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Ponzi Schemes

This archive displays posts tagged as relevant to Ponzi and pyramid schemes. You may also be interested in the following pages:

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May 4, 2022

Brenda Smith, former investment manager for Broad Reach Capital LP, pleaded guilty to seven counts of securities fraud. She will pay $47.2 million in restitution, spend 109 months in prison, and spend another 3 years thereafter under supervised release, for orchestrating a $100 million securities fraud scheme. To further her fraud, Smith provided investors with false monthly account statements, made false representations about her personal investment in the company, satisfied redemption requests by diverting other investors’ funds to pay the redemption amounts, and transferred clients’ funds to investments that were outside the scope of the promised investment strategy. NJ USAO

April 15, 2022

Damon Elliott, and his entity Piptastic Limited will pay almost $6.5 million in disgorgement and interest, and a civil penalty of nearly $100,000 for his promotion of a Ponzi scheme in violation of the antifraud provisions of the Securities Act and the Securities Exchange Act. Elliott, through Piptastic, misused investor assets, lied about the status of their investments, provided fabricated account statements, and lied about investors’ funds being safely held in trading accounts. In addition to the disgorgement and interest levied against Elliott, Piptastic is enjoined from further violations of the Securities Act and the Securities Exchange Act.  SEC

April 12, 2022

Robert A. Karmann, a CPA and former CFO of DC Solar, was sentenced to 6 years in prison and ordered to pay $624 million for his role in perpetrating a Ponzi-style scheme, by taking new investor money to pay older investors, and deploying circular transactions to cover up their illicit behavior. DC Solar manufactured trailer-mounted solar generators and marketed them as having extensive third-party lease demand. Karmann and his co-conspirators offered falsified financial statements and operation reports and provided fabricated revenue summaries to victims of the scheme. Karmann oversaw the hidden transfers of funds, gave false information to investor representatives, and instructed a subordinate to “make it up” when asked by a customer for reports on the location of their solar generators. USAO EDCA

April 8, 2022

Danish resident Casper Mikkelsen, also known as Carsten Nielsen, Brian Thomson, Thomas Jensen, and Casper Muller, has been ordered to pay $1.2 million in restitution and $3.6 million in penalties after he was found to have misappropriated client funds for his personal use, used earlier investor funds to pay later investors, and failed to register as a commodity trading advisor.  Mikkelsen’s victims had believed they were investing their funds to trade in forex.  CFTC

February 14, 2022

Zachary Joseph Horwitz, 35, of Los Angeles, CA will spend 20 years in federal prison and was ordered to pay over $230 million in restitution. Horwitz raised $650 million from over 250 investors in his Ponzi scheme—investors who were lied to about future licensing and distribution agreements with online platforms such as Netflix and HBO. Horwitz operated his Ponzi scheme via 1inMM Capital, duping five major groups of private investors through hundreds of 6- and 12-month promissory notes, which he defaulted on. Horwitz initiated the scheme in 2014, and it remained active until his arrest by the FBI in April 2021. USAO CDCA

Top Ten Financial and Healthcare Fraud Prison Sentences of 2021

Posted  01/28/22
handcuff and money
Individuals involved in financial and healthcare fraud schemes face not just civil liability, but also criminal penalties – including prison time. In 2021, the Department of Justice obtained substantial prison sentences in a myriad of cases involving healthcare and financial frauds, many of which involved convictions of the type of fraudulent schemes that whistleblowers report. Whistleblowers play an essential role...

January 20, 2022

Florida resident Mary Kathryn Marr was sentenced to 14 years in prison following her guilty plea on charges related to her role in a criminal enterprise that scammed victims into sending members of the conspiracy funds for fraudulent investments based on high-pressure “boiler room” tactics.  The conspirators operated a network of bank accounts in the names of shell companies into which the boiler room agents, and sometimes Marr herself, instructed victims to send their money.  The victims’ funds were then laundered through more bank accounts and sent overseas.  Marr was also ordered to forfeit various assets, pay a fine of $1.5 million, and pay restitution of $14.5 million to victims.  USAO MD FL

January 14, 2022

Perry Santillo was sentenced to 17.5 years in prison and ordered to pay restitution of more than $100 million following his conviction on charges related to fraudulent investment schemes including the solicitation of funds through and for Lucian Development and City Capital Corporation.  The Ponzi scheme, which operated over ten years, obtained at least $115.5 million from approximately 1000 investors. Santillo and his co-conspirators purchased the businesses of investment advisors and brokers around the country in order to find potential new investors, and used new investments to fund their lavish lifestyles and make interest and other payments to earlier investors. USAO WD NY

December 13, 2021

Paul Ricky Mata, who worked as a financial advisor, was sentenced to 14 years in prison and ordered to pay $12.6 million in restitution following his guilty plea on charges related to his fraudulent solicitation of customers for investment in his companies including Secured Capital, which he claimed offered guaranteed returns through investments in “government-backed tax liens,” “asset-backed deed certificates,” and distressed commercial and residential properties.  In fact, Mata, who concealed his long history of disciplinary action by regulators, used investor funds to pay his personal expenses.  USAO CD Cal

November 29, 2021

Denari Capital LLC and its principals Travis Capson and Arnab Sarkar have been ordered to pay a total of $4 million in penalties and restitution based on findings that they engaged in foreign exchange (forex) pool fraud and failed to register with the CFTC as a commodity pool operator and associated persons.  Defendants misrepresented Denari’s trading and performance in fraudulent solicitations, issued false account statements, and improperly commingled pool funds.  CFTC
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