Articles Posted in Ponzi Scams

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.

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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.

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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.

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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.

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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.

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San Angeleno Man Goes to Prison Over Investment Scams
Stanley Jonathan Fortenberry of Texas has been sentenced to 78 months behind bars for running two investment scams and bilking investors of about $900K. He pleaded guilty to obstruction of justice and mail fraud in 2016. Now, Fortenberry must pay over $890K in restitution and forfeit more than $311K.

Fortenberry ran Premier Investment Fund and raised money for social media projects operated by another company. According to prosecutors, the Texas man misled investors about that company’s profitability and regarding what their money would be used for. He admitted to diverting about half of investors’ money to himself and to his fundraising operation.

Fortenberry also ran Wattenberg Energy Partners, a company that raised money for oil and glass drilling projects in Colorado. He admitted to establishing the company under his son’s name because the US Securities and Exchange Commission was already investigating him about the way Premier investors’ funds were being used.

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Susan C. Daub and William D. Allen have each been sentenced to six years in prison for running a Ponzi scam that involved issuing loans to professional athletes. Allen, a former NFL player with the Miami Dolphins and the New England Patriots, and Daub have been both the subject of a criminal case and an Securities and Exchange Commission case over this matter.

The two of them were arrested in 2015 on criminal charges of wire fraud, conspiracy, and charging money related to a specified illegal act. Along with their Capital Financial Partners Enterprises, Capital Financial Holdings, and Capital Financial Partners, the two of them raised nearly $32M from investors, who were told that they were providing loans professional athletes but would get back their money in full along with interest when the loans were repaid.

In its civil case, SEC said that Daub and Allen only advanced about $18M to the athletes even though they’d raised over $31M from investors. The regulator said that from 7/2012 through 2/2015, even though the defendants had only gotten back a little over $13M in loan repayments from the pro athletes, they paid back about $20M to investors by using investors’ funds to make up for the almost $7M deficit.

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The US Securities and Exchange Commission has filed Texas fraud charges against Patrick O. Howard, Optimal Economics Capital Partners, LLC (OE Capital) and Howard Capital Holdings, LLC. Howard controls the two Dallas-based companies., which have raised about $13M from 119 investors. The regulator is alleging that the money went to fraudulent offerings involving private fund investments in three limited liability companies and that Howard falsely presented himself as a registered investment adviser when, in fact, he was not. In addition to offering and selling units through OE Capital, he retained two firms to do the same and paid them a 5% commission.

The SEC is charging Howard and his companies with violating the Securities Act of 1933, the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The regulator wants permanent injunctions, disgorgement, prejudgment interest, and civil penalties.

According to the Commission, which filed its complaint under seal in Dallas federal court, Howard and his two companies promised investors 12-20% yearly returns, along with minimal risk. They also purportedly claimed that almost all invested money would go toward acquiring interest in revenue streams of the portfolio companies and that promised returns were insured.

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Chicago Hedge Fund Manager Gets Over Four Years in $1.8M Fraud
Clayton Cohn is sentenced to more than four years behind bars and he will pay $1.55M in restitution for targeting military veterans in a $1.8M hedge fund fraud. Cohn is an ex-US Marine. He pleaded guilty to the criminal charges against him.

Cohn is accused of pretending to be a successful hedge fund manager to persuade clients to invest with his Marketaction Capital Management. Of the over $1.8M that was invested,he lost more than $1.5M and spent at least $400K on his luxury lifestyle and business investments.

The US Securities and Exchange Commission had brought civil charges against him in 2013 when they accused Cohn of soliciting investors through his Veterans Financial Education Network. The non-profit was supposed to help veterans handle their money. Instead, he diverted some of their funds toward himself. The regulator stayed its case against him following the federal indictments. Now, the civil fraud charges will proceed.

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Bond Fraud Case Leads to Conviction for Former Visium Asset Management 

A jury has convicted Stefan Lumiere, a former Visium Asset Management LP portfolio manager, of wire fraud and securities fraud. Lumiere was accused of conspiring to artificially inflate the value of a fund that was invested in debt issued by healthcare companies. Prosecutors said that his actions caused the fund’s net asset value to become overstated by tens of millions of dollars, compelling investors to pay more than they should have for the securities. They argued that Lumiere got fraudulent price quotes from brokers who worked outside the firm in order to override prices that the credit fund’s administrator had calculated. They say that he mismarked securities for years.

Ex-Former Hilliard Lyons Broker Doesn’t Appear to Testify, Gets Barred by FINRA 

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