at one point Illarramendi gave over a bogus letter from an accountant in Venezuela in an effort to verify some $275M in nonexistent assets.

Prosecutors claim that Illarramendi transferred money between investment accounts without notifying clients, as well as falsified documents to fool his clients.
While all his investors are located abroad, the financial fraud scam has impacted startup technology companies in the US that depended on Investments from Illarramendi’s group.

If convicted, Illarramendi could end up serving up to 70 years behind bars.

Venezuelan Workers Caught Up In Conn. Ponzi Scheme, NPR/AP, March 30, 2011
Venezuela Oil Min: Working With US To Recover Pension Fund Money, The Wall Street Journal, March 27, 2011

Related Web Resource:
Petroleos de Venezuela

More Blog Posts:
Michael Kenwood Capital Management, LLC Principal Pleads Guilty to Securities Fraud Involving Ponzi Scam, Institutional Investors Securities Blog, March 17, 2011
Order to Freeze Assets in $53M Fund Fraud Allegedly Involving Michael Kenwood Asset Management LLC Obtained by SEC, Stockbroker Fraud Blog, February 21, 2011 Continue Reading ›

Michael Kenwood Capital Management, LLC Principal Pleads Guilty to Securities Fraud Involving Ponzi Scam

Published on: March 17, 2011 | by Shepherd Smith Edwards & Kantas, LLP

Last month, our stockbroker fraud lawyers reported on a Securities and Exchange Commission order to freeze the assets of Michael Kenwood Capital Management, LLC and its principal Francisco Illarramendi for their alleged misappropriation of $53 million in investor funds. This month, Illarramendi pleaded guilty to securities fraud, wire fraud, conspiracy to obstruct justice, and investment adviser fraud.

Per the US Department of Justice’s release, a hedge fund that Illarramendi was advising sustained losses in the millions. He had been tasked with investing the money. However, instead of telling clients about their failed investments, the DOJ says that Illarramendi decided to cover up this information by taking part in a securities fraud scam. The hedge funds and other entities that he advised ended up with “outstanding liabilities” far beyond their assets’ values. U.S. Attorney David B. Fein says this securities case this is the largest white-collar prosecution that the office has ever pursued.

Two other men have been detained and criminally charged over their alleged involvement in the hedge fund scam and of aiding Illaramendi. Juan Carlos Horna Napolitano and Juan Carlos Guillen Zerpa are charged with investment adviser fraud and conspiracy to obstruct justice.

Meantime, the SEC says it has amended its civil complaint against Illaramendi and MK Capital Management, LLC. The agency is now alleging that the “breadth” of the securities fraud may be in the “hundreds of millions.”

Our institutional investment fraud law firm represents clients in arbitration and litigation with claims against investment advisers, broker-dealers, brokers, and others in the financial industry. We are dedicated to recovering investor losses.

Related Web Resources:

Order to Freeze Assets in $53M Fund Fraud Allegedly Involving Michael Kenwood Asset Management LLC Obtained by SEC, Stockbroker Fraud Blog, February 21, 2011

SEC adds new charges Connecticut-based hedge fund manager in Ponzi scheme, SEC, March 7, 2011

Texas Congressmen Seek Answers from SEC Chairwoman Regarding Conflict of Interest Related to Madoff Debacle

Published on: March 8, 2011 | by Shepherd Smith Edwards & Kantas, LLP

Texas Congressman Jeb Hensarling is one of four Republican members of the House Financial Services Committee wanting to know more about Securities and Exchange Commission Chairwoman Mary Schapiro’s role in managing the conflict of interest presented by appointing David M. Becker as the SEC’s general counsel. Becker, who is no longer in this post, is with someone with a financial interest in a Bernard Madoff investment account. As a senior policy director for the SEC involved in dealing with Madoff Ponzi scam, he played a role determining how victims would be compensated.

Becker’s ties with Madoff didn’t come to light until trustee Irving H. Picard sued him and his two brothers to get back more than $1million of the $2 million they had inherited from their late mother’s Madoff investment. The former SEC general counsel claims that he told Schapiro and the chief ethics officer of his Madoff-related financial interest. Now, however, SEC inspector general H. David Kotz says he wants to probe possible conflicts of interest related to Becker’s role with the SEC as someone who stood to benefit from decisions involving Madoff Ponzi scam victims. According to the New York Times, two unnamed sources say while the SEC agreed to return to investors only the funds they had placed in their Madoff accounts, Becker had pushed for allowing the victims to keep some of their investment gains.

Lawmakers say they want details of Schapiro’s talks with Becker about his Madoff ties. They also want to know whether she followed all the steps delineated in government ethics rules. Also getting into the mix is Texas Representative and Republican Randy Neugebauer, who is quoted in the New York Times as stating that he believes the SEC should be held to the same high standard of “transparency and disclosure” as it holds other companies.

Ex-Wextrust Capital COO Pleads Guilty to Role in $255M Affinity Fraud Scam

Published on: February 27, 2011 | by Shepherd Smith Edwards & Kantas, LLP

Joseph Shereshevsky, the ex-COO of Wextrust Capital LLC (Wextrust), has pled guilty to securities fraud, conspiracy and mail fraud charges over his involvement in a $255 million dollar affinity fraud scam. Shereshevsky entered his guilty plea in the U.S. District Court for the Southern District of New York.

He and codefendant Steven Byers, the private equity concern’s ex-CEO and president, diverted millions in investor funds in a Ponzi scam that took place between 2003 and 2008. Many of the approximately 1,200 investment fraud victims belong to the Orthodox Jewish Community.

Shereshevsky and Byers allegedly made misrepresentations by making it appear as if the investors’ money would go toward the purchase and operation of several commercial properties that the federal government had leased. In fact, the properties were never bought and investors’ funds were put to other uses. Byers and Shereshevsky, who are accused of using about $3 million and $9 million raised in a private placement for purposes that weren’t articulated to investors, also allegedly conspired together to “fabricate a story” about why the deal failed.

Byers pleaded guilty to the securities fraud and conspiracy charges against him last year. The two men, Wextrust, and a number of Wextrust entities, including Wextrust Development Group, LLC (WDG), Wextrust Equity Partners, LLC (WEP), Axela Hospitality, LLC (Axela), and Wextrust Securities, LLC (Wextrust Securities), face SEC civil charges over their alleged misconduct related to the affinity fraud scam.

Related Web Resources:
Ex-WexTrust Exec Shereshevsky Pleads Guilty to Fraud, Conspiracy, The Wall Street Journal, February 3, 2011

More Stockbroker Fraud Blog Posts:
Ex-Triton Financial CEO Accused of Using NFL Contacts to Commit $50M Texas Securities Fraud, Stockbroker Fraud Blog, February 17, 2011
Even as Ponzi Schemers Serve Time Behind Bars, Investors Are Left Coping with Millions in Financial Losses, Stockbroker Fraud Blog, January 25, 2011
CFTC Files Charges in Alleged California Ponzi Scam Involving the Fraudulent Solicitation of $14 million in Commodity Futures, Stockbroker Fraud Blog, January 18, 2011 Continue Reading ›

Ex-Triton Financial CEO Accused of Using NFL Contacts to Commit $50M Texas Securities Fraud

Published on: February 17, 2011 | by Shepherd Smith Edwards & Kantas, LLP

Kurt Branham Barton, the former CEO of Triton Financial, a financial firm based in Austin, Texas, has been indicted on 33 counts, including Texas securities fraud, money laundering, and wire fraud. Barton allegedly used ex-NFL stars and church contacts in a $50 million Ponzi scam.

The American-Statesman reports that beginning in 2002, Barton accumulated a number of partnerships and companies based around Triton Financial. He even hired ex-NFL stars Chris Weinke and Ty Detmer to persuade clients to invest. Many investors belonged to the Church of Jesus Christ of Latter-day Saints (Barton is also a member).

Court documents contend that Barton got investors to give him over $50 million and that he used the funds to live a lavish lifestyle that included expensive vehicles, flying in private planes, and a luxury box for watching University of Texas football games. He also made money in political campaign contributions.

By 2009, however, several securities fraud complaints had been filed. Investors accused Barton of misleading them about where their money would go. The Securities and Exchange Commission would go on to file a securities fraud lawsuit against Triton Financial and Barton, and the Texas State Securities Board has stripped him of his investment adviser license.

The indictment accuses Barton of lying about his investments to investors regulators and of creating “false, fictitious, and fraudulent limited partnerships. He also allegedly used an E-Trade statement that showed his holdings had a balance of over $3 million even though the actual balance was $3,161.17. Barton is accused of giving regulators “altered and fabricated documents” about his business dealings.

A judge has placed Triton Financial in receivership. Per the receiver’ statement on January 31, 2011, over 600 investors have made $63.3 million in securities fraud claims against the financial firm and its ex-CEO.

Related Web Resources:
Former Triton chief indicted on charges of money laundering and fraud, Statesman, February 15, 2011
Broker indicted in fraud with NFL stars, KXAN, February 16, 2011
Read the Indictment (PDF)

More Stockbroker Fraud Blog Posts:
Texas Securities Act Control Person Claims against Merrill Lynch Pierce Fenner & Smith Inc. is Revived by Appeals Court, Stockbroker Fraud Blog Posts, January 20, 2011
R. Allen Stanford’s Criminal Trial Over $7 Billion Ponzi Scam Delayed So He Can Detoxify from Medication Addiction, Stockbroker Fraud Blog Posts, January 11, 2011
ALJ to Determine Whether to Revoke Registration of STS-Advisors Ltd. and Investment Adviser Representative Richard Lewis Bruce Over Alleged Texas Securities Fraud, Stockbroker Fraud Blog Posts, January 7, 2011 Continue Reading ›

Even as Ponzi Schemers Serve Time Behind Bars, Investors Are Left Coping with Millions in Financial Losses

Published on: January 25, 2011 | by Shepherd Smith Edwards & Kantas, LLP

While the multi-billion dollar Stanford and Madoff Ponzi scams are among the larger fraud schemes that have dominated the news headlines, “smaller” Ponzi scams resulting in losses in the millions have cropped up throughout the US. Some of these fraudsters have been convicted and are paying for their crimes behind bars. Unfortunately, the many investors who have not recovered their lost investments are still paying a price, too.

Ponzi scammer Jeremy Hart is now sentenced 9 years in prison after pleading guilty to one count of felony securities and one count of felony theft. Hart and Richard Novaria ran a Ponzi scam between July 2006 and May 2008 that defrauded investors of $3.4 million. Many of the investors were clients of Hart Financial Inc. and they had placed their money in Dreamweaver Foundation, which was run by Novaria. Although they were promised returns of 7 to 14%, no money was made and Hart used investors’ funds to pay for personal expenses.

Also recently pleading guilty to fraud, including money laundering and mail fraud, is ex-Park Capital Management Group manager Donna Jones. She served as the assistant of Brentwood financial adviser Michael J. Park. Jones has admitted to running a Ponzi scam with Park that bilked investors of PCMG funds of over $10 million. The money was supposed to have been invested in marketable securities.

More than 10 investors invested more than $10 million in the bogus PCMG investment accounts. Only $4 million has been recovered. Park has already been sentenced to 8 years in prison. Jones hasn’t received her sentence yet.

Also now behind bars is Keith Epstein of Epstein and Rich Investment Firm. He is accused of defrauding elderly members and their families of millions. Investors wrote Epstein personal checks for investments that he was supposed to make on their behalf. Instead, he deposited the funds in his personal account.

Related Web Resources:
Fort Collins man sentenced to 9 years for Ponzi scheme, Coloradoan, January 21, 2011
Assistant pleads guilty in Brentwood Ponzi scheme, Tennessean, January 21, 2011
Victims Of Ponzi Scheme Hope Others Come Forward, WNEM, January 21, 2011
Number of Ponzi Scam Collapses Increased Significantly Last Year, January 4, 2011 Continue Reading ›

CFTC Files Charges in Alleged California Ponzi Scam Involving the Fraudulent Solicitation of $14 million in Commodity Futures

Published on: January 18, 2011 | by Shepherd Smith Edwards & Kantas, LLP

The Commodity Futures Trading Commission is charging Increase Investments Inc., Spirit Investments, and Scott Bottolfson with securities fraud. The CFTC contends that the defendants solicited about $14 million from 30 individuals for investments in two commodity trading pools that traded options on commodity futures and commodity futures contracts. Increase and Spirit allegedly ran the pools. The commission is seeking restitution for the investment fraud victims, fines, the return of ill-gotten gains, trading and registration bans, and permanent injunctions against future violations of federal commodities laws.

The CFTC contends that from 2002 through August 2010, Bottolfson made false and misleading statements to draw in prospective investors. He is accused of promising a 20% fixed-rate return and making it appear as if the commodity futures investments were not only guaranteed, but also that they protected, risk-free, and profitable.

Investors went on to sustain about $845,000 in trading losses. About $2.97 million had been placed in the commodity pool trading accounts. The CFTC is accusing Bottolfson of allegedly misappropriating about $11 million of investors’ money to pay pool participants their “profits,” as well as cover some of his personal expenses.

R. Allen Stanford’s Criminal Trial Over $7 Billion Ponzi Scam Delayed So He Can Detoxify from Medication Addiction

Published on: January 11, 2011 | by Shepherd Smith Edwards & Kantas, LLP

U.S. District Judge David Hittner has postponed the criminal trial of Texas financier R. Allen Stanford so that he can undergo detoxification from his medication addiction. Three psychiatrists had testified that he is incompetent to stand trial after getting hooked on anti-depressant and anti-anxiety medications.

Stanford, the ex-head of Stanford Financial Group, is accused of running a $7 billion Ponzi scam. He, his companies, and other ex-executives, allegedly bilked investors through Stanford International Bank Ltd’s sale of certificate deposits. Stanford has been indicted on 21 criminal counts of wrongdoing. The US Securities and Exchange Commission also has a Texas securities fraud case against Stanford. Others who were named defendants in that case: Stanford International Bank (SIB), which is located in Antigua, Stanford Group Company (SGC), an investment adviser and broker-dealer located in Houston, Stanford Capital Management, an investment adviser, Stanford Financial Group chief investment officer, Laura Pendergest-Holt, and SIB chief financial officer James Davis.

Stanford has been in federal custody without bail because he is considered a flight risk. According to Stanford’s criminal defense team, prison doctors gave him the meds.

Psychiatrist Victor Scarano, who was retained by Stanford’s team, was among those who testified. He said that for a year Stanford has been taking 3 milligrams of clonazepam daily and that this has caused the 60-year-old to feel drowsy and suffer from lack of energy. He has also had a difficult time concentrating on his tasks. Usually, the normal dosage for this anti-anxiety drug is 1 milligrams a day and for no more than two weeks. Stanford is also taking the anti-depressant mirtazapine.

Scarano contends that Stanford sustained a traumatic brain injury when a prisoner assaulted him in September 2009. The psychiatrist believes that Stanford will need anymore from three to six months to kick his anti-anxiety drug addiction. Meantime, federal prosecutor Andrew A. Warren has suggested that Stanford faked his symptoms.

Prosecutors believe that Stanford can receive the treatment he needs while in federal prison, but Stanford’s criminal defense team wants him hospitalized at a private facility in the Houston area. His lawyers want his criminal trial delayed for two years so that they have enough time to prepare his defense.

Related Web Resources:
Read the SEC’s complaint (PDF)

Judge orders Stanford get drug treatment, Houston Chronicle, January 11, 2011
Financier Is Described as Addicted to Medicine, NY Times, January 7, 2011
Stanford Group. Co., Stockbroker Fraud Blog, February 22, 2009
Texas Securities Fraud, Stockbroker Fraud Blog Continue Reading ›