Ponzi Schemes

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

February 17, 2023

Two individuals who ran a Ponzi scheme involving cattle and marijuana have been sentenced to 6 years in prison and ordered to pay almost $16 million in restitution each.  Additionally, Reva Joyce Stachniw was ordered to forfeit $6 million, and Ron Throgmartin was ordered to forfeit $1 million.  DOJ

February 7, 2023

Saivian LLC and owner EJ Dalius have agreed to pay $24 million in disgorgement, prejudgment interest, and penalties for operating a multimillion-dollar Ponzi and pyramid scheme.  According to the SEC, Savian and Dalius promised investors 20% cash back on retail shopping purchases as long as they paid a $125 fee every 28 days and submitted receipts for their purchases.  Savian and Dalius claimed the cash back payments were funded by monetizing receipt data, when in fact, it was funded by payments from prior investors.  In addition to the Ponzi scheme, Savian and Dalius also ran a pyramid scheme wherein affiliates sold memberships to others down the line.  SEC

January 24, 2023

A former energy company executive accused of defrauding investors of more than $15 million and misappropriating investor funds has been sentenced to 5 years in prison after pleading guilty to wire fraud.  While serving as the executive chairman and managing partner of Citadel Energy, which supposedly helped oil and gas companies with fluid management, Joey Stanton Dodson made false and misleading representations and omissions to investors concerning the intended use of their funds and his own compensation.  After obtaining over $15.6 million from over 50 investors, Dodson misappropriated $1.3 million into his own accounts, and used some of it to repay investors of unrelated entities.  DOJ