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The eponymous Ponzi scheme was a fraud conducted by Charles Ponzi, who went from anonymity to being a well-known Boston millionaire in six months using such a scheme in 1920. Profits were supposed to come from exchanging international postal reply coupons. He promised 50% interest (return) on investments in 45 days or “double your money” in 90 days. Around 40,000 people invested about $15 million altogether. In the end, only a third of that money was returned to them.

Contents

Other historical examples

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19th century

  • Before Ponzi, in 1899 William "520 Percent" Miller opened for business as the "Franklin Syndicate" in Brooklyn, New York. Miller promised 10% a week interest and exploited some of the main themes of Ponzi schemes such as customers reinvesting the interest they made. He defrauded buyers out of $1 million and was sentenced to jail for 10 years. After he was pardoned, he opened a grocery store on Long Island. During the Ponzi investigation, Miller was interviewed by the Boston Post to compare his scheme to Ponzi's – the interviewer found them remarkably similar, but Ponzi's became more famous for taking in seven times as much money.[1]

20th century

1930s

  • Ivar Kreuger, a Swedish businessman, known as the "match king", built a Ponzi scheme, defrauding investors based on the supposedly fantastic profitability, and ever expanding nature, of his match monopolies. The scheme soon collapsed in the 1930s, and Kreuger shot himself.[2]

1980s

  • Between 1970 and 1984 in Portugal, a woman known as Dona Branca maintained a scheme that paid 10% monthly interest. In 1988 she was sentenced to 10 years in prison. She always claimed that she was only trying to help the poor, but in her trial it was proven that she had received the equivalent of €85 million (almost US$120 million)[3][4].
  • In January 1984 Adriaan Nieuwoudt started the so-called "Kubus" scheme with an apparent beauty product in South Africa. Subscribers to the scheme bought a supposedly biological substance called an "activator", that was used to grow cultures in milk. After growing for a week or two, the cultures were harvested and dried, and sold back to the scheme. The cultures were never used for a beauty product but were simply ground up and resold to further investors as activators[5]. Other schemes by Nieuwoudt include investment in a holiday resort and a scheme involving collecting useless old postage stamps. He is currently seeking investors for a get-rich-quick coaline mining operating on his farm.
  • Sixteen hundred investors in Diamond Mortgage Company and A.J. Obie, two firms with the same managers, lost approximately $50 million in what the Michigan Court of Appeals described as "the largest reported 'Ponzi' scheme in the history of the state." It led to the passage in 1987 of the MBLSA (Mortgage Brokers, Lenders, and Servicers Act)."[6][7]
  • In the 1980s in San Diego, California, J. David & Company, an alleged currency and commodity trading and investing operation named after its founder, J. David Dominelli, a withdrawn and shy currency and commodity trader, was revealed to be a Ponzi scheme which took in $200 million and returned $120 million to investors, leaving a net loss of $80 million. The scheme touched all levels of upper class business and professional life in San Diego and environs, and involved the Mayor of Del Mar, California, a cozy upscale beach town just north of La Jolla, who was J. David's assistant and live-in companion, and others, including the prominent New York law firm Rogers & Wells (now Clifford Chance), which had advised J. David (through a rogue partner) and others[8][9][10][11][12]. When the fall came, J. David briefly escaped to Montserrat in the Caribbean, but was returned ultimately to plead guilty to federal charges and receive 20 years federal imprisonment[13].
  • In the 80's, Sanchaita Investments of Calcutta, India was offering very high rates of interest to get people to make cash deposits. The Commercial Tax Officer, Bureau of Investigation asked the police to register a First Information Report [FIR]. This was struck down by the Calcutta High Court and later by the Supreme Court of India. Much later the fraud came to light and many people lost their life savings. http://www.humanrightsinitiative.org/publications/hrc/humanrights_policing.pdf

1990s

  • RaeJean "Rapmaster 20K Percent" Bonham's World Plus, based in Fairbanks, Alaska, operated as a Ponzi scheme from 1989–1995
  • In Romania, between 1991 and 1994, the Caritas scheme run by the "Caritas" company of Cluj-Napoca, owned by Ioan Stoica promised eight times the money invested in six months. It attracted 400,000 depositors from all over the country who invested 1,257 billion lei (about 1 billion USD) before it finally went bankrupt on 14 August 1994, having a debt of US$450 million. The owner, Ioan Stoica was sentenced in 1995 by the Cluj Court to a total of seven years in prison for fraud, but he appealed and it was reduced to two years; then he went on to the Supreme Court of Justice and the sentence was finally reduced to one year and a half.
  • MMM was a Russian company that existed in the 1990s. It involved at least two million people and collected as much as $1.5 billion before its collapse. Founder Sergey Mavrodi was sentenced to 4.5 years in prison in 2003.
  • In late 1994, the European Kings Club collapsed, with ensuing losses of about $1.1 billion. This scam was led by Damara Bertges and Hans Günther Spachtholz. In the Swiss cantons Uri and Glarus, it was estimated that about one adult in ten invested into the EKC. The scam involved buying "letters" valued at 1,400 Swiss francs that entitled buyers to receive 12 monthly payments of 200 Swiss francs. The organisation was based in Gelnhausen, Germany[14].
  • In 1995 Steven Hoffenberg of Towers Financial Corporation was sentenced to a jail term of 20 years for a $475 million scam.
  • In May 1995, Pennsylvania's attorney general moved to freeze the assets of the Foundation for New Era Philanthropy and its chairman, John G. Bennett, Jr. The organization had raised over $500 million from 1,100 donors. Participants, including the Red Cross, had believed they were participating in a matching-gifts program through New Era but, in fact, it was really a Ponzi scheme. Losses amounted to $135 million.
  • In early 1996, the United States Securities and Exchange Commission (SEC) filed a civil action against Bennett Funding Group, its chief financial officer, Patrick R. Bennett, and other companies Bennett controlled, in connection with a massive Ponzi scheme. The companies fraudulently raised hundreds of millions of dollars, purportedly to purchase assignments of equipment leases and promissory notes[15].
  • From 1993 until 1997 a church named Greater Ministries International in Tampa, Florida, headed by Gerald Payne bilked over 18,000 people out of $500 million[16]. Payne and other church elders promised the church members double their money back, citing Biblical scripture. However, nearly all the money was lost and hidden away. Church leaders received prison sentences ranging from 13 to 27 years.
  • In the mid-1990s, Albania was transitioning into a liberalized market economy after years under a State-controlled economy reinforced by the cult of personality involving longtime Communist leader Enver Hoxha; the rudimentary financial system became dominated by pyramid schemes, and government officials tacitly endorsed a series of pyramid investment funds. Many Albanians, approximately two-thirds of the population, invested in them. By 1997 the inevitable end came: Albanians, who had lost $1.2 billion, took their protest to the streets where uncontainable rioting and attacks on government infrastructure led to the toppling of the government and the temporary existence of a stateless society. Although technically a Ponzi Scheme, the Albanian scams were commonly referred to as Pyramid Schemes both popularly and by the IMF[17].
  • In Delhi, India, Hoffland Finance collapsed amid a major scandal in 1998. Hoffland, a category II merchant banker, had been suspended by SEBI, which directed it to refrain from undertaking any new portfolio management assignments. It had floated a scheme, called "Invest Card",that lured investors with a return of 27 per cent annually.[18]

21st century

  • In 2000, a Ponzi scheme perpetrated by Scientology minister Reed Slatkin came unraveled when the U.S. Securities and Exchange Commission regulators became aware that Slatkin was not a licensed investment adviser. Slatkin had raised some $600 million from over 500 wealthy investors, mostly Hollywood celebrities.[19]
  • In 2001, the Haitian population fell prey to Ponzi schemers offering rates up to 15%. The outfits called "cooperatives" appeared to be implicitly backed by the government and became wildly popular in the population at large who felt safe since the coops were openly advertising on the radio, TV ads, and used as spokepeople Haitian pop stars. It is estimated that more than $240 million were swindled from investors, equivalent to 60% of the country's GDP[20].
  • The Brothers was a large investment operation, eventually exposed as a Ponzi scheme, in Costa Rica from the late 1980s until 2002. The fund was operated by brothers Luis Enrique and Osvaldo Villalobos. Investigators determined that the scam took in at least $400 million. Most of the clientele were American and Canadian retirees but some Costa Ricans also invested the minimum $10,000. About 6,300 individuals ultimately were involved. Interest rates were 3% per month, usually paid in cash, or 2.8% compounded. The ability to pay such high interest was attributed to Luis Enrique Villalobos’ existing agricultural aviation business, investment in unspecified European high yield funds, and loans to Coca Cola, among others. Osvaldo Villalobos’ role was primarily to move money around a large number of shell companies and then pay investors. In May 2007 Osvaldo Villalobos was sentenced to 18 years in prison for fraud and illegal banking. Luis Enrique Villalobos remains a fugitive[21].
  • In 2003, the SEC closed a $1 billion scheme by Mutual Benefits Company in Florida run by Peter Lombardi affecting 28,000 investors. Mutual claimed it used the money to pay viaticals settlements to HIV patients. Lombardi is now serving a 20-year prison sentence.[22]
  • In 2005, Angelo Haligiannis plead guilty to running a Ponzi scheme costing investors about $80 million.
  • In December 2005, in Los Angeles, California, Larry Toshio Osaki, who ran a Ponzi scheme (of large proportion) and continued to offer bogus investments in accounts receivable factoring after being ordered to cease and desist by a Federal judge, was sentenced to 20 years in federal prison. In addition to the prison term, Judge Stephen V. Wilson ordered Osaki to pay more than $145 million in restitution to victims.
  • In February 2005, Moshe Leichner and his son Zvi Leichner [23] were sentenced to 240 months in federal prison for running a ponzi scheme [24] through a commodities futures trading firm, Midland Euro[25] that defrauded hundreds of investors out of more than $95 million, including Dean Tanella[26] of GunnAllen Financial[27] and Safe Harbor Capital Management (now dba HarborLight Capital Management)[28] which lost $40 million[29] for their investors.
  • In May 2006, James Paul Lewis, Jr. was sentenced to 30 years in federal prison for running a $311 million Ponzi scheme over a 20-year time period. He operated under the name Financial Advisory Consultants from Lake Forest, California[30].
  • In October 2006 in Malaysia, two prominent members of society and several others were held for running an alleged scam, known as SwissCash or Swiss Mutual Fund (1948). SwissCash offered returns of up to 300% within a 15-month investment period. Currently, this HYIP investment is offered to citizens of Malaysia, Singapore, and Indonesia. It claimed investors’ funds were channeled to business activities ranging from oil exploration to shipping and agriculture in the Caribbean. The company claims to be operating out of New York and incorporated in the Commonwealth of Dominica[31][32][33].
  • On April 13, 2007, Sibt-e-Hassan Shah, aka "Double Shah," was arrested by government officials in Wazirabad, a small town of Pakistan[34]. Sibt-e-Hassan claimed to double investors' money within 30 days in the beginning of his scheme, later extended to 90 days. He is suspected to have gathered very large investments (approx US$ 1 billion) in a very short time period.
  • On June 27, 2007, former boy band mogul and notorious con artist Lou Pearlman was indicted by a grand jury on several counts of fraud which is turning out to be one of the largest and longest running United States Ponzi schemes ever.[citation needed] His scheme lasted for over 20 years. The final total damage may rest somewhere near $500 million[35]. Pearlman's scam involved bilking investors out of their savings with a fraudulent savings and loans program claiming it to be FDIC insured though it was not. On March 4, 2008, Pearlman agreed to plead guilty to charges of conspiracy, money laundering, and making false statements during a bankruptcy proceeding, and to testify for the prosecution of several accomplices, according to law enforcement officials. On May 21, 2008, Pearlman was sentenced to 300 months in jail with the stipulation that he could cut one month off his sentence for every $1 million he paid his investors back.
  • On August 17, 2007, the Philippine National Bureau of Investigation (NBI) filed syndicated estafa cases against 27 officers and investors of FrancSwiss Investment, a "Ponzi" pyramiding scam on the Internet. Charged were Michael Mansfield, chief financial officer; Kurt Sandelman, risk management team leader; Rupert Benedict Da Vinco, investment team leader; Julia Rodriguez, international banking team leader; Hector Willem Sidberg, marketing and international affairs; and Fernando Munoz, customer service leader; Roger Smith, the British chief operation officer of FS Investment in the Asia-Pacific region; Bensy Fong, the Singaporean system operation officer; Raymond Chua, Singaporean marketing officer; a certain Michelle and Mike, Filipino secretaries and collectors of money from investors; 16 investors, including arrested suspect Eleazard Castillo, 26, a native of Cabuyao, Ilocos Sur, allegedly one of the financial advisers of FrancSwiss Investment. 41 investors claimed they lost a total of $75,000 to the investment scheme. FrancSwiss deceived investors in the Philippines of ₱1 billion ($50 million)[36].
  • In the third and the biggest Philippines Ponzi scam (involving $150 million and $250 million), criminal charges, based on suit filed by 21,000 complainants were filed on June, 2008, with the Department of Justice, against against Performance Investments Products Corp (PIPC) officers and incorporators for violation of the Securities Regulation Code (SRC), versus: Singaporean national Michael H.K. Liew, PIPC president; Cristina Gonzalez-Tuason, general manager, and other officers and agents - Ma. Cristina Bautista-Jurado, Barbara Garcia, Anthony Kierulf, Eugene Go, Michael Melchor Nubla, Ma. Pamela Morris, Luis Aragon, Renato Sarmiento Jr., Victor Jose Vergel de Dios, Nicoline Amoranto Mendoza, Jose Tengco III, Oudine Santos and Herley Jesuitas[37].
  • Minnesota, USA - allegedly orchestrated by Minneapolis, Minnesota celebrity businessman Tom Petters. On December 1, 2008 Tom Petters was charged by the Federal government as the mastermind behind a $3.65 billion Ponzi scheme that bilked investors over a 13-year period. Tom Petters lived an extravagant lifestyle supported by his Ponzi scheme. Petters faces 20 counts of wire and mail fraud, Conspiracy, and money laundering for the alleged investment scheme that ran from 1995 through September 2008. He is expected to plead not-guilty, but his co-conspirators in the Ponzi scheme, Deanna Coleman, Robert White, Michael Catain, and Larry Reynolds, have all pled guilty. The Petters Ponzi scheme came to an end when Petters' top co-conspirator Deanna Coleman turned government informant and wore a wire. Petters and the others were planning to flee to countries without extradition agreements with the U.S. Deanna Coleman and Michael Catain had properties in Costa Rica. On December 2, 2009, Tom Petters was found guilty in the U.S. District Court in St. Paul, Minnesota on 20 counts of wire and mail fraud[38]. Reporters from the Minneapolis Star Tribune stated that it is extremely unlikely that Petters will ever again live as a free citizen. The US federal government is now seeking forfeiture of all Petters' assets.[citation needed] [39][40].
  • Jordan : Many traders were arrested on October / November 2008 for multi-millions Ponzi Scams.[citation needed]
  • In Oct, 2006 Gregory Nathan, a Sydney fund manager, was arrested on charges including dishonest conduct and obtaining money by making false and misleading statements, in what investigators discovered to have been a Ponzi scheme. Nathan, a notorious gambler, reported returns that were always stellar, prompting many to invest their life savings. Nathan didn't discriminate when it came to pitching his investment opportunities with victims including his mother, his girlfriend, his flatmate, the elderly and handicapped. Nathan falsely reported his fund had $22 million under management, when the most it could have had at any one time was approximately $4.9 million. From 2001 - 2006 an estimated $8.8 million was lost by an untold number of investors believed to be in the hundreds. In a desperate late bid to perpetuate the scheme, Nathan sent an email to existing clients on Oct 9, 2006 just days before placing his companies in administration, encouraging them to increase their investment. On 19 Sept, 2008, Nathan was sentenced to a total of seven years imprisonment including a five year non-parole period.[41].
  • On December 10, 2008, Bernard Madoff made an admission to his sons that his investments were "all one big lie." The following day he was arrested and charged with a single count of securities fraud.[42] As of December 2008 the losses were estimated to be $65 billion, making it the largest investor fraud in history.[43] Madoff was sentenced to 150 years in prison on June 29, 2009.
  • On January 9, 2009, the U.S. Securities and Exchange Commission (SEC) charged Joseph S. Forte from Bromall, PA with masterminding a $50 million Ponzi scheme. He swindled over 80 investors, mostly close friends from 1995 to 2009. The SEC investigator called Forte a "complete fraud". Records show Forte used for his own personal use, over $28 million.
  • On January 16, 2009, the Serious Fraud Office in the United Kingdom uncovered an £80 million buy-to-let property fraud scheme operating under a company called Practical Property Portfolio in which at least 1,750 investors were conned £25,000 each in return for a promise of a house in the North East of England. All five directors - John Potts (fraudster), Peter Gosling, Natalie Laverick, Peter Graham (fraudster) and Eric Armstrong - pleaded guilty to fraud and will be sentenced in March 2009.[44]
  • On January 26, 2009, Nick Cosmo, the founder of Agape World, surrendered to federal authorities in connection with a suspected $380 million Ponzi scheme. Previously convicted of fraud in 1999, Nicholas Cosmo, surrendered at the Long Island Rail Road train station in Hicksville, N.Y.[45] In March 2009, a lawsuit was filed in New York against Bank of America, one of the largest banks in the United States, that claimed that Bank of America “established, equipped and staffed” a branch office in the headquarters of Mr. Cosmo’s firm, Agape Merchant Advance. As a result, the lawsuit contends that the bank knowingly “assisted, facilitated and furthered” Mr. Cosmo’s fraudulent scheme.[46]
  • On February 9, 2009, the City of London Police Economic Crime Department arrested Terry Freeman, director of GFX Capital Markets Ltd, over £40 million fraud which is possibly another Ponzi scheme.[47]
  • On February 17, 2009, the Stanford International Bank and proprietor Allen Stanford were accused of "massive fraud" by U.S. authorities. SIB's assets were frozen. The apparent Ponzi scheme drew in more than $8 billion of "deposits", many from investors in Latin America. He was arrested by the Federal Bureau of Investigation on June 18, 2009.
  • On February 25, 2009, the SEC charged James Nicholson for allegedly "defraud[ing] hundreds of investors of millions of dollars"[48]
  • On March 13, 2009, a 67 year old Ohio woman named Joanne Schneider was sentenced to three years in prison, the minimum allowed, for operating a Ponzi scheme that cost investors an estimated $60 million.[49]
  • On March 13, 2009 the SEC charged Brian Jared Smart of Lehi, Utah with the security fraud from the creation of a Ponzi Scheme that targeted the elderly. The complaint claims that Smart stole OVER $2 million from his victims.[50]
  • On June 17, 2009, Donald Anthony Walker Young, who is known as Tony Young or Walker Young, had his office seized for using money from new investors to pay previous investors and “stole some of the money to purchase a vacation home in Palm Beach, Fla.” Young operated the alleged Ponzi scheme through an investment partnership Acorn II L.P., which he established in 2001 to invest in publicly traded securities, authorities said. The SEC alleged in its 22-page complaint that the fraud began in mid-2005 and continued until recently.
  • On June 2, 2009, the Colorado State Grand Jury indicted Jason Trevor Brooks of Boulder, Colorado on 24 counts of security fraud and theft. Authorities allege that from June 2005 to February 2008, Brooks collected about $10 million from investors to invest, but then used a vast majority of the funds for personal expenses, gambling, and to make interest payments and payouts to other investors. Brooks, working under the Genius Inc. name, told investors he had a distribution agreement with Matsushita Electric Industrial Co. Ltd. of Japan, which allowed him to purchase electronics and appliances as a distributor and then resell them for a profit to various home builders and other businesses, authorities said.[51]
  • On June 12, 2009, investors were reported to have lost billions of South African Rands in a Ponzi scheme masterminded by Barry Tannenbaum.[52]
  • On June 22, 2009 New York hedge-fund manager Edward T. Stein pleaded guilty to running a $30 million fraud and the friends and acquaintances who he preyed on urged a federal judge to immediately jail him. Stein, 59, admitted today to four counts of securities fraud and one charge of wire fraud. He was initially accused March 31 of cheating a client out of $6.5 million. The Court also froze the assets of seven entities, which Stein controlled, and the Commission charged as relief defendants, including investment funds Gemini Fund I, L.P. (Gemini) and DISP LLC (DISP), as well as, Prima Capital Management Corp. (Prima), Edward T. Stein Associates, Ltd., Vibrant Capital Corp. (Vibrant), Vibrant Capital Funding I LLC, and G&C Partnership Joint Venture. On February 9, 2009 New York hedge-fund manager Edward T. Stein was sentenced to nine years in prison for running a $46 million Ponzi scheme that preyed upon friends and acquaintances.
  • On July 27, 2009, missing financial adviser Earl Jones turned himself in to Quebec Provincial Police, weeks after provincial securities regulators said he was suspected of bilking clients out of as much as $50 million. He had been sought since early July, when Quebec's financial watchdog, L'Autorité des marchés financiers, put a freeze on the assets of Jones' small Montreal-based investment firm. The regulator alleged the business resembled a Ponzi scheme — a type of pyramid sales scam in which money from new investors is used to pay off the earlier ones.
  • On August 18, 2009, the state of Texas' Prepaid Higher Education Tuition Board modified the contracts of over 100,000 Texas Tomorrow Fund participants, limiting refund amounts from canceled contracts to the actual amount of contributions minus applicable service fees. This was a change from the original terms, which allowed participants to cancel their contracts and receive credit for college hours prepaid at current costs of tuition and fees. The change permits select contract holders to cancel their contracts prior to November 1, with proceeds paid by the contributions made by other contract holders. The Board admitted the change was necessary to ensure the continued solvency of the plan.[53][54]
  • On December 1, 2009 Scott W. Rothstein is a disbarred lawyer and the former managing shareholder, chairman, and chief executive officer of the now-defunct Rothstein Rosenfeldt Adler law firm. He is accused of funding his philanthropy, political contributions, law firm salaries, and an extravagant lifestyle with a massive 1.2 billion dollar Ponzi scheme. Scott Rothstein turned himself in to federal authorities and was subsequently arrested on charges related to the Racketeer Influenced and Corrupt Organizations Act (RICO).[55] Rothstein pleaded not guilty at his arraignment and was denied bond by Magistrate Robin Rosenbaum, who ruled that due to his ability to forge documents, he was considered a flight risk.[56]
  • On Thursday 18 March 2010 Stephen Gerard Versalko, a former ASB Bank investment banker, was sentenced in the Auckland District Court to six years in prison, with a minimum-non parole period of four years for fraud charges involving nearly $18 million NZD. [57]

Other notable schemes

Other notable (but involving smaller amounts of money) Ponzi schemes include:

  • Sarah Howe, who in 1880 opened up a "Ladies Deposit" in Boston promising eight percent interest, although she had no method of making profits. This unique scheme was billed as "for women only." Howe was arrested on October 18, 1880 by New York City Police and sentenced to three years in prison.[1]
  • On March 22, 2000, four people were indicted in the Northern District of Ohio, on charges including conspiracy to commit and committing mail and wire fraud. A company with which the defendants were affiliated allegedly collected more than $26 million from "investors" without selling any product or service, and paid older investors with the proceeds of the money collected from the newer investors[58].
  • In late 2003, a scheme by Bill Hickman, Sr., and his son, Bill Jr., was shut down. He had been selling unregistered securities that promised yields of up to 20 percent; more than $8 million was defrauded from dozens of residents of Pottawatomie County, Oklahoma, along with investors from as far away as California[59]. Hickman was sentenced to 8 years in state prison.
  • In December 2004, Mark Drucker pleaded guilty to a Ponzi scheme in which he told investors that he would use their funds to buy and sell securities through a brokerage account. He claimed that he was making significant profits on his day trades and that he had opportunities to invest in select IPOs that were likely to turn a substantial profit in a short period of time. He promised guaranteed returns of up to fifty (50%) percent in 90 days or less. In less than two years of trading, Drucker actually lost more than $850,000 in day trading and had no special access to IPOs. He paid out more than $3.6 million to investors while taking in $6.3 million[60][61].
  • In June 2005, in Los Angeles, California, John C. Jeffers was sentenced to 168 months (14 years) in federal prison and ordered to pay $26 million in restitution to more than 80 victims. Jeffers and his confederate John Minderhout ran what they said was a high-yield investment program they called the "Short Term Financing Transaction." The funds were collected from investors around the world from 1996 through 2000. Some investors were told that proceeds would be used to finance humanitarian projects around the globe, such as low-cost housing for the poor in developing nations. Jeffers sent letters to some victims that falsely claimed the program had been licensed by the Federal Reserve and the program had a relationship with the International Monetary Fund and the United States Treasury. Jeffers and Minderhout promised investors profits of up to 4,000 percent. Most of the money collected in the scheme went to Jeffers to pay commissions to salespeople, to make payments to investors to keep the scheme going, and to pay his own personal expenses[62].
  • In February 2006, Edmundo Rubi pleaded guilty to bilking hundreds of middle and low-income investors out of more than $24 million between 1999 and 2001, when he fled the U.S. after becoming aware that he was under suspicion. The investors in the scheme, called “Knight Express”, were told that their funds would be used to purchase and resell Federal Reserve notes, and were promised a six percent monthly return. Most of those bilked were part of the Filipino community in San Diego[63].
  • On May 10, 2006, Spanish police arrested nine people associated with Forum Filatelico and Afinsa Bienes Tangibles in an apparent Ponzi scheme that affected 250,000 investors from 1998 to 2001. Investors were promised huge returns from investments in a stamp fund[64].
  • 12DailyPro was a version of what is commonly known as a "paid autosurf" program where "investors" deposited money and received an extremely high profit (44%) within a short period (12 days). Charis Johnson created what authorities considered one of the largest modern-day versions of the Ponzi scheme. She accumulated a total of over US$1.9 million from the program. More than 300,000 people joined over the course of eight months, spending over $500 million[65]. When a federal investigation of 12DailyPro took place, its main payment processor, Stormpay, froze all funds related to it. Stormpay has since refused to return any of these funds. On February 24, 2006, the United States Securities and Exchange Commission (SEC) ordered 12DailyPro and its parent company to cease and desist all operations. On February 28, a Los Angeles judge ordered all company assets and records to be turned over to an appointed receiver for investigation. Charis F. Johnson now faces criminal and civil suits from both local and federal agencies.
  • On August 31, 2007, the Securities and Exchange Commission ("SEC") filed an emergency action against James Blackman Roberts ("Roberts"), FOMAC International, Inc. ("FOMAC"), and Consultores Las Tres Americas S.A. ("Consultores LTA") to halt an ongoing Ponzi scheme and freeze assets for the benefit of defrauded investors. The complaint filed by the SEC alleges that, since 2002, the defendants have raised at least $50 million in principal from approximately 450 investors located primarily in the U.S. and Costa Rica. The complaint further alleges that as early as 2005, the defendants experienced significant losses while trading investor funds in the Forex markets, misappropriated at least $3 million, and then used new investor money to pay returns and principal to existing investors. As a result, the complaint alleges, the defendants misrepresented to investors that these Ponzi payments were actually returns from their Forex trading[66]. It should be noted that the above-mentioned allegations have yet to be proven before a Court of law, and that the U.S. and Costa Rican law considers any person innocent until proven guilty.
  • Michael Eugene Kelly (born October 6, 1949) is the owner of Yucatan Resorts, Resort Holdings International, Puerto Cancun and Avanti Motor Corporation. He is accused by the FBI and the United States Attorney's Office of operating a $428 million Ponzi scheme that defrauded over a thousand elderly and senior citizens of their retirement money. Kelly was arrested in his hospital room at the Mayo Clinic on December 22, 2006 just before he was about to be discharged and return to one of his homes in Cancún, Mexico. In pretrial services, Kelly claimed that he makes $55,000 a year and only has $48,000 in assets. In spite of his claim of meager earnings, Kelly offered a private jet, four yachts and race track as collateral at his detention hearing. He was denied bail and is currently in the Metropolitan Correctional Center, Chicago waiting for arraignment. Since his arrest, Kelly has attempted to avoid indictment by arranging a plea agreement that includes paying restitution to the victims.

See also

References

  1. ^ a b Zuckoff, Mitchell. Ponzi's Scheme: The True Story of a Financial Legend. Random House: New York, 2005. (ISBN 1-4000-6039-7)
  2. ^ see: The Incredible Ivar Kreuger by Allen Churchill (Weidenfeld, London; Rinehart & Co., New York; 1957)
  3. ^ Visão, Apanhados pelos selos, 18 May 2006.
  4. ^ CanalSurWeb, Banqueros del pueblo, 12 May 2006
  5. ^ Legal City, Scams and other money-making schemes.
  6. ^ "People v. Greenberg,"176 Mich App 296, 299; 439 NW2nd 336(1989) cited in U.S. Supreme Court, 05-1342, Watters vs Wachovia Bank, page 6. At [1] American Bar Association site ABAnet.com, Retrieved August 29, 2007
  7. ^ [2] Keyfetz, Lisa, "The home ownership and equity protection act of 1994: extending liability for predatory subprime loans to secondary mortgage market participants." Loyola Consumer Law Review, Vol 18:2, pages 165-166. Retrieved August 29, 2007
  8. ^ "Rogers & Wells Settles Suit". New York Times. 1986-03-31. http://query.nytimes.com/gst/fullpage.html?res=9A0DE0DC163EF932A05750C0A960948260. 
  9. ^ "J. David Case: Damages Set". New York Times. 1987-08-28. http://query.nytimes.com/gst/fullpage.html?res=9B0DE1D6123FF93BA1575BC0A961948260. 
  10. ^ http://www.sandiegohistory.org/journal/86fall/dominelli.htm
  11. ^ Rancho Santa Fe, California
  12. ^ Lindsey, Robert (1985-08-21). "Retrial of San Diego Mayor is Opened". New York Times. http://select.nytimes.com/gst/abstract.html?res=FB0B15FB3D5F0C728EDDA10894DD484D81. 
  13. ^ "20-Year Term For Dominelli". New York Times. 1985-06-25. http://query.nytimes.com/gst/fullpage.html?res=9F03E3DA1139F936A15755C0A963948260. 
  14. ^ http://www.graumarktinfo.de/gm/grauestars/starradar/walhalla/:Damara-Bertges-European-Kings-Club-Chefin:Die-K%F6nigin-und-ihr-Gefolge/493274.html
  15. ^ http://www.sec.gov/divisions/enforce/claims/bennett.htm
  16. ^ "Extremism in America: Greater Ministries International". Anti-Defamation League. http://www.adl.org/Learn/ext_us/GMI.asp?LEARN_Cat=Extremism&LEARN_SubCat=Extremism_in_America&xpicked=3&item=gmi. Retrieved 2007-07-18. 
  17. ^ Christopher Jarvis, The Rise and Fall of Albania's Pyramid Schemes, Finance & Development: A Quarterly Magazine of the IMF, March 2000.
  18. ^ Indian Express, 24 Jan 1998
  19. ^ http://articles.latimes.com/2003/sep/03/business/fi-slatkin3
  20. ^ http://www.haitiprogres.com/2002/sm020724/eng07-24.html
  21. ^ Washington Post http://www.amcostarica.com/051707.htm
  22. ^ Lawyers' Indictment in $1 Billion Ponzi Scheme Shocks Legal Circles - New York Lawyer - January 26, 2009
  23. ^ [3]L.A Times May 24, 2005
  24. ^ [4]Midland Euro FAQ
  25. ^ [5]
  26. ^ [6]Ponzi Court Case: Dean Tanella
  27. ^ [7]GunnAllen Financial
  28. ^ [8]Safe Harbor Capital Management now dba HarborLight Capital Management
  29. ^ [9]"Error Times $40 million: Scam Trips Up a Pro" - June 9, 2003 - St Petersburg Times
  30. ^ Washington Post, 27 May 2006
  31. ^ The Star, Malaysia, 4 October 2006.
  32. ^ Today, Singapore, 24 January 2007.
  33. ^ Bank Negara, Malaysia, Malaysia, 5 September 2006.
  34. ^ Ali, Hasan (April 14, 2007). "Pir Double Shah arrested". Daily Times. http://www.dailytimes.com.pk/default.asp?page=2007%5C04%5C14%5Cstory_14-4-2007_pg7_18. 
  35. ^ Orlando Sentinel February 6, 2007 Pearlman, companies face $317 million in claims
  36. ^ Inquirer.net, Charges filed against 27 in alleged pyramiding scam
  37. ^ newsinfo.inquirer.net, $250-M ESTAFA, DOJ acts to speed up cases in PIPC scam
  38. ^ Hughes, Art (December 2, 2009). "UPDATE 2-Tom Petters found guilty of Ponzi scheme fraud". Reuters (Thomson Reuters). http://www.reuters.com/article/idUSN024978920091202. Retrieved December 10, 2009. 
  39. ^ Star Tribune
  40. ^ Tom Petters Indictment - PDF
  41. ^ [10]
  42. ^ "It was all one big lie". Washington Post. 2008-12-13. http://www.washingtonpost.com/wp-dyn/content/article/2008/12/12/AR2008121203970_pf.html. 
  43. ^ "Investors Were Told They Had a Total of $64.8 Billion". Wall Street Journal. 2009-03-10. http://online.wsj.com/article/SB123673521911590783.html. 
  44. ^ Massive buy-to-let scam cracked by fraud squad CityWire
  45. ^ http://www.nytimes.com/2009/01/27/business/27fraud.html
  46. ^ http://www.nytimes.com/2009/03/28/business/28ponzi.html
  47. ^ City trader Terry Freeman arrested over £40 million fraud Times Online
  48. ^ "2 arrests in NY securities fraud case". Yahoo News. 2009-02-25. http://finance.yahoo.com/news/2-arrests-in-NY-securities-apf-14467319.html. Retrieved 2009-02-25. 
  49. ^ [11]
  50. ^ SEC Complaint. Civil Action No. 2:09-cv-00224-DAK filed March 11, 2009]
  51. ^ [12]
  52. ^ Financial Mail, June 12, 2009 "Duped"
  53. ^ Texas Guaranteed Tuition Plan Change in Terms, August 18, 2009
  54. ^ State Comptroller referring to plan as "Ponzi scheme", August 3, 2009
  55. ^ http://www.scribd.com/doc/23448019/Scott-Rothstein-Charging-Document
  56. ^ http://www.sun-sentinel.com/media/acrobat/2009-12/50820067.pdf
  57. ^ http://www.nzherald.co.nz/prostitution/news/article.cfm?c_id=612&objectid=10632964&pnum=0
  58. ^ http://www.internetfraud.usdoj.gov/
  59. ^ http://www.ethicscheck.com/consumers/scamreport/rpt_04_11_23.htm
  60. ^ http://www.usdoj.gov/usao/gan/press/12-01-04.html
  61. ^ http://www.sec.gov/litigation/admin/34-49824.htm
  62. ^ http://www.usdoj.gov/usao/cac/pr2005/087.html
  63. ^ "Man Pleads Guilty to Federal Charges after Swindling more than $24 Million from Local Victims" November 16, 2005 "U.S. Immigration and Customs Enforcement." Retrieved December 23, 2007
  64. ^ http://news.bbc.co.uk/2/hi/business/4757741.stm
  65. ^ http://www.tlennonfor12dailypro.com/media/12DP_FirstInterimReport.pdf
  66. ^ http://www.sec.gov/litigation/litreleases/2007/lr20264.htm

Further reading

  • Zuckoff, Mitchell (2005). Ponzi’s Scheme: The True Story of a Financial Legend. New York: Random House. ISBN 1400060397. 

External links


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