Ponzi Schemes

February 24, 2021

Leroy King, the former chief of Antigua’s Financial Services Regulatory Commission, was sentenced to 10 years in prison for his role in obstructing the SEC’s investigation into the $7 billion Ponzi scheme perpetrated by R. Allen Stanford and the Stanford International Bank.  Stanford provided King with cash and luxury gifts, and in exchange King improperly denied his agency’s assistance to the SEC.  DOJ

February 5, 2021

Private equity fund ACP X, LP, its manager Laurence Allen, and other corporate entities owned and controlled by Allen including NYPPEX Holdings, LLC, have been ordered to pay nearly $7 million.  Allen allegedly used investor funds to pay himself and others exorbitant salaries and cover the expenses of Allen’s affiliated entities, contrary to representations to investors.  A receiver was appointed to wind down the fund.  NY

January 11, 2021

Steve Chen was sentenced to 10 years in prison following his guilty plea to charges arising from his promotion of a pyramid/Ponzi scam that netted $147 million from tens of thousands of investors.  Chen told victims that they could purchase interests in U.S. Fine Investment Arts, Inc. and other companies owned by him, falsely claiming that those companies mined and sold amber and other gemstones, and enlisted those investors to recruit others by awarding them bonuses and “Gem Coins” that he claimed were a digital currency.  USAO CD Cal

December 9, 2020

A man in Washington D.C. who ran a fraudulent diamond investment Ponzi scheme has been sentenced to 7 years in prison and ordered to pay $23 million in restitution to victims throughout the United States and Canada who were told their funds would be used to purchase rough diamonds that would be cut, polished, and resold at a profit.  To lure investors to the scheme, Jose Angel Aman and his co-conspirators promised that the investments were secured by Aman’s inventory of diamonds, allegedly valued at $25 million.  In fact, there was no $25 million inventory of diamonds, and the funds were used for interest payments to earlier investors and to pay Aman and his co-conspirators.  USAO SDFL

November 30, 2020

An attorney in Pennsylvania who defrauded his own clients through a $2.7 million Ponzi scheme has been sentenced to 6.5 years in prison and ordered to pay over $2.1 million in restitution and $273,091 in forfeiture.  In pleading guilty earlier this year, Todd Lahr admitted to soliciting investments from his clients for business opportunities that didn’t actually exist—including property leases in Europe and mining operations in Papua New Guinea—and then using the money that he didn’t spend on personal expenses to pay prior investors.  The monetary penalty in this criminal action will be offset by the final judgment obtained by the SEC in June; in the parallel civil action with the SEC, Lahr was ordered to pay over $1.1 million in disgorgement and pre-judgment interest.  DOJ; USAO EDPA

October 22, 2020

The former president of Hightower Capital Group (HCG) has been sentenced to nearly 16 years in prison and ordered to pay $9.6 million in restitution for running a Ponzi scheme that harmed investors, mostly family and friends, from 2013 to 2018.  Though barred from working as a broker in 2015, William Hightower managed to convince the investors to trust him with their retirement funds and life savings, which he then used to pay other investors and fund a lavish lifestyle for himself.  USAO SDTX

October 19, 2020

Investment adviser representative Paul Horton Smith, Sr. of eGate, LLC and his companies, Northstar Communications, LLC and Planning Services, Inc., have been ordered to pay over $4 million in disgorgement and $383,000 in prejudgment interest for defrauding at least 35 investors of more than $5.6 million.  According to the SEC, Horton and his companies targeted retirees and pre-retirees in Southern California, promising them guaranteed interest payments but paying the “interest” with new investor funds.  SEC