A Collection of Strange Beliefs, Amusing Deceptions, and Dangerous Delusions

From Abracadabra to Zombies | View All

Ponzi scheme

"Research shows that three characteristics are related to persuasiveness: perceived authority, honesty, and likeability." --Robert Levine

A Ponzi scheme is a fraudulent scam named after Charles Ponzi (1882-1949). Mr. Ponzi defrauded people by getting them to invest in a bogus product for a guaranteed rate of return and using the money of later investors to pay off the earlier ones. Who will make money from such a scheme? Those who start it and those who get in early. Does anyone really make money from these schemes. They must or they would have died off long ago.

How does one make money in a Ponzi scheme? If I start the scheme, I just skim off the top of my investment collections and pay off (or let people think I am paying off) investors at regular intervals from the money I collect from new investors. I might even be stupid enough to think that I can keep the scheme going when the recruiting has dried up. I can try to get money quickly by some other scheme, like investing in a can't-miss stock my broker recommends. Or I can take a safer route and put a big chunk of money on the craps table in Las Vegas and hope to hit it big. That's what a fellow I played Little League Baseball with did when he grew up. He took his investors' money to the craps table where he "invested" their funds. Unfortunately, his "investments" didn't pay off, his scheme was discovered, and he went to prison.

Ponzi started in the Boston area in 1919 with a loan of $200 and 16 investors who put in under $1,000. In les than six months he had thousands of investors and about $10,000,000. He said he was paying 50% interest on short-term investments. He told people he was buying international exchange coupons in foreign countries and getting six times their value in U.S. postage stamps. Buy low, sell high: isn't that what investment is all about? He claimed he was paying friends who invested with him $150 for each $100 invested and that he was doing this in forty-five days, even though he was promising them payment in ninety days. Why not buy the coupons yourself and skip the middleman? That would be greedy, wouldn't it? Besides, it would take effort on the investor's part. Ponzi would do all the work and the investor would enjoy an obscene profit for doing nothing. It didn't take long before he had so much money coming in that he had to move it from under his mattress to a traditional banking institution, which came under scrutiny and led to his undoing. Maybe investors should be careful when someone promises to make them rich and do all the work for them as well. (It's probably not a bad idea to ask yourself why a total stranger would want to make you rich while you do nothing but give him money.)

There were no postal coupons. Ponzi was paying early birds with the money he swindled out of newcomers. It wasn't long before Ponzi had no investors and free room and board in a federal prison for the next five years. Unlike many others who are defrauded, Ponzi's investors could not claim that he had a stellar reputation for honesty and was certainly trustworthy. He was an ex-convict who had immigrated from Italy via Canada where he had served three years for forgery. He was arrested for smuggling aliens into the United States within a few days of his release from the Canadian prison and then served time in Atlanta for the smuggling rap.

I don't know how many people lost money "investing" in my Little League buddy's scheme, but it could not have been as bad as what happened in Romania in 1993, in Albania in 1997, and Columbia in 2008. In each case, thousands of people with little opportunity for investment of capital were swindled by pyramid scheme operators. Romania's newspapers claimed that millions of Romanians lost their life savings in a scheme called Caritas. Reports from Albania claim that hundreds of thousands of Albanians "have invested their life savings or money they earned working abroad" in one of several outlawed pyramid schemes. "The schemes offered very high interest rates, with the first investors paid from later investors' deposits. They eventually failed when no new investors came in" (Dhimgjoka 1977). A similar fraud left thousands of Columbians with empty pockets a decade later. Any such scheme is doomed to fail because there cannot be an endless line of "investors." Only greed and self-deception are endless.

What causes intelligent people to lose fortunes in Ponzi schemes? I think the main factors are the same ones that cause people to be conned in general: trust and greed. If a crook is not seen as a crook, but as authoritative and honest, people will tend to trust him. Being the head of NASDAQ, a minister in a church, the head of a corporation, an officer in a reputable lending institution, or a police officer impresses people. Your position makes many people trust you. If you appear honest, people will trust you. It doesn't matter that you are dishonest; all that matters is how you appear to others. Above all, if you are a likeable fellow in a position of power with a reputation for honesty, you are in a position to con even the greatest skeptics if they are greedy, ignorant, and lazy. If you have expertise in a complex field and your marks don't, your advantage multiplies. Being physically attractive is a bonus, too. With your qualities and their neediness, you have the perfect recipe for ensuring that your marks will not investigate your scheme too carefully, especially if your field is governed by a labyrinth of laws and regulations. They want you to be who you say you are so much that they will cut you a lot of slack, especially since it relieves them of the burden of thinking too much about what you are proposing. Even though your scheme sounds too good to be true, your marks will give you a pass and will not investigate you thoroughly before handing over their life savings. You're not only selling them a scheme that will make them rich, you're selling them hope and giving them time to spend on their work or other activities without having to worry about their investments. You're banking on their laziness, ignorance, and greed to make you rich, while they perceive you as a hardworking, generous benefactor or as a genius who knows how to beat the market consistently.

new People who are members of an identifiable group, such as church members or members of the same race or ethnic group, are especially vulnerable to fraudulent investment schemes brought to them by one of their own (or one who claims to be one of their own). Affinity fraud takes advantage of the trust that members have for others in their group, especially for those who are considered leaders. Professionals, the elderly, teachers, and other groups have been victims of affinity fraud. Some examples include: Waldorf School teachers, Jehovah's Witnesses, African-American Baptists, Indian Fijians, and senior citizens. [/new]

See also pyramid scheme and chain letter.

See my review of Three Powerful Books on Persuasion

further reading

book and articles

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

Pyramid Schemes Are as American as Apple Pie: How President Grant was taken by the Madoff of his day by John Steele Gordon

The Rise and Fall of Albania's Pyramid Schemes by Christopher Jarvis

Impostors, Pretenders and Deceivers What gives liars away? by Loren Pankratz, Ph.D.


Charles K. Ponzi Website

Caritas (Romania)


Looking For A Great Investment? Try A Ponzi Scheme! by Francine McKenna "As I dig into some of the recent Ponzi scheme cases, I’m also developing a more critical view of some of their “victims”. I’m starting to wonder, in some cases, how much of their misfortune was the result of being honestly deceived and lied to and how much was their willingness to be a party to a scam as long as they were the beneficiaries and not the losers at the tail end?"

news stories

new 'Youngest-ever black CEO' charged with fraud Federal officials have charged a man who billed himself as the youngest-ever black CEO of a publicly traded company with running a Ponzi scheme. The Securities and Exchange Commission alleges that Ephren Taylor II -- a self-described "social capitalist," author and entrepreneur -- had defrauded investors in his firm of more than $11 million between 2008 and 2010. Taylor was an aggressive self-promoter, using investor funds to embark on a speaking tour, publicize his three books, and support his wife's singing career, the SEC said. In interviews with outlets like CNN, CNBC, Fox News and NPR, he offered business advice and boasted of earning his first million running a software company while still in high school. [/new]

Investors cash in on web-based scams "One of the first significant studies of cons known as High Yield Investment Programs (HYIPs) reveals that a small number of people are trying to use them as regular investment vehicles....HYIPs are an example of what are known as Ponzi schemes which claim to offer huge returns for those that invest some cash in them. They depend on more and more people being enrolled in the scam, with funds from those who invest late in the scheme being used to reward early entrants. While the instigator of the fraud makes money, most participants spend a lot of time recruiting more members to prop up their ever dwindling returns."

Stanford Convicted by Jury in $7 Billion Ponzi Scheme "A R. Allen Stanford, crookfederal jury on Tuesday convicted R. Allen Stanford, a Texas financier, on 13 out of 14 counts of fraud in connection with a worldwide scheme that lasted more than two decades and involved more than $7 billion in investments." Stanford defrauded nearly 30,000 investors in 113 countries with fake high-interest certificates of deposit at the Stanford International Bank based on the Caribbean island of Antigua.

Retired bus drivers lose everything in Ponzi scheme Thomas Mitchell, an investment adviser who gained the trust of a small community of retired bus and train operators in the Los Angeles area, has been charged by the Department of Justice with running a 15-year Ponzi scheme that collected $15 million from a group of 150 retirees, causing them to lose at least $7 million in retirement savings.

Courthouse News Service The SEC has charged Timothy Durham, James Cochran, and Rick Snow with running a $230 million Ponzi scheme on more than 5,000 investors, many of them elderly. Durham is the CEO of National Lampoon and Snow is its CFO. The men bought the Akron, Ohio-based Fair Finance Co., which had operated for decades as a privately held consumer finance company, and turned it into a Ponzi scheme, selling interest-bearing certificates, the SEC says.

This week's (Feb 4-12, 2011) Ponzis:

  1. Alabama. Jefferson County jury convicts Birmingham businessman in Ponzi scheme Terry Harris swindled 1,700 people nationwide of $1.7 million.
  2. North Carolina. Asheville businessman faces Ponzi scam charges James W. “Bill” Bailey Jr. was charged with running a Ponzi scheme that cheated investors out of $13 million over the last decade.
  3. New York. Albert de Chimay Pleads Guilty To $7 Million Hedge Fund Scheme.
  4. Miami. Economic Outlook: Burgled at the bank Ponzi scheme operator Luis Felipe Perez was ordered to return $10 million as he begins a 10-year prison sentence.
  5. California. Elk Grove Man Indicted for Ponzi scheme Involving $11 Million Christopher Jackson, 43, has been indicted by a federal grand jury in Sacramento on six counts of wire fraud in a real estate investment Ponzi-style scheme.
  6. Florida. Hialeah Man's $40 million Ponzi Scheme Nets More Arrests (see number 4 above)
  7. New York. Guilty plea in Ponzi scheme said to target Orthodox Jews Joseph Shereshevsky, 54, a former private equity executive has pleaded guilty to fraud charges in connection with what federal investigators called a $255 million Ponzi scheme that targeted Orthodox Jews. Shereshevsky could face a prison term of 210 to 262 months under his plea agreement, and will be required to make restitution to victims.
  8. Illinois. Tougher sentence sought for Ponzi schemer A Springfield man who cheated dozens of people out of millions of dollars could face six and a half years in prison.
  9. Minnesota. Judge sends $84 million message U.S. District Judge Donovan Frank wants prospective Ponzi schemers to consider the case of Charles Hays. It's not enough that the former Rosemount day trader, once described as a millionaire master of the game, must serve 10 years in prison. Or that his firm, Crossfire Trading, was ordered to disgorge $21.6 million, representing the "profits" from eight years of fraudulent deals. Frank last week approved a motion by the U.S. Commodities and Futures Trading Commission to impose a civil fine on Hays equal to three times the restitution amount: nearly $64.8 million. The judge said he wants to deter others from similar fraudulent conduct
  10. Florida. Lake Worth Man Charged In $2 Million Ponzi Scheme Lawrence Hamel used telemarketers to reel in potential clients to invest in distressed real estate. According to the documents, Hamel promised investors an 8 to 12 percent return on their investment. Prosecutors said Hamel never used the money to invest in real estate, instead using it for personal gain between 1998 and 2008.
  11. Texas and Utah. Houstonian named in alleged $50M Ponzi scheme Robert Andres and his unincorporated company are among the defendants in a complaint filed in a Utah court by a federal regulatory agency that alleges that Andres and others were part of a $50.2 million Ponzi scheme. According to a filing in the U.S. District Court of Utah in Salt Lake City by the U.S. Commodity Futures Trading Commission, Andres’ Houston-based Winsome Investment Trust “fraudulently solicited and accepted” the money from at least 243 investors to participate in a commodities pool.
  12. New Jersey. Brennan trust fund tied to Ponzi scheme Last February, Resteiner pleaded guilty to operating a $47 million Ponzi scheme through companies he controlled in the Bahamas.
  13. Michigan. Judge orders Bravata to surrender Ferrari A Brighton businessman accused of orchestrating the $53 million "Billionaire Boys Club" Ponzi scheme has until the end of the day to surrender title to a Ferrari purchased with "tainted" funds, a federal judge ordered today.
  14. Texas. Courthouse News. Several principals of Plano-based Aspen Exploration, including four members of the Rand family, pleaded guilty to running a $68 million oil and gas Ponzi scheme, federal prosecutors said.
  15. South Carolina. Former pastor accused of fraud The arrest comes two months after investigators at the U.S. Commodity Futures Trading Commission sued Ronald E. Satterfield, a former Charleston preacher, alleging he was part of a $3.3 million Ponzi scheme that wiped out savings for dozens of small investors.
  16. Florida. More charges hit Ormond man accused in Ponzi scheme New charges have been filed against an Ormond Beach businessman accused of bilking wealthy local investors out of more than $1 million. State investigators say Tomas Loebel did not tell a group of fellow country club members that the co-founder of his real estate investment businesses was on probation for participating in a massive Ponzi scheme based in Altamonte Springs.
  17. Arizona. Sentence looms in concert Ponzi scheme James Cundiff will be sentenced for his role in a Ponzi scheme that used the promise of show promotions for artists such as the Rolling Stones and Jimmy Buffett to lure more than $50 million from investors.
  18. North Carolina. Former Howland man convicted of Ponzi scheme begins prison sentence 61-year-old David Harriet was sentenced to five and a half years in a federal medical facility after being covicted of stealing nearly ten million dollars in a Ponzi scheme. Harriet suffers from pancreatic cancer.
  19. London. ‘Con-Seka’ Ponzi Scheme In London Targeted Sri Lankan Community Vibhawa Fonseka was flashy, young and rich. Everyone liked him. He was from a ‘good family,’ was extremely charming and was easy to trust. He used his influence and good name to start an investment scheme in which he, together with his family, encouraged friends and relatives to invest. His smooth talk and ostentatious show of wealth easily convinced people to fork out their hard earned cash. With a minimum investment of £15,000, Fonseka was soon minting money. He reportedly bought a mansion worth £1.6 million and hired flashy cars in order to convince his investors that they, like him, could make it big too. His strategy quickly attracted investors and when he was finally convicted on various charges of deception and money laundering, he had managed to scam a total of £10 million.
  20. Florida. Volusia Couple Accused In Ponzi Scheme Authorities with the New Smyrna Beach Police Department said Willard and Bonnie Aller operated a Ponzi scheme that cost five investors more than $2.5 million.
  21. California. Guilty plea in Ponzi scheme targeting Korean-Ams A bookkeeper at an Irvine investment firm has pleaded guilty to a federal wire fraud charge and participating in a Ponzi scheme that targeted Korean Americans in Orange County. Federal prosecutors say 40-year-old Sang Yi acknowledged that she helped her boyfriend, the owner of Pinupito, Inc., collect more than $8 million from about 60 victims.
  22. Alabama. Bham man found guilty of Ponzi scheme Terry Harris, founder of Wealth Builders International and CEO of Networker 2000, was found guilty on eight counts of fraud and violating provisions of the Alabama Securities Act – including operating a Ponzi scheme. Harris took about $4.7 million in funds from approximately 1,767 investors.
  23. The Feds May Have Just Caught The First Ponzi Scheme That Used Boobs To Distract Investors
  24. New York. Mount Sinai Ponzi schemer to be sentenced Steven Diaz, 47, convicted last year of defrauding his friends and neighbors in a Ponzi scheme, cheated investors who paid him approximately $3 million for a piece of the future earnings of his mold, fire, and flood remediation company. Diaz spent investors’ money on a Ferrari, vacations, limousine expenses, his mortgage, landscaping expenses, and tickets to sporting events and concerts.
  25. California. Ringleader of mortgage Ponzi scheme sentenced to six years behind bars The ringleader of a scheme in which Filipino homeowners struggling to make mortgage payments were urged to transfer property titles into a bogus trust was ordered Thursday to spend six years in prison and make restitution of $71,000. Edmundo Rubi, 53, pleaded guilty last month to five felony counts, including grand theft and perjury, stemming from the Ponzi scheme.
  26. Illinois. Barrington man charged in $105M Ponzi scheme Daniel Spitzer promised his investors a good deal: low risk and sizeable returns if they agreed to put their money into a fund he told them he invested primarily in foreign currency trading, authorities announced today. But instead of investing, Spitzer took most the money he obtained from about 400 people and used it to pay off other investors in what amounted to a $105 million Ponzi scheme.
  27. California. Encinitas Man Sentenced to Five Years in 'Ponzi' Case Scott Bottolfson, 56, must serve five years in federal prison following his conviction on a wire fraud charge from what amounted to a "Ponzi" scheme that defrauded some 30 investors out of $6.8 million.
  28. Florida. Man sentenced to 17 years for investment fraud Ronnie Bass Jr. has been sentenced to 17 years in prison for his role in a Ponzi scheme that scammed more than $14 million from hundreds of Haitian-American investors in South Florida and New Jersey.

That it for awhile. Be careful out there.

A few Ponzis here, few Ponzis there....

  1. St. Louis. Ponzi scheme investigation nabs one of IRS' own Richard Saunders, 62, formerly of St. Louis, was apprehended in Thailand and taken into U.S. Custody on Thursday. Prosecutors allege Saunders spent, paid, and diverted more than $1.3 million in investor funds, some of which he sent to offshore accounts, from November 2004 to January 2008. Saunders ultimately netted more than $4 million in the Ponzi scheme, in which he used funds from investors to pay returns on other investments, rather than actual profits.
  2. Montana. Helena-area man gets 10 years for running Ponzi scheme A 64-year-old East Helena man who took more than $2 million from investors to further a Ponzi scheme and who was convicted of stealing money from an elderly woman was sentenced to 10 years in prison. Arthur L. Heffelfinger, a former broker with KMS Financial Services, pleaded guilty in July to theft and to operating a pyramid promotional scheme. The scheme ran from February 2001 to September 2009. Heffelfinger was accused of using $739,724 of his clients' investment money for his personal use.
  3. Melbourne, Australia. Business crime: Mortgage broker operated Ponzi scheme Hazel Bucello, the sole director of Victorian Finance Broking Services Pty Ltd (VFBS) in Kew, has been sentenced to four years nine months in jail for running a Ponzi scheme masquerading as a housing investment scheme.
  4. San Diego. Ponzi scheme operator victimizes Pinoys again A Filipino Ponzi scheme mastermind and his accomplices have been charged with another scam targeting the Filipino community in San Diego. A grand jury indicted Edmundo Rubi, Joseph Encarnacion, Benjamin Hebron, and Gloria Hebron with felony counts of fraud, grand theft, and perjury among other charges. Rubi, who was already convicted once before of a separate Ponzi scheme, was sentenced to 70 months in supervised custody. Officials say he victimized over 400 fellow Filipinos out of $24 million.
  5. England. Gang conned investors out of £10m A man from Middlesex was the ringleader of an international gang that conned innocent investors out of £10 million in a "ponzi" fraud, it can be revealed. Victims paid thousands of pounds to gang members, wrongly believing they would receive a handsome profit for joining the scheme. The six men, described by the police as "sharks", were involved in a "premeditated deception" that saw people lose their homes and life savings. Details of the scam were made public after a judge lifted an order banning reporting of the case. American businessman John Francis Napoli, 51, was due to be sentenced at Southwark Crown Court, London, for his role in the fraud.
  6. New York. Plea change possible in federal fraud case Troy businessman Matthew J. Ryan could be negotiating some sort of plea deal with federal prosecutors as his trial on charges he ran a Ponzi scheme approaches. Ryan was indicted by a federal grand jury on charges of felony securities and mail fraud on accusations he bilked investment clients out of millions of dollars to fund his real estate business. Prosecutors say Ryan set up a fake company called American Integrity Financial Co. with a Manhattan address and used the company to sell "contracts" to investors with guaranteed rates of return. Ryan is accused of then using the money to fund his real estate business, Prime Rate & Return. His alleged victims are as diverse as senior citizens and a volunteer fire department in Greene County.
  7. Colorado. Organized Crime Alive And Well: Ponzi Scheme Anchored In Colorado John Reinholdt II, 39, used at least 19 Lafayette-based businesses, including the Jaguar Group LLC, to fraudulently obtain money from banks that foreclosed on numerous homeowners after Jaguar Group LLC’s affiliates failed to forward payments to its lenders, which held the promissory notes on the properties.
  8. Tennessee. Dickson resident pleads guilty in multi-million Ponzi scheme Donna Jones, 37, was arrested in April and charged with 17 crimes including conspiracy, mail fraud, bank fraud, and money laundering in a Ponzi scheme tied to her former employer, Michael J. Park of Brentwood. Jones was Park’s secretary while he was engaged in a multi-million dollar Ponzi scheme. Park was sentenced to eight years in prison. Jones faces a maximum sentence of 50 years in prison.
  9. Virginia. Titus case on CNBC's 'American Greed' The CNBC television program “American Greed” will premier a one-hour episode on Troy A. Titus, the debarred lawyer from Virginia Beach convicted of a multi-million-dollar real estate scheme. A Norfolk federal jury convicted Titus of 33 felonies, finding that he had operated a Ponzi scheme that cost investors around $8 million in losses. The government later said the total fraud amounted to nearly $12 million. Titus is appealing. Titus came from an upper-middle-class, devout Christian family. He studied at Liberty University and the College of William and Mary, and received a law degree from Regent University.
  10. Hawaii. Ponzi scheme operator sentenced for taking $10 million from Hawaii and mainland residents A 34-year-old Florida man was sentenced to seven and a half years in federal prison today for operating a Ponzi scheme that collected more than $10 million from people here and on the mainland. Patrick Rakotonanahary pleaded guilty last year to wire fraud in connection with his fraudulent investment scheme from 2007 to 2009 promising a return of 6 percent to 10 percent per week. Assistant U. S. Attorney Larry Tong said Rakotonanahary collected money from more than 100 people, including about 80 from Hawaii. Rakotonananahary will be subject to deportation to Madagascar after he serves his prison term. Tong said the victims lost life savings, retirement funds and money for college, but there's no indication that Rakotonanahary will be able to pay them.
  11. Arizona. CFTC charges Ariz. trader in FX Ponzi scheme The U.S. Commodity Futures Trading Commission (CFTC) announced that it obtained an emergency federal court order freezing the assets of defendant Anthony Eugene Linton of Tucson, Ariz. The order stems from a CFTC enforcement action filed on January 11, 2011, in the U.S. District Court for the District of Arizona, charging Linton with fraud and misappropriation of customer funds in connection with a Ponzi scheme involving off-exchange foreign currency (forex) trading. Specifically, the CFTC complaint alleges that, from at least October 2007 to the present, Linton fraudulently solicited and accepted at least $650,000 from at least 19 customers for the purpose of trading off-exchange forex contracts. The complaint charges that Linton falsely represented to customers that they would receive a 100 percent annual return on their investments.
  12. Hawaii/Nevada/Arizona/California. Husband accused in Ponzi scheme pleads not guilty A man accused of ripping off Hawaii convicts serving prison time on the mainland and their families in a $3 million Ponzi scheme pleaded not guilty to wire fraud and mail fraud charges. A federal judge set a March trial date for Perry Jay Griggs and ordered him held in custody without the opportunity for bail pending trial. Griggs' wife Rachelle pleaded not guilty to the same charges last week. The couple were fugitives from last October, when a federal grand jury in Hawaii returned an indictment against them, until their capture in Arizona last month. They are accused of running a Ponzi scheme from 2003 to 2008 while Perry Griggs was in a federal prison in Las Vegas for operating another Ponzi scheme in California.

A few Ponzis here, a few Ponzis there.....

  1. Illinois man gets nearly 17 years for Ponzi scheme A suburban Chicago man has been sentenced to nearly 17 years in prison for participating in a Ponzi scheme that bilked $6.4 million from more than 250 people. Prosecutors say he swindled the money to fund an Internet-based sports radio site.
  2. Where is the missing $6M? The U.S. Securities and Exchange Commission is seeking civil penalties and a lifetime brokerage ban against a Menands man who admitted duping more than 400 investors of nearly $6 million in a massive Ponzi scheme.
  3. Two plead guilty in Ponzi scheme Two men face jail sentences after they pleaded guilty to two felony counts of securities fraud in Boulder County District Court. The duo - Michael Kass of Boulder and Bela Geczy of Longmont - were charged with bilking $18 million from 272 investors, about half of whom are from Boulder County, according to a grand jury indictment released in April. Both men are set to be sentenced on April 6. Kass faces a possible sentence of 16 years, and Geczy is facing a sentence of 12 years.
  4. Los Osos man sentenced to 9 years in prison for Ponzi scheme A Los Osos business man was sentenced to nine years in state prison today for defrauding investors of more than $2 million. Leonard Delk, 82, pleaded no contest to charges of grand theft by embezzlement and unlawful sales of securities in October.
  5. SEC complaint: $60 million Ponzi scheme Federal regulators have accused several Draper men of bilking investors of $60 The money was to be used as collateral to obtain a line of credit for investments. But according to a complaint filed by the Securities and Exchange Commission Raymond P. Morris and James L. Haley were operating a Ponzi scheme.
  6. Director pleads guilty to £14m Ponzi scheme Terence Freeman pleaded guilty to five charges including carrying on the business of a company with intent to defraud its creditors. City of London Police detectives uncovered how up to 700 people invested in Mr Freeman's company, GFX Capital Ltd, with the promise of no risk and high returns on the foreign exchange markets.
  7. Victims Lose $40 Million in Alleged Ponzi Scheme"There's been an action brought by the New Jersey securities regulators alleging Carr Miller is a Ponzi scheme." Investors say they were promised returns of between 10 to 15 percent for nine-month terms.
  8. A charitable foundation that runs children's schools claims that accountants and a lawyer aided and abetted a Ponzi scheme run by a hedge fund manager who stole at least $20 million from his victims.
  9. ‘Thunjani is a Ponzi scheme’ The scheme claims that it is easy to double or even triple your initial investment in one month.
  10. Former Walkerton broker gets four years for Ponzi scheme Daniel Neil McDonald was sentenced last week to four years in prison for "misappropriation" of $1.9 million from more than 15 victims. The Ponzi scheme lasted from 1991-2005.
  11. Feds sue man in $14M Ponzi scheme The Commodity Futures Trading Commission sued Encinitas resident Scott Bottolfson for stealing $11 million from 30 investors between September 2001 and February 2010 in a Ponzi scheme.
  12. No money yet for people involved in Huffman scheme It’s been almost a year since J.V. Huffman Jr. pleaded guilty to orchestrating a Ponzi scheme that lasted 17 years and ended with his arrest in 2008. The nearly 400 people that invested about $3 million into what they thought was a legitimate investment company have still not seen any money from the receiver recovering it.
  13. Securities Commission Malaysia: Perpetrator Of Ponzi Scheme Jailed The Securities Commission Malaysia (SC) today secured a deterrent sentence against Raja Noor Asma Raja Harun, the director of FX Capital Consultant and FX Consultant, for operating a Ponzi scheme that duped over 4000 investors of more than RM100 million (about $32.7 million.) She was sentenced to 120 years in prison.
  14. Carlos Hill to be tried in June The fraud trial of alleged Ponzi schemer Carlos Hill is scheduled to start in the Home Circuit Court on June 13.The charge stems from the collapsed billion-dollar Ponzi scheme that Hill operated five years before its collapse in 2008.
  15. New Ponzi Scheme: Blame Bernie
  16. Why is Russia's Bernie Madoff Back in Business?
    How to describe Russia's most famous charlatan, Sergei Mavrodi? Take the swindling power of Bernie Madoff, combine it with the hypnotic creepiness of a midnight televangelist, wrap it in a math teacher's wardrobe, and you'd be pretty close. During the 1990s, Mavrodi's crude financial pyramid scheme, MMM, cheated millions of Russians out of their savings, turning the ex–night watchman into a symbol of that decade's shameless brand of capitalism. But now, three years after serving out his sentence for fraud, Mavrodi has returned to his old hustle, and the authorities can't seem to do anything about it.
  17. Ponzi scheme mastermind gets 15 years in prison Scott D. Farah, 47, was sentenced to 15 years in federal prison and Donald E. Dodge, 66, Farah's sidekick, was sentenced to 6 1/2 years. Victims of the fraud said the Ponzi scheme had ruined their lives, bankrupted many in their retirement years, and led to two suicides. More than 150 victims of the scheme lost more the $33 million.
  18. UT woman set for arraignment on wire fraud charges Thirty-six-year-old Emilee Peterson Buckley of Salt Lake County was indicted for an alleged Ponzi scheme that bilked more than $13 million from investors. Prosecutors allege Buckley offered clients returns of between 4 and 15 percent on investments, but then used money from new clients to make payments to older clients.
  19. ‘Ponzi scheme boss’ arrested in South Africa
  20. Head of Ponzi scheme pleads guilty A Ponchatoula, Louisiana, man pleaded guilty Wednesday to stealing millions from friends and relatives in a Ponzi scheme. 61-year-old Bill Chaucer was sentenced to eight years in prison. Chaucer's wife, 64-year-old Cheryl Chaucer, was sentenced to 10 years, all suspended, with one year of home incarceration. Prosecutors accused the Chaucers of bilking more than 200 investors out of roughly $11 million in a elaborate Ponzi Scheme, and then using that money to fund an elaborate lifestyle.
  21. Fort Collins man sentenced to 9 years for Ponzi scheme Jeremy Hart bilked 29 Northern Colorado investors out of $3.4 million and was sentenced to nine years in prison.

Sacramento man gets 18 years for Ponzi scheme Bob Steiner warned many times "You" can be taken. "You" probably won't believe it, but it's true. Read this story of how trusted friend William A. Sassman II took Mark Schroeder for about $500,000 and several other people for $4 million more. Sassman's father thought his son was just an insurance agent doing his job. Schroeder thought Sassman was a good friend with a good plan for investing the money he'd gotten from the sale of his audio-visual business. Schoeder is going to have to go to plan B for retirement, and his kids are on their own if they want to go to college. Sassman is going to have lots of time to think about the fun he had ruining other people's lives.

Without trust, there is no society. With trust, there is the opportunity for scam after scam. It's a tough world out there, especially if you're greedy and believe sombody who promises you 1,600 percent on your investment.

As bad as Sassman's scam was, he is small fry compared to Maui businessman Lloyd Y. Kimura, 61, who bilked more than 50 people of up to $20 million in a Ponzi scheme he's been running for 25 years. Kimura faces up to 135 years in prison.

In other scam news, the University of Miami invested in the Ponzi scheme of Allan Stanford, but received payments from Stanford. Now UM is being sued for $6.4 million in Ponzi money it got. Stanford owns the Stanford Financial Group, which had its headquarters in Miami and was accused of fraud in 2009 by the U.S. Securities and Exchange Commission, which claimed that Stanford ripped off investors of nearly $8 billion. Stanford is currently in jail awaiting trial. That trial is likely to be delayed because Stanford's attorneys claim that he has become incompetent due to anti-anxiety drugs he's been taking while in jail. A judge agreed. Stanford gets to go into detox before he goes into the courtroom for his trial.

In Michigan, Dante DeMiro was arrested for his part in bilking Mona Shores Schools out of $3.7 million in an alleged Ponzi scheme. The school district had been entrusting its money to DeMiro’s company, Gemini Financial, since 1999.

In Virginia, Birgit Mechlenburg was sentenced to five years in prison for her role in a Ponzi scheme that swindled hundreds of investors out of $60 million.

Recently, a court-appointed receiver trying to recover funds for victims of Tom Petters' Ponzi scheme sued JPMorgan Chase & Co. for more than $300 million, alleging the bank should have known that money it seized from Petters was the result of fraud.

Jay Hoffman, a Long Island financial planner was sentenced to two and one-third to seven years in jail after pleading guilty to grand larceny in a $2 million Ponzi scheme whose victims included family and friends. Prosecutors say he allegedly ran the scheme for two decades and may have had up to 40 victims.

Finally, rounding out today's Ponzi crime scene is the announcement that Richard Garcia, 29, a former loan officer at Wachovia Bank, has been sentenced to three years in federal prison for his part in a $12 million fraud. He had two collaborators, a CPA and a jeweler, who separately pleaded guilty in a $40 million Ponzi scheme.

"Investment-scam protest turns violent in Albania," by Merita Dhimgjoka, Sacramento Bee, Feb. 6, 1977

Madoff's Money

Harry Markopolos really did have the goods on Bernie Madoff

Investor who lost big to Madoff kills himself

Is Social Security a Ponzi scheme?

Last updated 14-Mar-2015

© Copyright 1994-2016 Robert T. Carroll * This page was designed by Cristian Popa.