Ponzi Schemes

December 20, 2023

Avinash Singh and Highrise Advantage, LLC will pay over $100 million in restitution and civil penalties and are permanently banned from registering with the CFTC and from trading on any registered entity. Despite bringing in almost $58 million from investors and feeder funds, Singh and Highrise used less than $2.5 million on forex trades and used over $25 million on personal expenses and to make payments on their Ponzi-like scheme. CFTC

November 15, 2023

Phillip Galles and the entities he controlled—Tyche Asset Management LLC, Tyche Master Fund Ltd, Tyche Asset Trade LLC, Tyche Offshore Fund Ltd., Tyche Onshore Fund LP, Tyche PML Master Fund Ltd., Tyche PML Onshore Fund LP, Tyche Onshore Fund GP LLC, and Tyche Asset Trade LLC—will pay over $5.3 million in restitution and a nearly $16 million penalty for violating CFTC regulations governing commodity pools and for making false and misleading statements to the National Futures Association. Gales convinced investors he was a hedge fund magnate and claimed his Tyche entities achieved returns of over 200%, which he attributed to sophisticated technology and trading strategies. The majority of investors' funds, however, were not used to place trades but rather to fund Galles' lavish lifestyle and carry out his Ponzi scheme. CFTC

July 28, 2023

Thomas D. Renison and Timothy J. Allcott, co-founders of ARO Equity, LLC, were sentenced to 48 months and 30 months in prison, respectively, for lying to current and prospective investors about ARO's performance and for using new investors' funds to pay interest to older investors. For at least 3 years, and despite Renison being barred in 2014 by the SEC from associating with any investment adviser or broker-dealer, Renison and Allcott deceptively convinced investors to cash out their retirement accounts and invest instead with ARO, touting double-digit returns and zero downside, ultimately raising nearly $6 million from investors. ARO's investments began failing almost immediately, but Renison and Allcott continued to tell investors their investments were as safe with ARO as they were with a bank. In addition to their prison sentences, Renison was ordered to pay restitution of $6,098,198.30 and Allcott will pay restitution of $6,249,983.30. SEC

July 28, 2023

Summitcrest Capital, Inc., and its principals, Johnny Tseng and Kevin Zhang, raised approximately $19.8 million from Chinese-speaking investors in the United States and China, misleading them to believe the funds would be used to make real estate-related loans "to the general public" and the income from these loans would be used to make interest payments and return of capital to investors. Tseng and Zhang, through their entity SC Development Fund, instead used investor funds for loans to Zhang's many real estate development and contracting businesses. Summitcrest, Tseng, and Zhang are on the hook jointly and severally for $16.6 million in disgorgement and over $4.3 million in prejudgment interest. Summitcrest and Zhang are permanently enjoined from violating the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act. Additionally, Tseng is barred from acting as an officer or director and will pay disgorgement of $60,000, plus $15,721 in prejudgment interest and a $414,366 penalty. SEC

June 30, 2023

Robert Christensen and Anthony Matic, both of Oregon, have been ordered to pay almost $5.4 million for their roles in a multi-year Ponzi scheme that defrauded retail investors of more than $10 million.  Using their companies—Foresee Inc., The Commission PDX LLC, The Policy PDX LLC, and Innings 150 LLC—Christensen and Matic offered and sold unregistered promissory notes to investors by leading them to believe the raised funds would be used to invest in real estate, and all funds raised would be returned in full within a few months with 9-15% interest.  In reality, however, Christensen and Matic used the funds on personal, unauthorized purposes.  SEC

June 26, 2023

Sanjay Singh, of Broward County, Florida, and his company, Royal Bengal Logistics Inc., have been charged by the SEC for fraudulently raising $112 million through a 5-year, Ponzi-like scheme, which targeted as many as 1,500 primarily Haitian-American investors through an unregistered securities offering. Singh promised investors guaranteed returns of 12.5 to 325 percent, and that the investors’ funds would be used to expand operations and increase its fleet of semi-trucks and trailers. Despite telling investors Royal Bengal generated up to $1 million in revenue per month, RB instead was operating at a loss and used approximately $70 million of new investor funds to make payments to other investors. Singh misappropriated at least $14 million of investor funds, and diverted more than $19 million into two brokerage accounts he controlled, engaged in highly speculative equities trading on margin in those accounts, and as a result lost more than $1 million of investor money. SEC

March 30, 2023

Siblings John and Jonatina Barksdale offered unregistered crypto asset “Ormeus Coin” securities through their multilevel marketing scheme called Ormeus Global. The pair produced social media posts, YouTube videos, and other promotional materials, while John held roadshows around the world to promote the securities. Defendants claimed Ormeus Coin had a quarter-billion-dollar mining operation, mining $5.4 to $8 million per month, but the mining operation generated less than $3 million in total revenue, and mining operations ceased. The Barksdales were ordered to pay over $46 million in disgorgement, prejudgment interest of $10 million, and a civil penalty of $23 million each. SEC

March 28, 2023

James K. Couture, a Massachusetts-based investment adviser, defrauded his clients of nearly $3 million from 2009 to December 2019, convincing them to sell portions of their securities to fund large money transfers to an entity Couture controlled—a detail not shared with his clients. Couture consented to a final judgment enjoining him from future violations of the securities laws’ antifraud provisions. Couture will spend 100 months in prison and was ordered to pay approximately $4.7 million in restitution and forfeiture for his deceptive, Ponzi-like scheme. SEC

March 23, 2023

A Maryland man named John Erasmus Frimpong has been sentenced to 9.5 years in prison and, along with his co-defendants, ordered to pay almost $17.5 million in restitution for operating a $28 million Ponzi scheme through a purported wealth management company called 1st Million LLC.  As part of his plea agreement, Frimpong admitted to making false and misleading statements to investors, including statements regarding the experience, training, and licensure of the company’s principals, the existence of a “trust” through which investors’ principles would be protected and returned in full, the investment’s rates of return, and the source of payments to investors.  USAO MD

February 24, 2023

Energy & Environmental Investments, LLC (“EEI”) and Energy & Environment, Inc. (“E&E”) have agreed to pay $3.4 million in disgorgement, nearly $1 million in prejudgment interest, and over $1 million in civil monetary penalty to settle SEC charges of conducting a fraudulent securities offering.  A parallel criminal case was filed in California Superior Court in 2021 against EEU’s CEO, Amir Sardari, and former Vice President of Investor Relations, Narysa Luddy, which both have pleaded guilty to.  According to the SEC, EEI employed high-pressure tactics to solicit investments, then misappropriated about 47% of the $9.3 million raised from over 200 investors to cover payroll, marketing, Luddy’s personal expenses, and payments to prior investors.  SEC