Ponzi Schemes

September 26, 2014

The SEC charged Charles S. Wang, Qian Cathy Zhang and Francis Y. Yuen, operators of Hong Kong-based eAdGear Holdings Limited and California-based eAdGear, Inc., with running an international pyramid scheme that raised more than $129 million from investors worldwide, primarily in the U.S., China, and Taiwan.   According to the SEC, even though eAdGear claimed to be a successful Internet marketing company, nearly all of its revenue was generated by investors, not its products or services and eAdGear’s operators used money from new investors to pay earlier investors as well as to repay a personal loan and purchase million-dollar homes for themselves. SEC

September 16, 2014

The SEC secured an emergency asset freeze againstAbatement Corp. Holding Company Limited, located in Turks and Caicos Islands, in connection with its operation of a South Florida-based Ponzi scheme.  The SEC’s complaint alleged that Abatement Corp. and its now-deceased principal Joseph Laurer falsely promised investors safe, guaranteed returns while instead engaging in a Ponzi scheme.  According to the SEC, Laurer, who was a member of the City of Homestead’s General Employee Pension Board and president of the South Dade chapter of AARP, raised more than $4.6 million from approximately 50 investors residing primarily in South Florida.  SEC

May 29, 2014

The SEC charged Chicago-based investment fund manager Neal V. Goyal and two investment advisers he owned and controlled – Blue Horizon Asset Management and Caldera Advisors – with violating the antifraud provisions of the various securities laws.  According to the SEC’s complaint, Goyal raised more than $11.4M in the last several years for investments in four private funds that he managed and controlled.  Goyal’s investment strategy lost money from the outset, but he hid those losses from investors through the Ponzi payments and phony account statements.  Meanwhile, Goyal misused investor funds to make down-payments and pay the mortgages on two homes he purchased.  He also siphoned away investor money to invest in a Chicago tavern, fund two children’s clothing boutiques that his wife operates in Chicago, and purchase artwork and lavish furniture.  SEC

May 21, 2014

The SEC charged Gaeton “Guy” S. Della Penna, a Sarasota, Florida-based private fund manager, with defrauding investors in a Ponzi scheme that ensued after he squandered their money on bad investments and personal expenses.  The SEC alleges that Della Penna raised $3.8M from investors in three private investment funds that he operated but then lost nearly all of their money by making unsuccessful investments and diverting more than a million dollars to himself and his girlfriend.  In an effort to cover up his fraud as it unraveled, Della Penna began operating a Ponzi scheme by using money from newer investors to pay fake returns to prior investors. SEC

April 17, 2014

The SEC charged Massachusetts-based TelexFree for allegedly operating a large pyramid scheme that mainly targeted Dominican and Brazilian immigrants in the US.  According to the SEC’s complaint, the defendants sold securities in the form of TelexFree “memberships” that promised annual returns of 200% or more but the company’s sales revenues of approximately $1.3M from August 2012 through March 2014 are barely one percent of the more than $1.1B needed to cover its promised payments.  SEC

April 8, 2014

The SEC announced fraud charges and an asset freeze against the operators of JCS Enterprises Inc. and T.B.T.I. Inc., a South Florida-based Ponzi scheme which targeted investors through YouTube videos and sold them investments in a product called virtual concierge machines (VCMs) that would purportedly generate guaranteed returns of 300 to 500 percent in four years.  SEC

March 28, 2014

The SEC announced charges and asset freezes against three entities operating under the business names WCM and WCM777 for allegedly running a worldwide pyramid scheme targeting Asian and Latino communities in the U.S. and abroad.  According to the SEC’s complaint, WCM and WCM777 have raised more than $65M since March 2013 by, among other things, falsely promising tens of thousands of investors a return on investment of 100 percent or more in 100 days. SEC

May 12, 2015

Garfield M. Taylor was sentenced to 13 years in prison and ordered to pay over $28.6 million in restitution for operating a Ponzi scheme that resulted in investors losing money they invested with Taylor and companies he controlled.  In a parallel action, the SEC obtained a civil judgment against Taylor for his fraudulent conduct.  DOJ

December 18, 2014

Robert L. Holloway, former CEO of US Ventures LC, was sentenced to 225 months in prison and to pay $15.2M in restitution for orchestrating a $33M Ponzi scheme resulting in $15.2M in losses to investors.DOJ

December 18, 2014

Houston investment manager Robert Andres was sentenced to 56 months in prison and to pay more than $3.2M in restitution for orchestrating a $72M investment fraud scheme resulting in approximately $40M in losses to investors. According to his guilty plea, between October 2005 and 2011, Andres recruited investors for Winsome Investment Trust, where he served as the sole manager, attorney and trustee, by misrepresenting Winsome’s assets, asset allocation and the manner in which investor funds were invested. Andres also misappropriated approximately $2.2M in investor money for personal use, including to pay his hotel bills and living expenses. DOJ