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.

Execs At NYC-Based Spongetech Charged With Financial Statement Fraud & Obstruction

Two top executives of New York City-based Spongetech Delivery Systems Inc. were arrested Wednesday and charged with fraud in an alleged scheme to defraud investors by reporting false financials and grossly overstated sales figures. Steven Y. Moskowitz, 45, of Flushing, New York, Spongetech's chief operating officer and chief financial officer, together with Michael Metter, 58, of Greenwich, Connecticut, its chief executive officer, were charged with conspiracy to commit securities fraud and with obstruction of justice by federal authorities. They are alleged to have engaged in a "pump and dump" scheme and falsified company financials by claiming revenues from nonexistent companies. Prosecutors claim that SpongeTech created five phony companies that accounted for 99 percent of its sales, including: SA Trading Co., USA Asia Trading, Dubai Export Import Co., New Century Media and Fresco Sales Corp.

Read the story here and here.

Hat tip: Reader Doug

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.

Colorado Investment Fraud Artist Scams Investors Again To Pay For Lawyer

Hamilton Alan Bird of Colorado Springs, Colorado, was indicted yesterday on charges he defrauded investors out of nearly $700,000 which was used to pay for his defense attorney in a prior investment fraud scheme that bilked 350 investors out of some $7.5 million. Bird, who was indicted in the earlier case in May 2006, pleaded guilty to fraud charges in March 2008 and was sentenced in September 2008 to 24 years in prison. A $12.6 million judgement was also entered against Bird in May 2007 in the same case. The more recent investment swindle involves a Nevada-based company, EquityFX, Inc., through which Bird lured investors for purported high return foreign exchange currency investments. According to authorities, the scheme lasted from January 2006 through September 2008 wherein he only invested a portion in foreign exchange accounts and used the rest to pay earlier investors, his defense attorney and to enrich himself.

Read the story here, here and here.

Read the indictment here.

Hat Tip: Reader Joe

Colorado Man Pleads Guilty To Operating Ponzi Scheme That Bilked $30+ Million From Investors

Mark Jay Jackson, 55, of Denver, Colorado, pleaded guilty to charges he operated a Ponzi-type investment fraud scheme that may have bilked more than $30 million from investors over a nearly 15 year period. Prosecutors allege that starting in April 1995 until June 2009, Jackson promised investors returns of 12 to 36 percent from his activities as a day trader. Instead, he is alleged to have used investment funds to enrich himself and to pay phony returns to other investors. Jackson is due to be sentenced on May 25 on the single racketeering charge he plead guilty to Monday. Jackson's scheme unravelled last summer and he was indicted in December on 59-counts of racketeering, securities fraud, theft and forgery.

Read the story here, here and here.

Read the criminal indictment here.

Update: New York Ponzi Schemer Sentenced To 9 Years

Edward T. Stein, 59, of Manhattan, New York, was sentenced to 9 years in prison this week for securities fraud and wire fraud in connection with the defrauding of as much as $45 million from at least 100 investors over a period of more than 10 years. Stein was the head of Roslyn, New York-based Edward T. Stein Associates Ltd. He pleaded guilty last June, admitting that between 1998 and 2009, he fraudulently solicited investors to purchase interests in several funds and partnerships he controlled by falsely assuring them that he would make investments on their behalf with the money they provided. Instead, he used the funds for his own purposes and to pay earlier investors. The SEC took action in April 2009, freezing his assets and charging him with securities fraud.

Read FraudTalk's original post on this story here.

Read the DOJ announcement here.

Arts Patron Sentenced For Bilking Investors Out Of $22 Million

Alberto W. Vilar, 69, of New York and San Francisco, was sentenced to 9 years in prison for defrauding some 1,400 investors out of about $22 million. Vilar was originally arrested in May 2005 on charges that included conspiracy to commit securities fraud, mail fraud, wire fraud and investment fraud. The allegations stem from charges that he misappropriated millions in investment funds entrusted to his firm, Amerindo Investment Advisors Inc. In November 2008, Vilar was convicted on 12 felony counts. Vilar was also ordered to pay $21.9 million in restitution. He was known for large gifts to the arts. A co-defendant, Gary Alan Tanaka, 66, was sentenced to five years in prison for his lesser role in the scheme.

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

Read the story here and here.

North Carolina Man Pleads Guilty In $25 Million Ponzi Scheme Case

J.V. Huffman Jr., 46, of Conover, North Carolina, pleaded guilty on Tuesday to 14 counts of securities fraud and 14 counts of obtaining property by false pretenses for his role in a Ponzi-type investment fraud scheme that defrauded more than 500 investors out of some $25 million over the course of about 9 years. Upon his guilty plea, Huffman, whose scheme wiped out the savings of many of his victims, was sentenced to more than 30 years in prison. Through his company, Biltmore Financial Group Inc., Huffman lured potential investors with the promise of returns of between 10 to 15 percent on the purchase and sale of mortgages. According to prosecutors, Huffman spent his ill-gotten gains on a lavish lifestyle, including purchasing luxury cars and trucks to investing in properties across the Carolinas, and purchasing a luxury box at Bank of America Stadium, among other personal items. His victims included many members of his own church and bible study group.

Read the story here and here.

Read the original SEC announcement of the complaint here.

Louisiana Businessman Charged In $20 Million Alleged Ponzi Scheme

Matthew B. Pizzolato, 26, of Tickfaw, Louisiana, has been charged in a 64-count indictment with securities fraud, mail fraud, wire fraud, money laundering, witness tampering and obstruction of justice in connection with an alleged Ponzi-scheme that defrauded investors out of some $19.5 million. About 160 mostly elderly individual investors were defrauded in the scheme, according to prosecutors. According to the criminal complaint, Pizzaloto operated Gulf Region Guaranty, Inc. and numerous related entities by offering certificates of deposit and treasury bills at rates higher than market value and marketed them as "safe," "guaranteed" or "conservative." Instead of investing the funds as advertised, Pizzolato made high-risk futures investments and other risky ventures as well as spent the money on a lavish personal lifestyle and for his own personal use.

Read the story here, here and here.

Update (4/4/10): Pizzolato pleaded guilty Thursday to 27 charges including mail fraud, wire fraud money laundering, securities fraud, and witness tampering.

Alabama Bookkeeper Charged With Embezzling Nearly $900K

Daphne Miller Brooks, 50, of Woodstock, Alabama, has been indicted on charges she embezzled $878,480 from Equity Development Corporation, a subsidiary of McDonald Management, Inc., where she had been employed as a manager and bookkeeper. The 14 count indictment includes charges of mail fraud, securities fraud and under-reporting income on federal income tax forms stemming from her alleged scheme that lasted from 2004 to 2008. The indictment alleges Brooks misappropriated the funds, in part, by making unauthorized credit card payments for her own benefit.

Read the story here .

Read the DOJ announcement here.

Update: Silicon Valley Venture Capitalist Sentenced In Securities Fraud Case

William "Boots" Del Biaggio III, 42, of Menlo Park, California, was sentenced to more than 8 years in prison for defrauding investors out of millions, in part, to purchase a professional hockey team franchise. Last February, Del Biaggio pleaded guilty to one charge of forging financial documents to obtain $110 million in loans from several banks and wealthy individuals. Prosecutors alleged that he used the money to purchase a controlling interest in the Nashville Predators. Del Biaggio is quoted as telling the court, "I'm incredibly sorry. I can't begin to express how sad and ashamed I am...I'm losing sleep, and I'm scared and I truly understand what the victims are going through."

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

Read the story here and here.

Boo hoo hoo...

Update On Florida Ponzi Scheme Case: Nadel Is Indicted On 15 Fraud Counts

Arthur G. Nadel, 76, of Sarasota, Florida, has been formally indicted on 15 counts of securities fraud, wire fraud and mail fraud in connection with his alleged Ponzi scheme investment fraud involving his Scoop Management Inc. money management company. Prosecutors alleged that he bilked at least 350 investors out of as much as $360 million. The indictment includes six counts of securities fraud, eight counts of wire fraud and one count of mail fraud. Nadel allegedly told investors that his securities trades generated $271 million in gains when in fact they had a net loss. Nadel was charged in January by the SEC with securities fraud and Nadel went missing. He ultimately turned himself into authorities after two weeks on the run. He faces as much as 280 years in prison if convicted on all counts.

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

Read the story here.

Update On Tennessee TARP Ponzi Schemer: Grigg Is Indicted

Gordon Burns Grigg, 46, of Nashville, Tennessee was formally indicted last week on charges he operated a Ponzi scheme with firm, ProTrust Management Inc., defrauding investors out of as much as $6.5 million with fraudulent investments in the Troubled Asset Relief Program (TARP). In January, the SEC obtained a court order freezing the assets of Grigg and ProTrust. According to the SEC complaint, Grigg represented himself as a financial planner and investment adviser, but neither he nor his firm is registered with the agency or a state regulator. He fraudulently represented to clients, whose funds he had control over, that they were invested in the TARP and guaranteed returns of as much as 12.5 percent. The Grigg case is the first TARP related fraud case being prosecuted by Neal Barofsky, the special inspector general for TARP - one of some 20 criminal probes he has initiated. Attorneys for Grigg say he will plead guilty to the mail fraud and wire fraud charges.

Read FraudTalk's original post on this story here.

Read the story here, here and here.

Update On Massive Ohio Corporate Fraud Case: National Century's Paulsen Sentenced To 30 Years

Lance K. Poulsen, 65, the former founder and CEO of Dublin, Ohio-based National Century Financial Enterprises, was sentenced Friday to 30 years in prison for defrauding investors to the tune of $1.9 billion. He was also ordered to pay $2.38 billion in restitution. According to prosecutors, Poulsen fabricated data, transferred funds between accounts to hide shortfalls and misled the investors concerning the financial health of the company. One of Poulsen's accomplices, Rebecca S. Parrett, 60, was sentenced to 25 years in prison for her part in the scheme. She remains a fugitive. A third defendant, Karl A. Demmler, 57, one of the founders of National Century, was sentenced to 7 years in prison for his involvement in the fraud. Poulsen was originally found guilty last October on multiple counts of securities fraud, wire fraud and money laundering. National Century collapsed in 2002.

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

Read the story here and here.

New York City Art Dealer Charged In $88 Million Fraud

Lawrence B. Salander, 59, of Millbrook, New York, and the proprietor of New York City-based Salander-O'Reilly Galleries, LLC, was arrested and charged with fraud for allegedly selling artwork and without permission or selling the same artwork more than once, and keeping the cash. Salander's high-end art dealership filed for bankruptcy in 2007 after numerous customers, including high profile individuals including tennis star John McEnroe, publisher Arthur Carter, and actor Robert Di Niro, sought to recover either their art or their funds. Salander-O'Reilly Galleries was shuttered by authorities in October 2007. Meanwhile, Salander, his wife, Jill and their seven children lived in a lavish 9,000 square foot townhouse in Manhattan and an estate up in Duchess County, New York. Prosecutors allege Salander bilked 26 victims between July 1994 and November 2007 out of some $88 million with his scheme. He was charged today with grand larceny, forgery and securities fraud.

Read the story here, here and here.

We note that since 2005, quite a few lawsuits were filed against Salander and his gallery to recover artwork and monies owed for artwork allegedly sold. This guy lived a lavish lifestyle while screwing over all his clients. I say good riddance. What goes around comes around.

Indiana Woman Charged With Fraud & Misappropriation Of Invesment Funds

Dorothy M. Geisler-Tragardh, of McCordsville, Indiana, was charged Thursday with one count of securities fraud and 10 counts of theft for allegedly bilking investors out of more than $2.5 million in a coal-gasification project. The scheme lasted 2 years, according to prosecutors, wherein Geisler-Tragardh fraudulently sold shares of Praxis Resources Partners, LLC, depositing the funds directly into her own accounts for her own benefit. Prosecutors have frozen her assets and seized such assets as Picasso artwork, a luxury waterfront home, a Rolex watch, a diamond, a Mercedes-Benz, two other cars and a boat. She has plead not guilty.

Read the story here, here and here.

2 Aides To Former NY Comptroller Hevesi Indicted On Kickback Charges

Hank Morris, formerly a political advisor and fundraiser to New York Comptroller Alan Hevesi (D-NY), and David Loglisci, formerly the chief investment officer in the comptroller's office, have been charged with 123 fraud counts, including "enterprise corruption," securities fraud, grand larceny, bribery and money laundering. The Securities & Exchange Commission has also moved to seize more than $35 million in assets controlled by Morris and Loglisci. The two are accused to accepting "placement fees," aka kickbacks, on more than 20 deals between 2003 to 2006, for steering state pension fund investments to certain companies. According to the SEC complaint and other reports, a number of firms, including HFV Management, Liberty Oak Capital Fund, Odyssey Investment Partners, Access/NY European Fund, the Aldus New York Emerging Fund, GKM/NY Venture Capital Fund, Olympia John Street Fund, Paladin Homeland Security Fund (NY), Pequot Diversified Offshore Fund/Pequot Private Equity Partners Fund IV, and Strategic Co-Investment Partners and the Carlyle Group, paid the placement fees to Morris and Loglisci. Morris and Loglisci have pleaded not guilty to the charges. Hevesi, pictured here, resigned in early 2007 after being convicted of using state workers as drivers for his wife.

Read the story here, here and here.

Madoff Accountant Charged With Fraud

David G. Friehling, 49, of Pomona, New York, and Bernard Madoff's longtime accountant, was arrested on fraud charges today. Friehling, the sole practitioner at Friehling & Horowitz, CPAs, PC, a small accounting concern located in a non-descript building north of New York City, had been Madoff's accountant since 1991. Friehling is specifically charged with securities fraud, aiding and abetting investment adviser fraud and four counts of filing false audit reports with the SEC. He earned as much as $186,000 per year in that capacity, according to reports. The firm had been co-owned by Friehling and his father-in-law, Jerome Horowitz, who turned over the business to Friehling some years ago and passed away last week at the age of 80. He faces up to 105 years in prison if convicted on all charges. Meanwhile, Friehling and his wife may have lost as much as $14 million in investment accounts held at Bernard L. Madoff Investment Securities LLC.

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Read the SEC's announcement here.

Madoff Pleads Guilty To All 11 Charges

Bernard L. Madoff, 70, of New York City, pleaded guilty today to a 11 count fraud Information, admitting that, as head and sole principal of of Bernard L. Madoff Investment Securities LLC, he defrauded thousands of clients out of at possibly as much as $65 billion. The Information included charges of securities fraud, investment adviser fraud, mail fraud, wire fraud, three counts of money laundering, false statements, perjury, false filings with the SEC, and theft from an employee benefit plan. He faces up to 150 years in prison, plus fines. At his guilty plea hearing today, he is quoted as saying, "I am actually grateful for this opportunity to publicly comment about my crimes, for which I am deeply sorry and ashamed." I cannot adequately express how sorry I am for my crimes." He also said that he is “painfully aware” that he has “deeply hurt many many people.”

Read FraudTalk's latest post on this story here.

Read the story here, here and here.

Arizona Attorney Pleads Guilty To "Pump & Dump" Stock Manipulation Schemes

David B. Stocker, 49, of Phoenix, Arizona and an attorney by training, pleaded guilty to securities fraud charges admitting that he defrauded investors in a number of "pump & dump" stock manipulation schemes involving 19 publicly traded companies. Those companies include: eDollars Inc; Emerging Holdings Inc.; MassClick Inc.; China Score Inc.; American Television and Film Company Inc.; Auction Mills Inc.; Custom-Designed Compressor Systems Inc.; Ecogate Inc.; Media International Concepts Inc.; Vanquish Productions Inc.; AVL Global Inc.; Motion DNA Corp.; PokerBook Gaming Corp.; TKO Holding Ltd; Body Scan Inc.; Integrity Messenger Corp.; Beverly Hills Film Studios; IFINIX Inc.; and V3 Global Inc. Stocker had been the subject of three SEC actions - 2 in 2007 and 1 in 2008 - for his involvement in penny stock fraud schemes involving some of these companies. In at least one case, Stocker had a co-conspirator, Phillip W. Offill Jr., a Texas lawyer, who allegedly set up a sham corporation at Stocker's direction. Stocker is set to be sentenced on November 6, 2009 and faces up to 5 years in prison, plus a fine of $250,000 for his involvement in these stock manipulation frauds.

Read the story here.

Read the DOJ's announcement here.