New Jersey-based Investment Adviser Pleads Guilty to $13.6 Million Ponzi Scheme

Sandra M. Venetis, 59, of Whitehouse Station, New Jersey, pleaded guilty to charges she defrauded at least 50 investors of more than $7 million by soliciting investments in a fictitious investment program. According to prosecutors, Venetis, the owner and principal of Systematic Financial Associates, Inc., over a period of about 3 years, from 1997 through August 13, 2010, offered a scheme that she claimed would fund loans to doctors for their quarterly pension plans. Investors poured about $13.6 million into the program. Instead, Venetis used the investment funds for her own benefit, to pay for Systematic Financial's expenses and to pay returns to earlier investors. Prosecutors alleged that Venetis used investment funds to support a lavish personal lifestyle. She plead guilty to one count of securities fraud and one count of transacting in criminal property and faces up to 30 years in prison, plus fines and restitution.

Read the story here and here.

Read the DOJ announcement here.

South Florida Financial Advisor Pleads Guilty To Embezzling $1.1 Million From Client Accounts

Shawn Roberts, 52, of Parkland, Florida pleaded guilty to charges he embezzled some $1.1 million from his clients at his financial advisory firm, Applied Benefits and Concepts. According to authorities, Roberts' scheme spanned about 4 years from 2005 until April 2009. He has pleaded guilty to one count of mail fraud. As part of his plea agreement, Roberts has agreed to pay full restitution to the one client he stole from. Sentencing is set for May 20, 2011.

Read the story here, here and here.

Utah Man Indicted in Georgia for Running a $30 Million Ponzi Scheme

Thomas Repke, 57, of Holladay, Utah, was indicted on charges he and a co-conspirator bilked at least 100 investors out of as much as $30 million in a Ponzi-type investment fraud scheme. Repke, through his companies, Coadum Capital and Mansell Acquisition Co., promised investors as much as 5 percent per month returns on investments allegedly made by him and a co-conspirator, James Jeffery, 58, of Ontario, Canada. Instead of investing the funds as promised, Repke and Jeffery allegedly transferred "substantial sums of money to themselves and more than $20 million to accounts in Switzerland and Malta for their own benefit. The scheme spanned approximately 2 years between January 2006 and December 2007, according to reports. The two were charged with 22 counts of mail fraud, wire fraud and conspiracy to which they plead not guilty.

Read the story here and here.

Green Energy Investment Fraud: Do Your Due Diligence

Last month, the Securities & Exchange Commission (“SEC”) took action against a group of boiler-room operators for running a fraudulent green energy scheme that bilked investors out of nearly $11 million. According to the SEC, the owners of Kensington Resources, Inc., two men from Southern California, 51-year old Joseph R. Porche, and 53-year old Larry R. Crowder, were behind the boiler-room operation. The scheme involved the purported sale of $11 million in unregistered shares of American Environmental Energy, Inc. ("AEEI") common stock to unsuspecting investors. Porche, Crowder and their boiler-room sales staff of four led investors to believe that the majority of investment funds were to be used by AEEI to conduct its green energy business. However, according to the SEC, the vast majority of the monies raised simply went to pay sales commissions and to finance the lavish lifestyles of Messrs. Porche and Crowder. At the end of the day, only $335,000 of the $11 million raised went to AEEI. It turns out that Crowder, and one of the boiler-room salesmen, Dale J. Engelhardt, have previous securities law offenses. In 1998, as a result of a similar fraud, Crowder was permanently barred from associating with any broker or dealer, among other censures.

With the government’s interest in promoting so called “green energy” – renewable and clean energy solutions – to support US energy demands, large public and private investments are flowing into a wide variety of startups, established companies, joint ventures and other programs to promote the sector. Sadly, the allure of green energy investments has also attracted the attention of fraudsters seeking to make a quick buck. Savvy investors would do well to do their due diligence on these opportunities in order to minimize the risk of fraud and other scams. Consider the following additional recent cases in the news:

• In August 2010, Dorothy Geisler-Tragardh, a principal of Praxis Resources, purportedly a “clean coal” supplier, pleaded guilty to defrauding investors out of as much as $2.5 million in a fraudulent sale of its stock. Geisler-Tragardh sold shares of Praxis to investors for $56 a share when they were worth only 30 cents apiece. Instead of investing the funds, she used the proceeds to enrich herself and to pay for a luxury waterfront home and a Picasso artwork.
  
• In June 2010, the SEC halted trading in shares of Green Energy Resources, Inc. as a result of its dubious claim that it would be providing 100,000 tons of “very buoyant and very absorbent” woodchips for the cleanup efforts on the Gulf Oil Spill. The SEC had also ceased trading in another company, ACT Clean Technologies, after it had made dubious claims in press releases about landing clean-up contracts.
  
• In March 2010 Reuters reported that investors in Australia had been defrauded out of at least US$3.2 million by a company called WesternField Holdings Inc., purportedly a Tokyo-based “leading developer of high quality greenhouse gas reduction projects” and a carbon offset investment firm. Investors were apparently the victims of an aggressive telemarketing scam. However, claims made on the company’s web site were found to be phony, such as credentials, background, associations, certifications and awards it claimed but, in fact, did not have. Even its address in Tokyo appears to have been made up. The Australian Securities and Investments Commission took action and blacklisted the company.
  
• In January 2010 notorious Canadian stock promoter, Stephen Demers, was found guilty of dozens of new fraud charges for the fraudulent sale of unregistered securities of United Environmental Energy, purportedly a green energy company. Demers had previously been found guilty of 435 securities violations in the prior five year period, according to The Montreal Gazette.
  
• In November 2009, the SEC accused several individuals, including the principals of Pennsylvania-based Mantria Corp., of multiple counts of investor fraud, alleging they had perpetrated a Ponzi-type scheme which bilked mostly elderly investors out of as much as $30 million. Mantria was purportedly the “world’s leading manufacturer and distributor” of biochar, allegedly a clean charcoal energy source, as well as the developer of a “carbon negative” housing community in rural Tennessee. In fact, these claims made to investors were a complete fraud – Mantria sold no biochar, nor had it developed an eco-friendly residential community. Biochar turns out to be an unproven and potentially controversial clean energy source.
  

These cases and others underscore the need for proactive and thorough due diligence when considering such investments. Indeed, in December 2009, the Financial Industry Regulatory Authority (“FINRA”) issued a warning to investors about possible green energy investment scams, such as “pump and dump” and Ponzi-type schemes as noted above. FINRA provided advice to potential investors about how to avoid being scammed, including watching out for the following:

• Unsolicited communication such as faxes, emails, text messages tweets, and strategically placed “opinions” in blogs and message boards, usually related to a very low-priced stock.
  Seminars and webinars that use short-term incentives and bonuses, along with aggressive sales tactics, to encourage you to liquidate your current savings and go “all in” on a new investment initiative.


• Price targets or predictions of swift and exponential growth.


• The use of facts from respected news sources to bolster claims of the size of the market for a new product or technology (“this is a billion dollar market…”).


• Mention of associations with or actions by federal and international governments that bolster a company's product or service (“The President wants hydrogen to be part of the solution for Detroit…”).


• References to actions by well-known companies used to justify growth of the company being touted. When a large oil company launched a “nitrogen-enriched” gas, this was quickly seized upon to validate the business prospects of a touted company, even though there was no direct link between the two.


• Claims that they’re the next big thing. Companies that, despite having not produced any revenue to date, are purported to have a new technology that will allow it to dominate the energy marketplace. (“Company XYZ will be the Exxon of the 21st century…”)


• Products that are only in the development stages or that claim “working prototypes” but have no actual products on the market.


• Unverifiable claims of enormous energy efficiency.


• Pressure to invest immediately.
  

FINRA advised using a healthy dose of skepticism to check out these opportunities and the people pitching them. At Marquet International, we have a simple three step process: verify, verify and verify. As can be seen in some of the examples, there were clear and in some cases glaring warning signs, such as prior history of investment fraud, opulent lifestyles of promoters, unregistered securities and non-existent offices. We recommend taking the following actions as well:

• Check out the bonafides of the principals involved in the company in question – some may have prior histories of fraud, criminal activities or checkered backgrounds that may call into question the overall validity of the investment;


• Double check the science – some green energy technologies remain unproven or overblown – make sure it is real and practical;


• Talk to industry experts – get a real-time read on their reputation and track record. Other useful reference sources include other investors, suppliers, vendors and joint-venture partners;


• Be sure company financials are audited and provided by a legitimate accounting firm – we have seen cases where fraudulent investment schemes are supported by phony or disreputable accountants;


• Check to make sure the company and its executives are not the subject of regulatory actions – a prior history of regulatory censures is the best predictor of future actions and should raise red flags for the potential investor; and


• Look for related party transactions and relationships – fraudulent or unsound investment schemes often involve interrelated entities.

International investments are harder to check out given the relative lack of public record, differing accounting standards and less relative regulatory oversight. Be wary of intermediaries – we have found these individuals are often disreputable who may muddy a potential investment that would otherwise be sound. Thorough due diligence in these cases often may rest on developing human intelligence sources who can provide an accurate operational and reputational analysis.

In sum, as these cases illustrate, a careful analysis of potential green energy investments will go a long way toward keeping your greenbacks working for you instead of being scammed.


Christopher T. Marquet is Chief Executive Officer of Marquet International, an investigative and security consulting firm based in Boston, Massachusetts. He can be reached at (617) 733-3304 or chris@marquetinternational.com.

Former Illinois Investment Advisor Sentenced In Michigan Union Pension Fraud Scam

John A. Orecchio, 44, formerly of Arlington Heights, Illinois, was sentenced today to 9 years and 4 months in federal prison for embezzling more than $24 million from several union pension funds in Michigan. Orecchio was also ordered to pay some $26.4 million in restitution, plus a $50 million civil judgement in favor of the U.S. Department of Labor. Prosecutors alleged that over a four year period, Orecchio, as a partner and co-founder of AA Capital Partners, defrauded six separate union pension funds, including those of the Michigan Regional Council of Carpenters and the Operating Engineers, Local 324 spending investment funds to support a lavish lifestyle that included luxury vehicles, thoroughbred racehorses, private jet junkets to Las Vegas and tropical islands, luxury sports events, real estate and an investment in a strip club. According to reports, approximately $100 million of the nearly $200 million in pension funds invested with Orecchio has been recovered, thus far.

Read the story here, here, here and here.

Read the criminal information here.

Tennessee Financial Advisor Accused Of $5.5 Million Ponzi Scheme

Aaron Donald Vallett, 32, of Brentwood, Tennessee, has been accused by the Securities and Exchange Commission of operating a Ponzi-type investment fraud scheme through his financial advisory firm, A.D. Vallett & Co. LLC, that bilked investors out of as much as $5.5 million. According to the SEC complaint, from September 2008 and April 2010, Vallett raised approximately $5.5 million from 19 investors through three unregistered offerings. Further, Vallett promised investors that they would receive "secured notes" for their investments with his firm, which were to be made in "various investments" including real estate. Instead, the SEC claims that Vallett spent a "substantial" portion of the investment funds on paying earlier investors returns and for personal expenses. The SEC obtained a temporary court order freezing the Vallett's assets. The firm's web site claims to be the "exclusive investment services provider" for the Nashville Predators professional hockey team. The SEC complaint alleges Vallett violated the Securities Act of 1933 and the Investment Advisors Act of 1940. No criminal charges have yet been filed. We note that FINRA, the Financial Industry Regulatory Authority, indicates multiple sanctions against Vallett, including a four suspension in 2008 and fines for various violations and infractions. He was also "permitted to resign" from a prior employer, Cambridge Way, Inc., for "misappropriation of proprietary material" and "violation of acknowledged company policy and code of ethics."

Read the story here, here, here and here.

Read the SEC complaint here.

Clearly a little due diligence would have revealed these prior bad acts for this character and no one should have invested with him.

South Florida Jeweler Charged With Operating $40 Million Ponzi Scheme

Luis Felipe Perez, 38, of Miami, Florida, has been charged by the Securities & Exchange Commission of operating a Ponzi-type investment fraud scheme that defrauded investors out of as much as $40 million. The SEC alleges that Perez, who has been charged with six counts of securities fraud, used his personal and family relationships to lure about 35 mostly Hispanic people to invest in his jewelry business, pawn shops in New York or in diamonds he held claimed to hold in a safety deposit box, promising returns of up to 10 percent per month. However, authorities believe Perez used the investment funds to pay earlier investors and to live a lavish lifestyle. Perez, who is president of Lucky Star Diamonds Inc. and Luis Felipe Jewelry Design Corp. reportedly began his fraudulent scheme in 2006 and continued until it fell apart in June 2009 when he could no longer repay investors. Perez' lavish lifestyle included a $3.2 million home, $1 million worth of jewelry, exotic vacations that cost him $200,000 a year, a private jet, expensive artwork and $100,000 in political contributions.

Read the story here and here.

Read the SEC complaint here.

New York Investment Advisor "To The Stars" Arrested & Charged With Fraud

Kenneth I. Starr, 66, of New York City, was arrested and charged last Thursday with wire fraud, fraud by an investment advisor and money laundering in connection with the alleged Ponzi-type investment fraud scheme that defrauded his clients as much as $30 million. According to prosecutors, Starr, through his firm Starr & Company, LLC, ran a complex set of schemes involving his son, his wife, Diane Passage, prominent New York Democratic Party politician Andrew Stein and "a former national official of a major political party," and "a partner at a prominent national law firm." Starr, no relation to Whitewater prosecutor Kenneth W. Starr, counted noteworthy Hollywood clients such as Wesley Snipes, Uma Thurman, Goldie Hawn, Al Pacino, Sylvester Stallone, Candice Bergen, Martin Scorsese, and Ron Howard. Other high profile clients reportedly include former William Morris chairman Jim Wiatt, photographer Annie Leibovitz, Jacob "Jacob the Jeweler" Arabov, illusionist David Blaine, heiress Rachel "Bunny" Mellon, publisher Robert Ziff, former Secretary of State Henry Kissinger and Caroline Kennedy. According to the complaint, Starr engaged is two types of fraudulent schemes: first, soliciting investments from his clients and then diverted the money to himself, his family and close associates; and second, making unauthorized transfers of client funds to himself and close associates. We note that Starr is an attorney by training and his wife, Dianne Passage is reportedly a former stripper and pole dancer who became his third wife.

Read the story here, here and here.

Read the indictment here.

Hat tip: Reader Doug

Update (3/3/11): Starr was sentenced to 7 1/2 years in prison. He had pleaded guilty last September to wire fraud and money laundering.

New York Man Accused Of Running $2 Million Ponzi Scheme

Jay M. Hoffman, 58, of East Meadow, New York, was arraigned last week on 22 counts of grand larceny and 2 counts of operating a scheme to defraud in connection with an alleged Ponzi-type investment fraud scheme that defrauded investors, including many family members and friends, out of at least $2 million. Hoffman plead not guilty to the charges. Prosecutors allege that through his company, Security Income Planners, Hoffman promised investors returns of up to 12 percent per year, but instead kept investor funds for himself or to make interest payments to earlier investors. Hoffman's scheme reportedly lasted some 20 years and involved more than 40 victims.

Read the story here and here.

Colorado Hedge Fund Manager Accused Of Operating $100 Million Ponzi Scheme

Sean Michael Mueller, 41, of Greenwood Village, Colorado, has been accused of operating an investment fraud scheme that bilked at least 30 investors out of as much as $100 million. Mueller, who operated Mueller Capital Management LLC, claimed he never lost money in eight years and the company purported to have returns of 12 percent to 25 percent per year. According to reports, the Mueller Over-Under Fund claimed $122 million in assets in December. However, in a handwritten note following his threatened suicide, Mueller referred to bank accounts totaling only $15 million indicating, "This is what is left." Last Thursday Mueller was talked down by police after he threatened to jump to his death from his office building. Mueller has been hospitalized and a judge has placed his company under regulator control.

Read the story here, here, here and here.

Nebraska Investment Advisor Pleads Guilty To Defrauding Investors In $6.5 Million Ponzi Scheme

Bryan Scott Behrens, 47, of Omaha, Nebraska, pleaded guilty to securities fraud charges admitting he bilked investors out of at least $3.5 million in a Ponzi-type investment fraud scheme. According to prosecutors, Behrens promised to invest client funds in Nevada real estate, but instead used the money for his businesses in Omaha, paid out money to early investments and used the rest for personal expenses. The SEC charged that from 2002 to 2007, Behrens operated a Ponzi-like investment scheme, raising $6.5 million from investors, including senior citizens, and misappropriating more than $3.5 million of those funds. He promised investors returns of up to 9 percent per year. Behrens was the owner of Bryan Behrens Company, Inc., 21st Century Financial Group and National Investments, Inc., as well as the owner of a local flower shop.

Read the story here.

Read the original complaint here.

Florida Man Accused In $880 Million Ponzi Scheme Case

Nevin K. Shapiro, 41, of Miami Beach, Florida, has been charged with money laundering and securities fraud in connection with allegedly operating a Ponzi-type investment fraud scheme that bilked investors out of some $880 million. Prosecutors allege that Shapiro used a Florida-based company he operated called Capitol Investments, USA, Inc., to lure investors who thought they were buying into a wholesale grocery distribution business. According to the SEC, Shapiro promised investors risk-free annual returns as high as 26 percent by persuading them to invest in a "grocery diversion" enterprise - a practice of buying low-cost groceries in one region of the country and reselling them in higher-priced markets. Instead, Shapiro looted the investment funds to pay for an extraordinary lavish lifestyle that included a $5.3 million Miami Beach mansion, $400,000 for courtside Miami Heat basketball tickets, a $1.5 million Riviera yacht, luxury cars, and to fuel his reported gambling habit, among other things. The scheme spanned nearly a 5 year period, from January 2005 to November 2009 when the scheme imploded.

Read the story here and here.

Read the SEC complaint here.

Update (7/19/10): Shapiro was formally indicted by a federal grand jury in New Jersey last Friday on one count of securities fraud, two counts of money laundering, one count of conspiracy to commit securities fraud, one count of conspiracy to commit wire fraud, and two counts of wire fraud.

Update (9/16/10): Shapiro pleaded guilty to the charges, admitting he defrauded investors out of as much as $880 million.

Hat tip: Reader Doug.

Florida Man Sentenced In Ponzi Scheme That Targeted Pennsylvania Residents

Sean Nathan Healy, 39, of Weston, Florida, was sentenced to 15 1/2 years in prison for operating a Ponzi-type investment fraud scheme that bilked Pennsylvania investors out of some $16.7 million. According to authorities, over the course of about 5 years, from 2003 until 2008, Healy accepted funds from investors meant to be invested in securities and commodities and used much of it to pay for a lavish lifestyle. Healy reportedly spent investor funds on such personal luxuries as a $2.4 million waterfront mansion with more than $2 million in improvements; $1.5 million in men’s and women’s jewelry; and numerous exotic vehicles and sports cars, including a Bentley and several Ferraris, Lamborghinis and Porsches worth more than $2.3 million. Healy was arrested last October and charged with 55 counts of wire fraud, mail fraud, money laundering and obstruction of justice. Healy plead guilty to two counts of wire fraud and one count of unlawful monetary transactions. Healy, a former bouncer dubbed by the media as the “King of Ponzi Bling,” operated an investment firm called Sand Dollar Investing Partners LLC to defraud approximately 50 investors. Healy's wife, Shalese Rania Healy, 37, also of Weston, Florida, was also named as a defendant in the case (pictured here with Sean Healy) since much of his assets purchased with the ill-gotten gains were put in her name.

Read the story here, here and here.

Read the original SEC complaint here.

Update: Petters Gets 50 Years For $3.65 billion Ponzi Scheme

Thomas "Tom" J. Petters, 52, of Wayzata, Minnesota, was sentenced to 50 years in prison for running a $3.65 billion Ponzi-type investment fraud scheme, one of the largest ever. Petters was convicted last December on all 20 criminal counts that he faced, including wire fraud, mail fraud and money laundering. The fraud and conspiracy case involved Minnetonka-based Petters Group Worldwide, LLC, his primary holding company, and Petters Company Inc., the investment arm of the group. Petters and his co-conspirators bilked investors who thought their investment money was being using to buy consumer electronics for resale to retailers such as BJ's Wholesale Club and Costco. Several other executives of the company, including Deanna Coleman, Robert White, Michael Catain and Larry Reynolds, who have all previously pleaded guilty in the case.

Read the story here, here and here.

Read FraudTalk's earlier posts on this story here, here, here, here and here.

Pennsylvania Money Manager Accused In $26 Million Ponzi Scheme

Donald Anthony Walker Young, 38, of Coatesville, Pennsylvania, was indicted Thursday on charges he defrauded investors out of some $26 million in a Ponzi-type investment fraud scheme. Specifically, Young was charged with one count of mail fraud and one count of money laundering. According to prosecutors, over at least a four year period, from 2005 to 2009, Young used investment funds entrusted to him through his investment firm, Acorn Capital Management, LLC, to finance a lavish lifestyle that included homes in Florida and Maine as well as a horse farm in Pennsylvania. Young is also accused of paying earlier investors out of new investment funds and creating false investment statements for clients to conceal his fraud. Young faces up to 30 years in prison, plus fines and restitution if convicted on both felony counts.

Read the story here, here and here.

Read the original SEC complaint here.

Minnesota Businessman Charged In Alleged $190 Million Ponzi Scheme Fraud

Trevor Gibson Cook, 37, of Apple Valley, Minnesota, was charged yesterday with operating a Ponzi-type investment fraud scheme that allegedly bilked as many as 1,000 investors out of at least $190 million. He faces one count of mail fraud and one count of tax evasion. Cook's scheme, which operated from January 2007 through July 2009, offered returns of as much as 12 percent on investments in a foreign-currency trading program with little or no risk, according to prosecutors. Instead of investing the funds as promised, Cook reportedly spent investment funds to pay returns to earlier investors in classic Ponzi style and used the rest to enrich himself with personal investments, real estate and to pay off large gambling debts. Cook was originally charged last November, along with Patrick "Pat" J. Kiley, 71, of Burnsville, Minnesota and a local conservative radio talk show host, of selling unregistered securities through a series of shell companies. The companies named in the SEC's original complaint include UBS Diversified Growth LLC, Universal Brokerage FX Management LLC, Oxford Global Advisors LLC, Oxford Global Partners LLC and four shell companies.

Read the story here and here.

Update (4/13/10): Cook plead guilty today to operating a $190 million Ponzi scheme.

Michigan Man Sentenced In $13.2 Million Ponzi Scheme

Richard Taft Johnson, 67, of Bloomfield Hills, Michigan, was sentenced to 8 years in prison for bilking investors out of some $13.2 million in a Ponzi-type investment fraud scheme. Prosecutors alleged that Johnson, through his company, Investor Planning Services, promised investors returns of as much as 40 percent per year through a low-risk program called the American Charitable Program. The scheme began in 1998 and lasted until 2009. There are about 130 known victims of Johnson's fraud. He plead guilty to "devising a Ponzi scheme and committing mail fraud in carrying it out."

Read the story here and here.

Read the DOJ announcements here and here.

New Mexico Real Estate Exec Accused Of Running $80 Million Ponzi Scheme

Douglas F. Vaughan, 62, of Albuquerque, New Mexico, and a prominent local real estate executive, has been accused by the SEC of operating a Ponzi-type investment fraud scheme that bilked investors out of some $80 million. According to the Securities and Exchange Commission, Vaughan, through his companies, The Vaughan Company Realtors and Vaughan Capital LLC, enticed investors with promissory notes with fixed rates of return between 10 and 25 percent for real estate investments involving distressed properties. Some 600 investors were defrauded, according to the SEC, dating back to 1993. Vaughan and his companies have reportedly filed for bankruptcy.

Read the story here and here.

Read the SEC complaint here

Michigan Man Sentenced For Operating $5 Million Ponzi Scheme

Raymond Frank Joseph, 55, of Bloomfield Hills, Michigan, was sentenced to 66 months in prison for operating a Ponzi-type investment fraud scheme that bilked investors out of at least $5 million. Joseph was found guilty by a federal jury after a two week trial on 36 felony counts, including three counts of wire fraud, nine counts of interstate transportation of stolen money or property, and twenty-four counts of conducting monetary transactions in criminally derived property. Between December 2002 and early 2007, Joseph was alleged to have solicited loans to invest in several business ventures. Instead, Joseph used the investment funds to pay returns to earlier investors and to for his own personal benefit. Joseph was also ordered to pay $2.2 million in restitution.

Read the story here and here.

Read the DOJ announcements here and here.

Former New York Foreign Exchange Trader Sentenced In $110 Million Ponzi Scheme

Michael Richard MacCaull, 38, of Northport, New York, a former foreign exchange trader, was sentenced to 188 months (15 1/2+ years) in prison for operating a Ponzi-type investment fraud scheme that bilked 272 investors out of some $110 million over an 7 year period. MacCaull and a co-defendant, Bradley David Eisner, 37, of Long Island, plead guilty in 2008 and have forfeited $28 million in assets. The court ordered MacCaull to pay additional restitution of $66 million. MacCaull and Eisner are alleged to have enticed investors through their company, Razor FX, Inc., claiming they were experts at foreign exchange trading. However, almost no trading occurred and investment funds went to pay returns to earlier investors and to maintain their opulent lifestyle. MacCaull was convicted in connection with an earlier investment fraud scheme involving Sterling Foster & Co., a now defunct New York boiler-room operation that manipulated stock prices. In 2002, MacCaull was sentenced to 15 months in prison.

Read the story here, here and here.

Read the original DOJ announcement here.