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* In 1997, South African businessman [[Kenny Kunene]] was convicted of running a Ponzi scheme with over 2,000 investors and sentenced to six years in prison.<ref name=tnyt>{{cite news|last=Dugger|first=Celia W.|title=Partying Amid Poverty Stirs South Africa Debate|url=http://www.nytimes.com/2011/02/15/world/africa/15southafrica.html|accessdate=18 February 2011|newspaper=The New York Times|date=14 February 2011|page=A4}}</ref>
* In 1997, South African businessman [[Kenny Kunene]] was convicted of running a Ponzi scheme with over 2,000 investors and sentenced to six years in prison.<ref name=tnyt>{{cite news|last=Dugger|first=Celia W.|title=Partying Amid Poverty Stirs South Africa Debate|url=http://www.nytimes.com/2011/02/15/world/africa/15southafrica.html|accessdate=18 February 2011|newspaper=The New York Times|date=14 February 2011|page=A4}}</ref>
* 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.<ref>Indian Express, 24 January 1998</ref>
* 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.<ref>Indian Express, 24 January 1998</ref>
* The Social Security system in the United States.


===21st century===
===21st century===

Revision as of 18:26, 29 August 2011

This is a list of Ponzi schemes, fraudulent investment operations that pay returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned.

Other historical examples

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 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 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]
  • Between 1978 and 1983 Ron Rewald ran an investment firm in Hawaii. The firm declared bankruptcy in 1983 and was revealed to have been a Ponzi scheme which defrauded over 400 investors of more than $22 million.[14] Rewald claimed that he had been operating the firm as a front for the U.S. Central Intelligence Agency.[15]

1990s

  • 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.
  • 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.[16]
  • 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.[17]
  • 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.[18] 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. In 1997, 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 International Monetary Fund.[19]
  • In 1997, South African businessman Kenny Kunene was convicted of running a Ponzi scheme with over 2,000 investors and sentenced to six years in prison.[20]
  • 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.[21]
  • The Social Security system in the United States.

21st century

  • 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.[22]
  • 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.[23]
  • 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.[24]
  • In February 2005, Moshe Leichner and his son Zvi Leichner[25] were sentenced to 240 months in federal prison for running a Ponzi scheme[26] through a commodities futures trading firm, Midland Euro[27] that defrauded hundreds of investors out of more than $95 million, including Dean Tanella[28] of GunnAllen Financial[29] (shut down by regulators in March 2010 for fraud allegations and losses related to another Ponzi scheme[30]) and Safe Harbor Capital Management (now dba HarborLight Capital Management)[31] which lost $40 million[32] 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.[33]
  • 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.[34][35][36]
  • 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.[37]
  • On June 27, 2007, former boy band mogul 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.[38]
  • 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).[39]
  • 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 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.[40]
  • The WexTrust Investment firm was closed August 1, 2008 by the Securities and Exchange Commission, charging that WexTrust and two of its owners (Joseph Shereshevsky of Norfolk and Steven Byers of Oak Brook, Ill) operated a Ponzi-type scheme by promising unusually high returns to earlier investors and paying them with money raised from later investors. The SEC case, filed in federal court in Manhattan, alleged that WexTrust and the two men defrauded investors by diverting at least $100 million to unauthorized uses. WexTrust targeted the Orthodox Jewish community, particularly in Norfok, VA and New York City. The receiver, Timothy Coleman, has returned only 2% of principal to WexTrust investors. Shereshevsky and Byers have not got gone to trial. [41]
  • 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.[42] 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. He later was convicted for turning Petters Group Worldwide into a $3.65 billion Ponzi scheme and was sentenced to 50 years in federal prison.
  • Jordan : Many traders were arrested on October / November 2008 for multi-millions Ponzi Scams.[citation needed]
  • September 15, 2008, Securities and Exchange Commission v. Jeanne M. Rowzee, James R. Halstead, and 'Robert T. Harvey United States District Court for the Central District of California. Civil Action No. SACV 08-1025 AG (ANx)SEC Charges Bogus PIPE Promoters in $52 Million Ponzi Scheme. The Securities and Exchange Commission today charged an Irvine, Calif., attorney and two other promoters for conducting a $52.7 million Ponzi scheme in which they sold investors bogus PIPE (private investment in public equity) investments, promised unrealistic profits, and misappropriated more than $20 million of investors' funds to function as their own personal piggy bank. Harvey misappropriated at least $2 million of Harvest Income funds to pay his personal credit card bills and other expenses. Harvey also paid himself approximately $2.3 million in purported "management fees." Harvey had a prior conviction with SEC violations in the early 80's and released from Federal Prison in 1987.[43] Harvey currently operates an oil and gas investment company, Harvest Petroleum, Inc. located in McKinney, Texas. [15] The defendants are charged with securities fraud under Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and with conducting an unregistered offering under Section 5 of the Securities Act. Rowzee and Harvey are also charged with investment adviser fraud under Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, and Halstead is charged with aiding and abetting violations of Sections 206(1) and 206(2) of the Advisers Act. The Commission's complaint seeks permanent injunctions, disgorgement of ill-gotten gains, and civil penalties against each defendant.The Commission acknowledges the assistance of the Federal Bureau of Investigation and the California Department of Corporations in this matter.
  • 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.[44] As of December 2008 the losses were estimated to be $65 billion, making it the largest investor fraud in history.[45] 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, Peter Gosling, Natalie Laverick, Peter Graham, and Eric Armstrong – pleaded guilty to fraud and have been sentenced in March 2009.[46]
  • 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.[47] 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.[48]
  • 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.[49]
  • 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"[50]
  • 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.[51]
  • On March 13, 2009, the SEC charged Brian Smart of Lehi, Utah, with securities fraud, saying he created a Ponzi scheme through which he defrauded elderly victims of $1.7 million.[52]On June 6th 2011, Federal Judge Dale Kimball ruled that Brian Smart was found to be responsible for losses in the amount of 2.05 million. He was fined a total of $4,715,580 dollars.[53]
  • 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. He was indicted on April 1, 2010;[54] pleaded guilty in July, 2010, to mail fraud and money laundering; and was sentenced to 17-1/2 years in prison in May, 2011.[55]
  • 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.[56] On April 27, 2010 Jason Trevor Brooks pleaded guilty to four felony counts of securities fraud in a scheme in which he bilked investors out of $10 million. Jason was sentenced to 32 years in prison and was also ordered to pay more than $5.1 million in restitution to his victims. Brooks received eight-year prison sentences for each of the four counts to which he pleaded guilty—two counts of securities fraud and two counts of making an untrue statement.[57]
  • On June 12, 2009, investors were reported to have lost billions of South African Rands in a Ponzi scheme masterminded by Barry Tannenbaum.[58]
  • 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 1.4 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).[59] Rothstein was denied bond by U.S. Magistrate Judge Robin Rosenbaum, who ruled that due to his ability to forge documents, he was considered a flight risk.[60] Although his arraignment plea was not guilty, Rothstein cooperated with the Government and reversed his plea to guilty of five federal crimes on January 27, 2010. He was sentenced to 50 years, despite the prosecution asking for 40 years.[61]
  • In 2010 Trevor Cook of Minnesota plead guilty and began serving a 25 year federal prison sentence in connection with the Oxford Group which reportedly took in $194mm. Bo Beckman still has charges pending in connection with the scheme. [62] [63][64][65]
  • In early 2010, it was reported that Tzvi Erez from Toronto had scammed 76 creditors out of a combined 27 million dollars. He created an illegitimate print business called E Graphix, and convinced investors to give him large loans in order to carry out fictional printing orders. He was charged with fraud and forgery by Toronto police, but was not convicted because the Canadian courts lacked adequate trial time to give him a trial.[66][67]
  • On May 20, 2010, the U.S. Securities and Exchange Commission (SEC) filed a federal case against Edward A. Allen and David L. Olson, two former brokers of World Financial Group / World Group Securities, accusing them of having raised approximately $14,800,000 through the offer and sale of promissory notes as part of an illegal Ponzi scheme in the States of Ohio and Florida between September 2005 and December 2008.[68]

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.[69]
  • 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.[70] 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.[71][72]
  • 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.[73]
  • 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.[74]
  • 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.[75]
  • Sept. 15, 2010, Nevin Shapiro pleaded guilty to a 2005 - 2009 Ponzi scheme in a Newark, New Jersey court. The scheme brought in approximately $880 million. Headquartered in Miami, the scheme was based on an import/export grocery business but was diverting investments to attract new investors. Among the items seized as a result of his plea were a $5 million Miami mansion and a yacht. He was known as "Lil Luke" because of his relationship with the Miami Hurricanes football team. This was a tribute to Luther Campbell, a famous former Hurricanes booster. On August 16, 2011, in a story broken by Yahoo! Sports, Shapiro stated that his support of the team included cash, entertainment, prostitutes, and gifts, all against NCAA rules. For more details on Shapiro's involvement with the Miami program, see 2011 University of Miami athletics scandal.[76][77][78]

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. {{cite news}}: Cite has empty unknown parameter: |coauthors= (help)
  9. ^ "J. David Case: Damages Set". New York Times. 1987-08-28. {{cite news}}: Cite has empty unknown parameter: |coauthors= (help)
  10. ^ Bauder, Donald (Fall 1986). "Captain Money and the Golden Girl: The J. David Affair". The Journal of San Diego History. 32 (4). San Diego History Center. Retrieved 2010-11-26.
  11. ^ Rancho Santa Fe, California
  12. ^ Lindsey, Robert (1985-08-21). "Retrial of San Diego Mayor is Opened". New York Times. {{cite news}}: Cite has empty unknown parameter: |coauthors= (help)
  13. ^ "20-Year Term For Dominelli". New York Times. 1985-06-25. {{cite news}}: Cite has empty unknown parameter: |coauthors= (help)
  14. ^ Rob Shikina (25 November 2010). "Con man Rewald directs a Los Angeles talent agency". Honolulu Star-Advertiser. Retrieved 7 January 2011.
  15. ^ "Rewald Convicted in Hawaiian Trial". Spokane Chronicle. Associated Press. 22 October 1985. Retrieved 7 January 2011.
  16. ^ Oberhuber, Nadine (2007-11-15). "Damara Bertges - European Kings Club-Chefin: Die Königin und ihr Gefolge - Walhalla - powered by BÖRSE ONLINE". Graumarktinfo.de (in German). G+J Wirtschaftsmedien Gmbh & Co. KG. Retrieved 2010-11-26.
  17. ^ "The Bennett Funding Group, Inc". Securities and Exchange Commission. 2008-06-20. Retrieved 2010-11-26.
  18. ^ "Extremism in America: Greater Ministries International". Anti-Defamation League. Retrieved 2007-07-18.
  19. ^ Christopher Jarvis, The Rise and Fall of Albania's Pyramid Schemes, Finance & Development: A Quarterly Magazine of the IMF, March 2000.
  20. ^ Dugger, Celia W. (14 February 2011). "Partying Amid Poverty Stirs South Africa Debate". The New York Times. p. A4. Retrieved 18 February 2011.
  21. ^ Indian Express, 24 January 1998
  22. ^ "Cooperative Crisis Continues to Escalate in Haiti". Vol. 20, no. 9. Brooklyn: Haiti Progres. 2002-07-24. Archived from the original on 2004-12-27.
  23. ^ Washington Post http://www.amcostarica.com/051707.htm
  24. ^ "Lawyers' Indictment in $1 Billion Ponzi Scheme Shocks Legal Circles". New York Lawyer. ALM Properties, Inc. 2009-01-26. Retrieved 2010-11-26.(registration required)
  25. ^ [3] L.A Times May 24, 2005
  26. ^ [4] Midland Euro FAQ
  27. ^ "Midland Leichner Entities U.S.B.C. Consolidated Case No. SV03-13981GM". 2010-11-11. Retrieved 2010-11-26.
  28. ^ [5] Ponzi Court Case: Dean Tanella
  29. ^ [6] GunnAllen Financial
  30. ^ [7]"Finra shuts down GunnAllen" - March 22, 2010 - Investment News
  31. ^ [8] Safe Harbor Capital Management now dba HarborLight Capital Management
  32. ^ [9]"Error Times $40 million: Scam Trips Up a Pro" - June 9, 2003 - St Petersburg Times
  33. ^ Flaccus, Gillian (2006-05-27). "Calif. Man Gets 30 Years for Ponzi Scheme". WashingtonPost.com. The Washington Post Company. Associated Press. Retrieved 2010-11-26.
  34. ^ The Star, Malaysia, 4 October 2006.
  35. ^ Today, Singapore, 24 January 2007.
  36. ^ Bank Negara, Malaysia, Malaysia, 5 September 2006.
  37. ^ "AD08-18 Sydney fund manager sentenced to jail" (Press release). Australian Securities and Investments Commission. 2008-09-19. Retrieved 2010-11-26.
  38. ^ Orlando Sentinel February 6, 2007 Pearlman, companies face $317 million in claims
  39. ^ Santos, Tina (2007-08-18). "Inquirer.net, Charges filed against 27 in alleged pyramiding scam". Inquirer.net. Makati City, Philippines: Philippine Daily Inquirer. Retrieved 2010-11-26.
  40. ^ Aning, Jerome (2008-06-26). "$250-M ESTAFA, DOJ acts to speed up cases in PIPC scam". Inquirer.net. Makati City, Philippines: Philippine Daily Inquirer. Retrieved 2010-11-26.
  41. ^ 'Investors 'stuck' High and Dry in Wextrust Fraud Case' The Virginian-Pilot, Oct 23, 2008
  42. ^ Hughes, Art (December 2, 2009). "UPDATE 2-Tom Petters found guilty of Ponzi scheme fraud". Reuters. Thomson Reuters. Retrieved December 10, 2009.
  43. ^ "Inmate Locator". Federal Bureau of Prisons. Retrieved 2010-11-26.
  44. ^ Appelbaum, Binyamin; Hilzenrath, David S.; Paley, Amit R. (2008-12-13). "It was all one big lie". Washington Post. Retrieved May 8, 2010.
  45. ^ Lucchetti, Aaron (2009-03-10). "Investors Were Told They Had a Total of $64.8 Billion". Wall Street Journal.
  46. ^ Massive buy-to-let scam cracked by fraud squad CityWire
  47. ^ "Suspect in Ponzi Scheme Surrenders on Long Island". The New York Times. January 27, 2009. Retrieved May 8, 2010.
  48. ^ Wayne, Leslie (March 28, 2009). "Bank of America Accused in Ponzi Lawsuit". The New York Times. Retrieved May 8, 2010.
  49. ^ City trader Terry Freeman arrested over £40 million fraud Times Online
  50. ^ Hays, Tom (2009-02-25). "2 arrests in NY securities fraud case". Yahoo News. Retrieved 2009-02-25.
  51. ^ "Ohio woman, 'mini-Madoff', sentenced for Ponzi scheme". ToledoontheMove.com. Barrington Broadcasting. Associated Press. 2009-03-13. Retrieved 2010-11-26.
  52. ^ Wall, Cleon (March 12, 2009). "Lehi man wanted by federal government in ponzi scheme". Salt Lake City: KSL. Retrieved June 12, 2011. {{cite news}}: Unknown parameter |separator= ignored (help)
  53. ^ "Court directs Utah man to repay millions in fraud case". The Salt Lake Tribune. June 14, 2011 (updated June 29, 2011). Retrieved July 4, 2011. {{cite news}}: Check date values in: |date= (help); Unknown parameter |separator= ignored (help)
  54. ^ "Owner of Chester County Investment Firm Charged with Running Multi-Million-Dollar Ponzi Scheme" (Press release). Philadelphia, Pennsylvania: Federal Bureau of Investigation. 2010-04-01. Retrieved 2010-11-26.
  55. ^ "Ponzi schemer with ties to MDI gets 17 years in prison", Bangor [Maine] Daily News, May 05, 2011 7:32 pm. Retrieved 2011-05-05.
  56. ^ Pankratz, Howard (2010-04-28). "Erie man jailed in alleged $10 million Ponzi scheme". denverpost.com. MediaNews Group. Retrieved 2010-11-26.
  57. ^ Aguilar, John (2010-04-27). "Erie man gets 32 years in $10 million investment scam". Boulder Daily Camera. MediaNews Group. Retrieved 2010-11-26.
  58. ^ Rose, Rob (2009-06-12). "Duped". Financial Mail. Financial Mail. Retrieved 2010-11-26.
  59. ^ Scott Rothstein Charging Document
  60. ^ Detention Order (Document 8), U.S. v. Scott W. Rothstein (09-CR-60331-CR-COHN, United States District Court for the Southern District of Florida), 2009-12-01Template:Accessdate
  61. ^ Jones, Ashby (June 10, 2010). "Rothstein Draws 50-Year Sentence". The Wall Street Journal.
  62. ^ [10], BULLETIN: SEC Charges Jason Bo-Alan Beckman In Trevor Cook Ponzi Scheme; Judge Freezes Assets; Agency Says Investors’ Cash Used To Make Child-Support Payments And Puchase ‘Luxury Homes’ And Cars By PatrickPretty.com 11:42 am Mar 9, 2011
  63. ^ [11] Fallout from Cook's Ponzi scheme widens: Bo Beckman's attorneys file suit over unpaid legal bills, while L. Edward Baker files for bankruptcy protection. Saturday, June 26, 2010 5:56 AM
  64. ^ [12]New charges in $194 million Ponzi scheme Article by: DAN BROWNING and DAVID PHELPS , Minneapolis Star Tribune staff writers Updated: March 7, 2011
  65. ^ [13] Beckman says he was no 'ringleader' in Cook's scheme Article by: DAN BROWNING , Minneapolis Star Tribune Updated: August 3, 2011
  66. ^ www.nickstein.com/.../mensch-next-door-charged-with-ponzi-scheme/
  67. ^ www.cbc.ca/news/canada/story/2010/11/15/tzvi-erez.html
  68. ^ Edward A. Allen, David L. Olson, and A and O Investments, LLC
  69. ^ http://www.internetfraud.usdoj.gov/
  70. ^ "Hickman gets 8 years, son 5 years". National Ethics Bureau - Consumer Protection - Scam Report. San Diego, California: National Ethics Bureau. 2004-09-23. Retrieved 2010-11-26.
  71. ^ [14] [dead link]
  72. ^ "Fidelity National Capital Investors, Inc.: Admin. Proc. Rel. No. 34-49824 (File No. 3-11514)". Securities and Exchange Commission. 2004-06-08. Retrieved 2010-11-26.
  73. ^ http://www.usdoj.gov/usao/cac/pr2005/087.html
  74. ^ "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.
  75. ^ "Spain arrests nine on stamp fraud". BBC News. May 10, 2006. Retrieved May 8, 2010.
  76. ^ Robinson, Charles (August 16, 2011). "Renegade Miami football booster spells out illicit benefits to players". Yahoo! Sports. Retrieved August 23, 2011.
  77. ^ {http://www.newser.com/article/d9p5nbj00/convicted-ponzi-schemer-nevin-shapiro-tells-yahoo-sports-he-gave-gifts-to-miami-athletes.html}
  78. ^ {http://blogs.miaminewtimes.com/riptide/2010/09/nevin_shapiro_miami_beach_ponz.php}

Further reading

  • Zuckoff, Mitchell (2005). Ponzi’s Scheme: The True Story of a Financial Legend. New York: Random House. ISBN 1400060397. {{cite book}}: Cite has empty unknown parameter: |coauthors= (help)
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