Investor Fraud Claims Include Kiddar Capital and Stanford Ponzi Scam

$20M Ponzi Scam Results in Guilty Plea for Kiddar Capital Founder
Todd Hitt, Kiddar Capital’s founder and a member of a prominent commercial real estate family in Virginia, has pleaded guilty to criminal fraud charges accusing him of operating a $20M Ponzi fraud that involved several schemes. According to prosecutors, Hitt solicited about $30M from investors and then proceeded to use most of the money to fund his lavish lifestyle while using newer investors’ funds to pay older investors. He also allegedly made “false statements and material omissions” to investors when he didn’t tell them that their money was comingled with unrelated projects and not just the real estate and venture capital investments for which their funds were supposedly designated.

The U.S. Attorney’s Office for the Eastern District of Virginia contends that because of Hitt’s “fraudulent conduct,” investors lost about $20M. He is facing up to 20 years behind bars and is expected to pay a fine of millions of dollars. He previously settled related civil fraud charges filed against him by the US Securities and Exchange Commission.

A Decade Later, Stanford Ponzi Fraud Victims Said They’ve Barely Recovered Anything
Investors who lost money in the $8B Stanford Ponzi Scam say they haven’t recovered much even though 10 years have passed since what is being called the second largest investor fraud in US history was uncovered.

The Ponzi fraud, run by Allen Stanford through his Stanford Financial Group, involved certificates of deposit issued by Stanford International Bank, which was based in Antigua. Investors were sold the CD’s through Stanford’s brokerage firm in the US. Stanford, who is now serving 110 years in prison, claimed that not only were the CDs secure investments but also they made solid returns. About 18,000 investors were defrauded.

CNBC.com reports that according to court-appointed receiver Ralph Janvey, only about $500M of investors loses were recovered as of October 2018. $224M of that has been designated for fees and costs for Janvey, which means just about $275M–approximately 5 cents on the dollar–is for the victims. A lawyer for Janvey said that the receivership has since recovered another $200M and is still attempting to recover hundreds of millions of dollars more through lawsuits brought against those accused of receiving fraudulent transfers from Stanford. Another $160M at Societe Generale has yet to make it back to investors after the bank stopped its release.

That the CDs were issued by a foreign bank has also been problematic for investors, since their investments were not protected under the Securities Investors Protection Corporation. SIPC compensates investors for their cash and securities losses should a broker-dealer fail.

Puma Biotech Shareholders Awarded Up to $100M in Damages for Fraud
A US federal jury has issued a verdict awarding The Norfolk Pension Fund up to $100M in damages for shareholders of Puma Biotechnology. The biotech company and its CEO Alan Auerbach are accused of purposely misleading Puma investors about the effectiveness of its sole product, a drug known commercially as Nerlynx.

The pension fund, which is based in the UK, bought approximately 18,000 Puma shares. The plaintiff contends that it was sold the shares at inflated rates while the company garnered bonuses and compensation. After the actual results of drug trials became public knowledge, however, Puma’s share price plunged.

Whether you are a retail investor, an institutional investor, or a high net worth individual investor, Shepherd Smith Edwards and Kantas LLP (SSEK Law Firm) can help you explore your options if you suspect that you were the victim of investor fraud. Contact SSEK Law Firm today.