Ponzi Schemes of the Week
Because I was getting tired of writing individual stories on these morons, I thought I’d consolidate all of the scandals into one big article giving you the skinny on all the greed that is fit to print… er, blog? We’re all familiar with the concept made famous by Charles Ponzi in the 1920s… use funds from new investors to pay off old investors. The whole hook of ponzi schemes is that they’re advertised to be high return/low risk investments– and as long as investors see pretty performance reports or are able to withdraw cash when they request it, they don’t seem to know or care what’s going on. Only problem is, this sort of fraud requires a constant flow of money in order to keep things going– so if investors want to cash out or there isn’t enough money coming in, you’re screwed… just like the people below:
*Twin Cities businessman Trevor Cook was charged Tuesday with allegedly orchestrating a $190 million forex Ponzi scheme involving some 1,000 investors between 2007 and 2009. Cook, however, is being accused of using the money to make payments to previous investors, buying ownership interests in two trading firms, buying a real estate development in Panama, acquiring the Van Dusen Mansion in Minneapolis and paying personal expenses, including substantial gambling debts– not to mention making false promises to investors of generating returns of 10-12 percent. He is facing one charge of mail fraud and one charge of tax evasion (so far) and up to 25 years in prison. The charges were filed as a result of a collaborative effort of the FBI, IRS, SEC, and CFTC. Bizweek.com
*Four people from a company called HMS Financial Inc. were charged in a $60 million Ponzi scheme in Canada involving over 1,000 investors across North America. Police charged Murray Stark, 73, Robert Fyn, 62, and Garth Bailey, 57, fraud over C$5,000 ($4,900) and conspiracy to commit fraud. The three, plus Katherine Rodrique Bailey, 53, were charged with laundering the proceeds of crime. The company went belly up back in 2004– it has taken 6 years to levy charges. Reuters
*West Point grad Enrique Villalba was accused on Monday of perpetrating a $30 million Ponzi scheme involving his Money Market Alternative LP using a method called “Money Market Plus” for investing in the futures market he claimed produce long-term gains of 8% to 12% for investors. According to Reuters, “The complaint also charged that Villalba did not put promised “stop” orders in place to prevent excessive losses and that he diverted millions of dollars in investor money to fund Rico Latte coffee shops in Ohio, purchase real estate and make payments to some investors.” In addition to the criminal complaint, separate civil complaints were filed by the SEC and CFTC on Monday.
*Patrick Rakotonanahary of Punta Gorda, FL pleaded not guilty in Hawaii to federal charges that he bilked 64 Hawaii investors and dozens of others in what officials allege was a classic Ponzi scheme. Rakotonanahary, who is president and chief executive of Cyber Market Group LLC, is accused of 21 counts of wire fraud. Authorities allege his forex trading scheme amassed about $10.3 million from more than 100 people, including almost $8 million from 64 Hawaii residents. Businessweek.com
*More than 50 people were scammed out of some $13.2 million by Richard Taft Johnson. Doing business as Investor Planning Services in Bloomfield Hills, Johnson told potential investors that they could invest in a low-risk program called the American Charitable Program beginning in the late 1990s, which he told investors would result in a 10 percent return per quarter. He also claimed it included the purchase of an insurance policy that he said would provide a future benefit to a charity or qualified nonprofit organization. Johnson was sentenced to 8 years in prison and was ordered to repay the $13.2 million in restitution. C&G News
*Beverly Hills investment manager Michael McCready pleaded guilty to bilking investors out of $8 million between 2004 and 2009. Instead of investing the money, according to CNN, McCready used the money to pay for his rent, vehicle leases and travel expenses; finance production of a movie; and develop businesses, the Justice Department said. He was sentenced to 9 years in prison and ordered to pay $8 million in restitution. CNN.com
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Loading ...