Stanford Gets 110 Years for Role in $7 Billion Swindle

 R. Allen Stanford, the Texas financier convicted of fleecing 30,000 investors from 113 countries in a $7 billion Ponzi scheme, was sentenced on Thursday to 110 years in jail.

A defiant Mr. Stanford, in a rambling statement to the court before the sentencing, intermittently fought back tears and shuffled papers, and said, “I’m not up here to ask for sympathy or forgiveness. I’m up here to tell you from my heart I didn’t run a Ponzi scheme.”

He blamed the government for the collapse of his businesses and asserted that “we could have paid off every depositor and still have substantial assets remaining.”

In response, federal prosecutor, William J. Stellmach, called Mr. Stanford’s version of events “obscene.” 

“This is a man utterly without remorse,” Mr. Stellmach said. “From beginning to end, he treated all of his victims as roadkill.” 

“He went after the middle class, including people who didn’t have money to lose. People have lost their homes. They have come out of retirement.”

A federal jury in March convicted Mr. Stanford of 13 out of 14 counts of fraud in connection with a worldwide scheme over more than two decades in which he offered fraudulent high-interest certificates of deposit at the Stanford International Bank, which was based on the Caribbean island of Antigua.

Prosecutors argued that Mr. Stanford had consistently lied to investors, promoting safe investments for money that he channeled into a luxurious lifestyle, a Swiss bank account and various business deals that almost never succeeded.  

Sept 2008 video

Flashy Miami Jeweler Accused in Ponzi Scheme, Fraud

As a kid, Luis Felipe Perez cleaned bathrooms at a taco joint. By his 30s, he was a high-end jeweler, riding the streets of Hialeah in a Bentley. He traveled with bodyguards. Donated tens of thousands of dollars to local and national politicians. And even dined at a fete for the king and queen of Spain when the royal couple visited Miami. But his businesses, the feds say, were a sham. His jewelry companies had no employees -- and the man known simply as ``Felipito'' orchestrated a $40 million Ponzi scheme and took part in a $12 million bank fraud conspiracy, according to law enforcement authorities. [Source: Miami Herald]

http://www.sec.gov/litigation/litreleases/2010/lr21544.htm

According to the SEC's complaint, filed in U.S. District Court for the Southern District of Florida, Perez began his scheme in 2006 when he began raising money from investors, many of them Hispanic, under the guise of investments in his purported jewelry businesses. Perez was the president and sole owner of Lucky Star Diamonds Inc. and Luis Felipe Jewelry Design Corp., neither of which ever had any employees. Both companies have now ceased operations.

Hedge Fund Manager on the Run From FBI Arrested in Poland

United States officials say an American fugitive wanted for money laundering and other financial fraud has been arrested in Poland, The Associated Press reported.

The American Embassy said Wednesday that Polish police arrested Aleksander Efrosman, a businessman from Staten Island, N.Y., in Krakow last weekend.

The United States Commodity Futures Trading Commission said in a complaint filed in 2005 that Mr. Efrosman, who also goes by Alex Besser, stole about $5 million from customers of two fraudulent hedge funds that he had claimed to manage, Century Maxim Fund and AJR Capital.

Alexsander Efrosman, also known as Alex Besser, was a Russian immigrant

http://dealbook.blogs.nytimes.com/2010/06/03/hedge-fund-manager-accused-of-fraud-arrested/

http://www.nytimes.com/1997/08/09/business/currency-trading-schemes-leave-unwary-investors-holding-the-bag.html

HighTower broker sued for selling investments tied to Ponzi scheme

(left: Scott Rothstein, showing off his collection of watches, faces 100 years in prison for his role in the scam)

Investors claim Curtis Lyman sold them promissory notes in feeder fund for $1.4B scam operated by Scott Rothstein

By Bruce Kelly, Investment News

March 31, 2010

A broker with HighTower Advisors LLC, the startup with the sterling pedigree, has been sued over the sale of notes into a feeder fund for what turned out to be a massive Ponzi scheme.

Investors in Florida filed two lawsuits in state court in Palm Beach County this month against HighTower and one of its brokers, Curtis Lyman, alleging investment fraud, the sale of unregistered securities, breach of fiduciary duty and negligence.

The two investors filing the suits, Deborah Marlin and Robert Kimmel, claim they invested $217,000 and $4.4 million, respectively, in promissory notes with Banyon 1030-32 LLC. Banyon went into default on the notes in November when the $1.4 billion Ponzi scheme, controlled by disbarred attorney Scott W. Rothstein, was exposed.

In January, Mr. Rothstein pleaded guilty to running the largest investment fraud in the history of South Florida. When he is sentenced May 6, he could receive up to 100 years in prison.

The Banyon fund was controlled by George G. Levin. According to the lawsuits, Mr. Lyman told investors that Mr. Levin was looking for capital to put into structured legal settlements. Mr. Lyman allegedly told investors that Banyon would produce a guaranteed rate of return through the notes. The plaintiffs also claim the adviser stated the investment was low-risk, safe and secure.

According to court documents, the promissory notes were scheduled to pay a return of 16% per year. Mr. Lyman's clients were investing in Banyon notes as late as October 2009, weeks before the Ponzi scheme was revealed, the lawsuit alleges. The lawsuit does not state the commission Mr. Lyman was paid to sell the notes.

According to records with the Financial Industry Regulatory Authority Inc., Mr. Lyman joined HighTower in December 2008.

Mr. Lyman told investors that “he normally did not do ‘private deals' as he was very leery and cautious of them,” but that he had known Mr. Levin for a long time and that he personally guaranteed the notes, according to the lawsuits.

HighTower has been a high-profile firm since it opened in 2007. Led by investors such as former Morgan Stanley chief executive Philip Purcell, and David Pottruck, ex-CEO of Charles Schwab Corp., HighTower has successfully recruited major adviser teams and talent from Wall Street firms.

Indeed, the Chicago-based company announced today that it is hiring Michael LaMena, a former executive director of Morgan Stanley Smith Barney LLC's private wealth management operations in New York, as chief operations officer. He is a 14-year veteran of Morgan Stanley.

HighTower's advisory group has more than $1 billion in client assets, according to its filing with the Securities and Exchange Commission. Published reports indicate that, overall, HighTower has attracted $16 billion in client assets.

The broker named in the suits, Mr. Lyman, allegedly told clients he was confident in the Banyon investment just months before it collapsed.

“I remain comfortable on the Banyon program,” Mr. Lyman wrote in an e-mail to a client in June 2009.

“Business has remained strong and they have not ‘oversubscribed' their demand, which is the biggest business risk I think they have. We are monitoring that closely, but, at the moment, they are working to raise over 300 million dollars in order to retire more expensive hedge fund lines,” he wrote. “My recommendation is to renew the notes.”

This is not a case of a broker “selling away,” or selling investments without the knowledge of his broker-dealer, said Scott Silver, a plaintiff's lawyer representing one HighTower client who bought the Banyon notes.

As an indication that HighTower approved the product, Mr. Silver pointed to the fact that Banyon appeared on the account statements of Mr. Lyman's clients.

“We were shocked that HighTower approved the sale of Banyon to its customers,” said Mr. Silver, who added that he is filing a $1 million arbitration claim against HighTower today with charges similar to those in the two other investor lawsuits.

Fidelity Investments is HighTower's custodian.

When asked whether HighTower approved the Banyon product, Jennifer Connelly, a spokeswoman for the firm, said that the Banyon fund was not, at any time, on the HighTower platform. “These are legacy investments predating Mr. Lyman joining HighTower,” she said.

Ms. Connelly also said Mr. Lyman invested in the Ponzi scheme prior to joining HighTower.

“Mr. Lyman, prior to joining HighTower, invested his own capital along with several of his clients' into this Ponzi scheme,” she said. “He did not receive any economic incentive to make these investments and is a victim, as are the others who were defrauded by Rothstein.”

Prior to signing on with HighTower, Mr. Lyman worked for USF Securities LP, USF Advisors LLC and Capital Market Strategies LLC, according to his Finra records. Elliot Weissbluth, a manager of HighTower Holdings LLC -- the holding company that owns the broker-dealer -- was the president of USF's brokerage and advisory units when Mr. Lyman was hired by the Houston-based firm in Nov. 2005.

Mr. Lyman made the Banyon investments after Mr. Weissbluth left the US Fiduciary and USF Advisors management team in 2007, Ms. Connelly said.

SEC Accuses Miami Couple of Running $135M Ponzi Scheme

Gaston E. Cantens and Teresita Cantens are the founders and co-owners of Royal West Properties Inc

Federal authorities on Wednesday charged a prominent Miami businessman and his wife with running a Ponzi scheme that bilked $135 million from elderly Cuban-American investors who were lured by the couple's credibility in the South Florida community and ties to religious and educational institutions.

The federal agency also alleged that the Cantens used $20 million from investors to pay themselves exorbitant salaries, to invest in other projects and to divert some $1 million to their children and grandchildren in the form of alleged ``consulting fees.''

SEC officials said the Cantens were not registered with the federal government to make securities offerings to investors.

According to a statement, the SEC says that the Miami couple, who founded Royal West Properties Inc. in 1982, sold promissory notes to investors after acquiring various properties and later financing their sale. It further alleges that Royal West continued to offer credit schemes and real estate investments, particularly to Cuban and Latin American investors, even after showing operating losses as early as 2002.

``In classic Ponzi scheme fashion, the Cantens used new investor funds to pay principal and interest to earlier investors and to fund Royal West's ongoing business operations,'' stated the complaint filed in Miami federal court.

The couple issued a statement Wednesday denying the SEC charges and attributed their company's downfall to the collapse of the real estate market.

``It is regrettable that the SEC would so grossly mischaracterize the business difficulties of Gaston and Teresita Cantens and Royal West Properties,'' the statement said. ``The use of a term like `ponzi scheme' is a gross mischaracterization and is seemingly being used solely for its headline-grabbing value.''

``The Cantens did everything they could to save Royal West from bankruptcy including the investment of all of their available cash resources in the company,'' the statement said.

The Cantens said the SEC's claims of $135 million in losses were ``far afield,'' saying their company had $48 million in liabilities at the time of its bankruptcy.

The Cantens are well-known in Miami. One son, also named Gastón I. Cantens, is a former state representative (1996-2006) and is vice presdient for the Florida Crystals sugar company. The son is not named in the SEC complaint.

Several investors raised warnings about the crisis at the company last June when they told El Nuevo Herald that they had handed over their savings over to the Cantens. They said the high interest rates and their personal relationship with the couple gave them confidence their investment was sound.

According to the SEC complaint, the Cantens guaranteed investors annual returns of 9 percent to 16 percent, telling them the money would be generated from mortgages on land in southwest Florida sold by Royal West.

“Chinese Warren Buffet” arrested in Toronto

A fund manager who called himself the “Chinese Warren Buffet” has been arrested in Toronto for running a Ponzi scheme which duped investors out of an estimated $30 million.

Weizhen Tang was arrested at Toronto’s airport and stands accused of defrauding as many as 100 clients, with one losing as much as $2.4 million.

The 51 year-old is thought to have operated the scheme between January 2006 and March 2009, which asked for a minimum commitment of $150,000 from investors.

He worked through online business Oversea Chinese Fund Limited Partnership and advertised opportunities in foreign exchanges, options and mutual funds across China and Hong Kong.

The investment adviser stands accused of securities fraud, illegal distributions of securities and unregistered trading in securities by the Ontario Securities Commission.

Mr Tang is due to appear in court on April 19th.

He was supposed to return to Canada from China on December 29th but failed to show.

An investigation into his activities was originally launched by the Toronto police during April 2009.

Allen Stanford trial set for 2011

The trial of alleged fraudster Allen Stanford will not take place until 2011, a judge has ruled.

Mr Stanford is accused of carrying out a $7 billion Ponzi scheme at his offshore bank in Antigua.

As he is deemed a flight risk by US authorities, he will spend the year before his January 2011 trial in custody.

The start date of the trial was a compromise between prosecutors, who wished to begin the trial in September 2010, while defence lawyers were pushing for a summer 2011 date in order to better prepare their case.

His chief financial officer James Davis has already pleaded guilty to fraud while Mr Stanford himself has denied all charges.

In September, he had his nose broken in a prison brawl and had to spend the weekend in hospital before being returned to his jail cell.

If convicted, Mr Stanford may have to spend the rest of his life in prison.

Book : Too Good to Be True: The Rise and Fall of Bernie Madoff

When Bernie Madoff’s $65 billion Ponzi scheme unraveled at the end of 2008, many in the industry wondered how he did it, how otherwise savvy investors were lured into it, and how regulators failed to stop it. These are the questions that Erin Arvedlund attempts to answer in her book “Too Good to Be True: The Rise and Fall of Bernie Madoff.”


The book explores Madoff’s background, interviewing classmates from his days at Far Rockaway High School in New York, who noted that Bernie was an average guy who they never dreamed would ascend to titan of Wall Street and chairman of the Nasdaq. She also discusses Madoff’s involvement in the early development of electronic trading, including the Nasdaq and the Cincinnati Stock Exchange, an all-electronic stock market that actually moved to Chicago through a membership deal with the Chicago Board Options Exchange (CBOE) in 1995.


The book goes on to explain how Madoff carried out his Ponzi scheme through his illegal advisory business with the help of the legal side of his business, a brokerage firm. Both businesses were on three floors of the same building. Arvedlund’s descriptions of how the activity on the broker-dealer business on the eighteenth and nineteenth floors differed from the advisory business on the seventeenth are fascinating. It’s amazing how Madoff was able to get away with mailing his investors tickets for trades supposedly made on their behalf that never actually happened. The book explains that instead of actually trading for the advisory business, he would take investors money, deposit it into a bank account, and send it back to earlier investors.

One of the more amusing accounts in the book is the story of Salomon Konig, a money manager who is essentially in exile in the United States after running a mini Ponzi scheme in Venezuela. Konig would ask any fund of hedge funds he considered doing business with if they had any money in Madoff, and if they did, he would not deal with them. As another of Arvedlund’s interviewees points out, “it takes a crook to smell another crook.”

“Too Good to Be True” is an informative account of how Madoff carried out his scheme, how he lured in his victims, how industry experts raised alerts about it, and, ultimately, how the investigations into it failed. Anyone who is interested in this Ponzi scheme to end all Ponzi schemes will find it a worthwhile read.

Florida Lawyer Rothstein Charged in $1.2 Billion Ponzi Scheme

David Voreacos, Carlyn Kolker and Susannah Nesmith, Bloomberg, December 2, 2009

Scott Rothstein (above), a disbarred South Florida lawyer, pleaded not guilty to U.S. charges alleging he ran a $1.2 billion fraud that paid for his lifestyle and donations to Governor Charlie Crist and other politicians.

Rothstein, 47, faces 100 years in prison if convicted of two counts of wire fraud and three conspiracy charges filed yesterday. Prosecutors say his law firm was a racketeering enterprise that fleeced investors in a Ponzi scheme. Authorities seek forfeiture of $1.2 billion in cash, real estate, luxury cars and boats, jewelry, sports memorabilia and a guitar collection.

“This case is a glaring example of greed run amok, of someone who gave up all principles for a lifestyle he could not afford,” acting U.S. Attorney Jeffrey Sloman said yesterday at a news conference in Miami. “Now, the mansions, Ferraris, yachts, the law firm and his friends are all gone.”

Rothstein made an initial appearance yesterday in federal court in Fort Lauderdale wearing handcuffs, a black T-shirt and blue jeans. He pleaded not guilty, and U.S. Magistrate Judge Robin Rosenbaum ordered him held without bail before a possible trial.

Prosecutors said the Ponzi scheme began in 2005 and bankrolled his Fort Lauderdale firm, Rothstein Rosenfeldt Adler PA. Rothstein and his coconspirators gave to the campaigns of local, state and federal politicians in a way that evaded limits on such donations and disguised the true source of the money, prosecutors alleged in document known as a criminal information. Many of the contributions have since been returned.

Lawsuit Settlements

Rothstein, who waived possible indictment by a grand jury, told investors they could buy discounted stakes in settlements of sexual harassment and whistleblower lawsuits, prosecutors said. He told investors they would collect the full proceeds.

The alleged fraud may be the largest in Miami history, John Gillies, the agent in charge of the city’s Federal Bureau of Investigation office, said at a news conference yesterday.

In another scheme, Rothstein settled a client’s lawsuit without their knowledge, obligating them to pay $500,000, prosecutors said. He created a false court order and forged a federal judge’s signature to show they won the case and were owed $23 million by defendants who hid the money in the Cayman Islands. Rothstein bilked the clients by saying they had to post a $57 million bond to recover the judgment, prosecutors said.

He used the money from the alleged scheme to buy 18 properties in Florida, two in Narragansett, Rhode Island, two condominiums in Manhattan, and an apartment in Brooklyn, prosecutors said. He also had a white Lamborghini, red Ferrari Spider, 304 pieces of jewelry, and a collection of sports memorabilia.

‘Who Is Complicit’

The probe into Rothstein’s co-conspirators is continuing, Sloman said.

“Our investigation is trying to figure who is complicit and who is a victim,” Sloman said.

Rothstein and his co-conspirators told investors that their investments were kept in trust accounts where the funds were verified by independent sources, including a financial adviser, prosecutors said. They fabricated so-called lock letters from an unnamed bank executive stating that account funds were intended only for specific investors.

“Defendant Rothstein and other co-conspirators prepared and used altered bank statements, purportedly issued from a well-established international financial institution, to fraudulently convince potential and current investors that funds had been received from the purported defendant companies and were maintained in trust accounts,” prosecutors said.

TD Bank

Rothstein and his firm had 38 bank accounts at TD Bank and four accounts at Gibraltar Private Bank and Trust that were used in the alleged scheme, prosecutors said.

TD Bank is cooperating with the government investigation, spokeswoman Rebecca Acevedo said in an e-mail statement.

“TD Bank has been transparent in providing information regarding accounts that Mr. Rothstein and his law firm held at the bank,” Acevedo said.

Gibraltar spokesman Peter Whalen didn’t return a call seeking comment yesterday.

Investors sued TD Bank on Nov. 20, saying the bank was the “epicenter” of the alleged fraud. The bank denied the claims.

Rothstein attorney Marc Nurik, who entered the plea on his client’s behalf, didn’t contest the judge’s detention order. After the hearing, Nurik said Rothstein has not decided whether he may plead guilty in the future.

“At this point we are weighing our options,” said Nurik, who added that Rothstein isn’t cooperating with prosecutors. “I am providing a certain amount of limited information to the government.”

‘Remorseful’

Nurik said the “actual loss” from the alleged scheme was less than $500 million, rather than the $1.2 billion cited by prosecutors.

“Scott feels very remorseful about what happened in this situation,” Nurik said. “My client wishes to see that legitimate investors get paid their money back.”

Rothstein agreed to be disbarred in November by the Florida Supreme Court following a state bar association probe.

The 70-lawyer firm he co-founded collapsed after partners there said they found evidence that Rothstein was running an illegal side business. The firm, which sued him on Nov. 2, is being dissolved in U.S. Bankruptcy Court in Fort Lauderdale.

The case is U.S. v. Scott Rothstein, 09-60331, U.S. District Court, Southern District of Florida (Fort Lauderdale).

Tom Petters trial set to begin

Jury selection is due to begin in the trial of Minnesota businessman Tom Petters, who stands accused of conducting a $3.65 billion Ponzi scheme.

Mr Petters is pleading not guilty to more than 20 different charges, which include allegations of money laundering, obstruction of justice and fraud.

A 16-member jury is to be selected today (Wednesday 28th October 2009) for the case, which is expected to run for up to six weeks.

Prosecutors claim that Mr Petters and his associates convinced investors to loan them money to purchase electronic goods to sell on to large retailers.

But the money being paid back to clients in return for their investments actually came from funds from new investors, while Mr Petters reportedly used the cash to fund a lavish lifestyle.

Five of his ex-colleagues have already pled guilty to their part in the scheme.

Earlier this year, Bernard Madoff, who masterminded a global $65 billion Ponzi scheme, was sentenced to 150 years in jail.

Ponzi schemer Richard Piccoli gets 20-year term‎

Victims of a multimillion-dollar Ponzi scheme who wanted the man who robbed them severely punished got their wish Wednesday when a judge sentenced the 83-year-old businessman to a 20-year prison term.

"A hundred-fifty years ago we would have taken him out and hung him," said investor Carl Bell, 64, one of three victims who spoke at the sentencing of Richard Piccoli of Amherst, a suburb of Buffalo. About a dozen others looked on. U.S. District Judge William Skretny rejected a defense request for a sentence that would give Piccoli hope that he would not die in prison, saying he ran a "shameful, disgraceful and rather ruthless Ponzi scheme" that bilked clients recruited largely through ads in Catholic newspapers, using clergy-member investors as references. 

 "You operated without a conscience. You are a wolf in sheep's clothing," the judge told the grandfatherly Piccoli, who walked slowly to the podium and put eyeglasses on before addressing the court. "I know I'm going to jail, and I deserve it," said Piccoli, whose scheme lasted nearly 30 years. "I let so many people down." 

 Assistant U.S. Attorney Gretchen Wylegala said authorities estimate Piccoli and his Gen-See Capital Corp. took in $31 million in investments between 2002 and 2009 and that about $7 million was available to partially reimburse victims, many of whom lost tens of thousands of dollars saved over a lifetime of work. 

 More than 800 people invested with Piccoli, authorities said, and about 500 lost money as he paid earlier investors with money collected from those who came later. At least 100 people said their finances were ruined, Skretny said. 

 Defense attorney Joel Daniels said that while defendants in similar cases, including Bernard Madoff, had been driven by greed, Piccoli "was a saver, not a spender," always in search of a good business deal that would let him straighten things out. "He didn't have any Palm Beach condos. He didn't have any boats," Daniels said. Piccoli, a widower, drove a leased Toyota Camry, which he turned in last week to raise money for restitution, Daniels said, and sold off four parcels of real estate for a total of less than $400,000. "He's broke. He doesn't have two nickels to rub together, literally," Daniels said. 

Investor Lu Tracy of Rochester said she was forced to give up plans to buy a lakeside home in Atlanta after learning the tens of thousands of dollars she had given Piccoli, based on an ad she picked up in a nursing home, were gone. Piccoli, she said, had shaken her faith in mankind. "I can't relocate or travel or enjoy my retirement," the 69-year-old former manufacturing supervisor said. 

 Victim Harold DiMarco, 79, of Buffalo said he suffered a heart attack in January and blamed the stress of losing his own investments and "anguish" over steering others, including three who have died, to Piccoli. Skretny sentenced Piccoli to 20 years for a mail fraud charge and imposed a five-year concurrent sentence for tax evasion. Piccoli pleaded guilty to the charges in June. Investors, who will receive an undetermined percentage of their money back, were told they would not receive anything until after investigators had finalized the amount available, likely sometime next year.

SEC busts a 'master of deceit' in $14M Ponzi scheme

Three men are accused of running a Ponzi scheme that scammed more than $14 million from hundreds of Haitian-American investors in South Florida and New Jersey.
In a complaint filed Friday, the Securities and Exchange Commission said Ronnie Eugene Bass Jr., Abner Alabre and Brian Taglieri promised to double their clients' money every 90 days through their HomePals Investment Club.

"The extraordinary promises made by these three men spread by word of mouth throughout a close-knit community," said Glenn Gordon, associate director of the SEC's Miami regional office. "Bass presented himself as a master trader of stock options and commodities, when in reality he was a master of deceit."

Bass, 35, of Miami, invested no more than $1.2 million of the $14.3 million collected from investors, and suffered trading losses of 20 percent, authorities said.

Bass, Alabre and Taglieri also face criminal charges of securities fraud, wire fraud, conspiracy to commit securities fraud and conspiracy to commit money laundering, according to a grand jury indictment. Each faces up to 20 years in prison if convicted.

From April 2008 to December 2008, the men pitched their investments to prospective clients in their Delray Beach offices and maintained a Web site, homepalsinvestmentclub.com, authorities said.

The company's phone number has been disconnected, but its Web site was still live Saturday, complete with testimonials such as "I have never met a firm that operates with such integrity. HomePals Investments Club does what it says it will do."

HomePals raised most of its money through as many as 64 Haitian-American investment clubs, and it offered potential investors a commission for forming new clubs, according to the SEC.

Most of the money allegedly went to paying earlier investors. The men misappropriated about $668,000 for personal use, including $380,000 for a house for Bass and Alabre.

By the end of December, HomePals had only $7,300 left and stopped making payments to investors, according to the SEC complaint. Bass sent investors a letter on Dec. 26, 2008, stating that, "as a consequence of heavy losses suffered," HomePals would not be able to make the payments until March 6. The company closed its offices on March 7.

Alabre, 33, of Miramar, presented himself to investors as the company's secretary, and Taglieri, 49, of Jupiter, presented himself as HomePals' attorney, authorities said.

Bass and Alabre were being detained Saturday, with their arraignments and bond hearings scheduled for Wednesday. Bass' attorney declined comment. Alabre's attorney also declined comment, saying he had not yet been able to meet with his court-appointed client.

The SEC said Taglieri agreed to settle the charges against him without admitting guilt or denying the allegations.

It was not clear if Taglieri was represented by an attorney. Phone numbers listed for him have been disconnected.

In December, the SEC accused a Palm Beach County man of bilking more than $23 million from thousands of Haitian-Americans nationwide. George Theodule used his Haitian background to recruit investors and promised to create a "nation of Haitian millionaires," according to an attorney representing some of the scheme's victims.

more at http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091019/FREE/910199992/1094/INDaily01

JPMorgan Chase, Credit Suisse and Morgan Stanley pay $100m Ponzi fine

JPMorgan Chase, Credit Suisse and Morgan Stanley have agreed to pay out $100 million over claims they were involved in a Ponzi scheme at the now bankrupt mortgage lender American Business Financial Services (ABFS).

The lawsuit alleged that ABFS had become insolvent in 2000, but created the impression it was still financially viable with the assistance of the Wall Street firms.

Bear Stearns, which is now part of JPMorgan Chase, was also named in the lawsuit.

George Miller, the ABFS's bankruptcy trustee, was seeking at least $750 million from the banks on behalf of more than 20,000 people who lost their life savings when ABFS went bankrupt.

JPMorgan Chase paid $55 million on behalf of it and Bear Stearns to settle the case, while Credit Suisse paid out $37.5 million and Morgan Stanley $7.5 million.

The companies denied any wrongdoing.

Last month, changes to the Security and Exchange Commission's investigations policies into Ponzi schemes were recommended after it missed Bernard Madoff's $50 billion worldwide fraud for years.

Allen Stanford returns to jail after prison brawl

Businessman Allen Stanford, who is awaiting trial for an alleged $7 billion fraud, has returned to jail after being badly injured during a prison brawl last week.

Fifty-nine-year-old Stanford suffered a broken nose, two black eyes and mild concussion in the fight at the Joe Corley Detention Facility in Conroe, Texas.

He spent the weekend in hospital before being returned to his jail cell on Monday.

Mr Stanford had previously been taken to hospital in August 2009 for five days following heart problems.

The former chairman of the Stanford Financial Group, who saw his assets frozen following his arrest in February 2009, will stand trial on 21 separate criminal charges relating to a Ponzi scheme he is alleged to have run from his offshore bank in Antigua.

Mr Stanford is accused of targeting several sportsmen in the fraud, including baseball players Johnny Damon and J. D. Drew.

According to prosecutors, Mr Stanford used the proceeds to pay for an extravagant lifestyle of Caribbean homes and private jets.

Madoff family to be sued over Ponzi scheme

Several members of Bernard Madoff's family are set to be sued for $198 million, according to the trustee who is winding down Madoff's company.

Trustee Irving Picard told CBS News that Madoff's brother, his two sons and a niece all held executive positions within the firm and should have known about the 20-year Ponzi scheme.

Bernard Madoff is currently serving a 150-year prison sentence after he admitted to masterminding the multi-billion dollar fraud, which saw investors paid with the money of new clients.

Mr Picard said the lawsuits filed against the Madoff family members accused them of negligence, breach of fiduciary duty and profiting personally from the crime.

"Whether or not they have a criminal problem we will pursue them as far as we can pursue them," he said.

"And if that leads to bankrupting them - then that's what will happen."

He estimated that around $18 billion of investors' money remained unrecovered.

Victims of the Ponzi scheme included director Steven Spielberg and talk show host Larry King.

Madoff's wife Ruth has been named in one of the 13 other lawsuits that Mr Picard and his lawyers have launched in an attempt to recover around $15 billion of the stolen funds.

But only $1.5 billion of the stolen money has been recovered so far.

SEC charges former GunnAllen and Questar broker with fraud in $250M Ponzi scheme

Frank Bluestein ‘lured elderly investors into refinancing the mortgages on their homes,' regulator alleges

The Securities and Exchange Commission today charged Frank Bluestein with fraud for allegedly being the single largest salesperson in a $250 million Ponzi scheme that collapsed in August 2007.

According to the SEC's complaint, from 2002 to 2007 Mr. Bluestein was responsible for soliciting about 800 investors who invested $74 million into the scheme, which allegedly was operated by Edward May and his company, E-M Management Co. LLC.

In November 2007, the SEC charged Mr. May and his firm in connection with the scheme, which allegedly centered on phony Las Vegas casino and resort telecommunications deals.

Mr. Bluestein was affiliated with Questar Capital Corp. from 2000 to 2005, and then moved to GunnAllen, where he was an affiliated rep until October 2007, a few months after the Ponzi scheme collapsed, triggering a number of investors' arbitration complaints against GunnAllen and Questar.

The SEC complaint, however, mentions neither firm, saying that Mr. Bluestein “did not sell the E-M securities” through a broker-dealer, and that the offerings did not appear on client statements. However, the firms through which he worked “provided the E-M Offerings with an aura of legitimacy and engendered trust from potential investors.”

Mr. Bluestein “lured elderly investors into refinancing the mortgages on their homes,” the SEC alleged, and he conducted numerous seminars to find new investors. At the seminars, Mr. Bluestein would often ask attendees who already invested in the E-M offering if they had “received their Ed May checks?” or “How do you like those Ed Mays?”

The seminars were often held in California and Michigan, the SEC said. Mr. Bluestein was based near Detroit. Mr. Bluestein allegedly told investors that the investments were low-risk, and Mr. May coordinated contracts with hotels for the installation of equipment such as televisions and gaming consoles. Mr. Bluestein's due diligence for the deals was shoddy and incomplete, according to the SEC complaint.

Mr. Bluestein also misled investors about the compensation he received from the offerings, the SEC charged. On top of the $1.4 million in disclosed compensation, he allegedly received $2.4 million in commissions from Mr. May and E-M Management.

more at http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20090928/FREE/909289982/-1/RSS02&rssfeed=RSS02

US pair charged over ATM fraud

Authorities in the US have charged two men with running an $80 million Ponzi scheme.

Vance Moore II and Walter Netschi have been accused of orchestrating the fraud through the use of a number of automatic teller machines (ATMs) placed in shops and hotels around the country.

The pair are said to have attracted investors by telling them they would make money from the charges levied for use of the cash dispensers, but they instead used the cash to "further the fraudulent scheme and to enrich themselves" rather than purchase ATMs.

It is alleged that over the course of the scheme - which ran from 2005 until January 2008 - the pair told investors that collectively they had bought around 4,000 cash machines.

However, approximately 90% of these either did not exist or were not owned by Moore and Netschi.

CFTC: CapitalStreet Financial ran a $1.3M Ponzi scheme

Charged with misappropriating $875,000 of customer funds

The Commodity Futures Trading Commission has charged CapitalStreet Financial LLC, a foreign exchange trading firm in Denver, N.C., with operating a Ponzi scheme in which at least 69 customers were allegedly bilked out of an estimated $1.3 million.

The company was charged along with Sean F. Mescall, also of Denver, with misappropriating approximately $875,000 of customer funds to pay purported profits to customers and for their personal use.
CapitalStreet and Mr. Mescall, who was identified as an “officer” of CapitalStreet in the CFTC complaint filed last week, provided customers with false monthly statements to conceal trading losses and misuse of customer funds, according to the CFTC. They also directed funds to “relief defendants” Gaincapital Inc. and Gerald Mescall, a relative of Sean Mescall, also of Denver, N.C.

more at http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20090914/REG/909149974

Canadian police charge two over Ponzi scheme

Police in Canada have charged two men with allegedly running a Ponzi-style fraud worth over $193.5 million.

Milowe Brost and Gary Sorenson have been accused of convincing investors to place money into offshore shell companies they secretly ran by promising them high returns.

According to the country's Globe and Mail newspaper, as many as 3,000 victims across Canada and the US were involved and the amount accrued by the fraud could be as much as $374 million.

Police arrested Mr Brost but Mr Sorenson - who is believed to be in Honduras - has not yet been taken into custody.

The charges come following a three-and-a-half year investigation into the case and police have been criticized for not discovering and stopping the scheme sooner.

SEC charges New York money manager Philip Barry

A New York-based money manager has been charged with running a $40 million Ponzi scheme by the Securities and Exchange Commission (SEC).

Philip Barry of Brooklyn is alleged to have orchestrated the fraud through three of his firms - Leverage Group, North American Financial Services and Leverage Option Management.

The SEC said he promised around 800 investors high returns from the sale of liquid investments, but instead used their money for private interests.

It also alleged that Mr Barry guaranteed returns of as much as 21 per cent per year through the use of a proven trading strategy and misrepresented that the investors' money would be used to trade in options and other securities.

Director of the SEC's regional office in New York George Canellos described him as being "unscrupulous and unregulated", adding that he "lured" his victims with "false promises" of profits and liquidity.

Last month, the regulatory body filed a charge against Las Vegas accountant Michael Moore, who is alleged to have conducted securities fraud by issuing false audit reports.