Articles Posted in Ponzi Scams


Former HCR Wealth Advisors financial adviser Admits to Defrauding Pro Athlete of $1.2M

Jeremy Joseph Drake, an ex-HCR Wealth Advisors financial adviser, has agreed to a consent judgment in the US Securities and Exchange Commission’s case against him in which he admits that he defrauded a pro athlete and his wife of $1.2M while misleading them about how much he was actually charging them to manage about $35M of their money.

The US government contends that Drake told the couple that he was charging them less than most clients to manage their assets. Instead, they ended up paying $1.2M more in management fees. Drake, meantime, was personally paid $900k in “incentive-based compensation” related to these fees. He is accused of fudging financial statements to them, lying, and then later, after admitting to what he’d done, pressuring the couple not to report him by saying that this could lead to “bad publicity” for the athlete.


Former MRI International Head is Found Guilty in $1.5B Ponzi Scam

Edwin Fujinaga, the ex-CEO of medical billings collections company MRI International, has been convicted of multiple counts of wire fraud, mail fraud, and money laundering. He is scheduled to be sentenced earlier this year.

According to the release issued by the US Attorney’s Office for the District of Nevada, Fujinaga and two other MRI executives were indicted in 2013 and were accused of fraudulently soliciting investments from over 10,000 residents in Japan, who wired their money to the US into bank accounts that he controlled. Fujinaga told investors that their funds would go toward buying medical claims only.

Steven Pagartanis, an ex-New York broker with Lombard Securities, has pleaded guilty to wire fraud and mail fraud in a Ponzi scam that went on for more than 18 years and caused investors to lose more than $9M of the over $13M that they invested. Many of his victims were older investors who lost a significant amount of their life savings. Many of them had worked with Pagartanis for years.

According to the release by the US Attorney’s Office for the Eastern District of New York, from 1/2000 to 3/2018, Pagartanis persuaded older individuals to get involved in investments involving real estate, including those that had affiliations with an international hotel conglomerate and publicly traded entities. Investors were told that their principal was secure and they would make a fixed return of 4.5 to 8% yearly.

Pagartanis’ victims were instructed to write checks to an entity of which he was secretly in control. The former broker used different bank accounts to launder the stolen money that he then spent on his own expenses as well as to pay other investors their “interest or dividend payments” that they were owed. He set up bogus account statements so as to encourage further investing and to hide his fraud.

The Financial Industry Regulatory Authority (FINRA) has barred yet another ex-broker for selling promissory notes that have since been linked to the $1.2B Woodbridge Ponzi scam. The fraud is believed to have bilked around 8,400 investors.

According to the self-regulatory authority (SRO), broker Frank Dietrich sold 58 investors $10M of promissory notes that came from the Woodbridge Group of Companies. 30 of these investors were clients of Quest Capital Strategies, Inc., which was Dietrich’s brokerage firm at the time of the sales. FINRA said that the former Quest Capital broker earned $261K in commissions from selling the Woodbridge investments.

Quest Capital Strategies reportedly did not know that Dietrich was selling the Woodbridge notes to its customers. Earlier this year, the brokerage firm allowed him to step down after finding that he had sold a product it had not approved and for failing to disclose external business activities.


Investment Adviser Accused of Lying to Retirement Fund Clients Pleads Guilty

Richard G. Cody, an investment adviser who ran Boston Investment Partners and is accused of lying to clients about how he handled their retirement funds, has revised his not guilty plea. Cody is now pleading guilty to both making a false declaration under oath and investment adviser fraud.

According to The U.S. Attorney’s Office for the District of Massachusetts, Cody allegedly lied to at least three investors who had relied on him to manage their retirement savings. The investment adviser is accused of fabricating documents so it would look as if their funds were still in the accounts even though hundreds of thousands of dollars had disappeared.

Already under scrutiny for suspending its sale of private placements, along with redemptions to investors, GPB Capital Holdings now has to explain why its accountant, Crowe LLP, has resigned as the alternative asset management firm’s auditor. GPB Capital had announced a few months ago that it was undergoing an accounting overhaul and that this was why it had failed to submit financial statements for its two biggest funds – the GPB Holdings II and the GPB Automotive Portfolio – to the U.S. Securities and Exchange Commission (SEC) earlier this year. These private placements primarily invest in waste management businesses and car dealerships.

According to GPB Capital CEO David Gentile, Crowe has resigned because of “perceived risks” that the accounting firm felt were outside its “internal risk tolerance parameters.” GPB Capital has since retained EisnerAmper, LLP as its replacement auditor.

Such a significant change at such an important time period should raise significant concerns to those who have invested in GPB Capital Holdings private placement deals. GPB Capital Holdings has at least nine different funds including the two mentioned above (GPB Automotive Portfolio and GPB Holdings II) as well as GPB Holdings III, GPB Cold Storage, GPB NY Development and GPB Waste Management.


Former Financial Adviser Now Facing Years in Prison for $20M Investor Fraud

Dawn Bennett, an ex-financial adviser and the operator of Bennett Financial Group Services, has been convicted of 17 criminal charges, including securities fraud, conspiracy, bank fraud, wire fraud, and making false statements on a loan application. It took a federal jury less than five hours to convict her for  a $20M ponzi scam that defrauded nearly four dozen investors, including many older investors and retirees. Some of her advisory clients took money out of their retirement accounts to invest with Bennett.

Prosecutors contend that the former financial adviser, who is also an ex-radio show host, used investors’ money to pay back earlier investors in Ponzi-like fashion and to fund her luxury lifestyle. This purportedly included paying priests in India to conduct religious ceremonies to keep regulators away, a $500K luxury suite at the Dallas Cowboys’ stadium, and cosmetic surgery procedures.

Wayde McKelvy, who is accused of playing a key role in a $54M Ponzi scam that targeted unsophisticated investors, is on trial before a federal jury. According to the US government, McKelvy, who is a former co-owner of Mantria Corp., and two others allegedly sold fake investments in green energy and land to investors, including retirees and widows, and then used the funds to support their luxury lifestyles.

Investors were promised up to 50% returns on a supposed new charcoal substitute comprised of organic waste, as well as on real estate in Tennessee. The land, however, was never developed.

Meantime, investors were told that the Tennessee land was valued at over $100M. Through Mantria Financial, the alleged co-conspirators assisted investors in purchasing investments in both the land deals and the charcoal substitute, known as “biochar.”


Former Michigan Financial Adviser Faces SEC Charges in $2.7M Investment Scam that Defrauded Seniors

The US Securities and Exchange Commission has filed fraud charges against Ernest J. Romer III, a former Michigan-based financial adviser with 47 disclosures on his Broker-Check record and who was barred by FINRA last year. Romer also pleaded no contest to embezzlement in July and is awaiting his sentence. According to the regulator, between 2014 and 2016, the ex-financial adviser defrauded unsophisticated investors and older retirees of $2.7M.

The regulator contends that Romer convinced at least 30 clients to “sell securities in their brokerage accounts” and transfer their proceeds to the companies CoreCap Solutions or P & R Capital. He purportedly gave them the impression that these were affiliated brokerage firms when, in fact, they were businesses that Romer owned. Many of these investors entrusted him with their life savings.

It wasn’t bad enough that over 10,000 investors, many of them retirees and other retail investors, were bilked in the $1.2B Woodbridge Ponzi scam. Now, they are allowed to borrow against what they hope to recover after the bankrupt real estate developer’s assets are liquidated but they must pay a 16% interest rate to do so.

While the rate isn’t necessarily wrong or unfair on the part of hedge fund lender Axar Capital Management—it was the investors that went to the Delaware Bankruptcy court seeking a $215M loan facility so that they could access their funds until Woodbridge’s bankruptcy proceedings are settled—the rate is still a steep sum considering that they thought that their investments would garner an approximately 8% return.

SEC Goes After Woodbridge

Contact Information