Articles Tagged with ponzi scheme

San Diego-based investment advisor, Christopher Dougherty has been arrested for allegedly defrauding mostly senior investors in a multi-million-dollar Ponzi Scheme. The District Attorney’s office charged Mr. Dougherty with 82 felonies that include grand theft, financial elder abuse and securities fraud for activity between 2015 and 2018. According to allegations, Dougherty offered his clients the “opportunity” to invest in his private companies and non-existent tax-free private placements, promising around 5% in quarterly dividends. Meanwhile, Dougherty allegedly used investor money for his expenses and to pay some falsified “returns” to maintain the scam. For this alleged conduct, the SEC has charged Christopher Dougherty, along with his entities, C&D Professional Services, JTA Farm Enterprises, and JTA Real Estate Holdings for securities laws violations. Upon investigation, our securities fraud lawyers find many similarities between the alleged activities and other Ponzi Schemes.

A Ponzi Scheme is a type of investment fraud that uses investors’ money to pay falsified “returns” to other investors. The falsified returns provide the investors with the illusion that their money is producing genuine profits from investments. In reality, Ponzi Scheme perpetrators use the money meant for investments on personal expenses and maintaining the fraud, as suggested with this case. Ponzi Schemers usually gain the trust of their unsuspecting victims to get the funds. All Ponzi Schemes end when the perpetrator is not able to pay the investors their requested money, as seen with Mr. Dougherty. Eventually, there are not enough new funds coming in that can be used to maintain the Ponzi Scheme.

The SEC complaint alleges that Mr. Dougherty raised over $7 million through providing fraudulent advisory services through his firm, C&D Professional Services, Inc. Investors were allegedly offered the opportunity to invest in his organic beef ranch, a marijuana cultivation plan, and real estate holdings. Rather than using the investor funds to generate profits, Mr. Dougherty allegedly just shuffled the money around at his discretion.  Mr. Dougherty allegedly used received investor funds to pay falsified returns to others, including payments to anyone who complained. Additionally, Dougherty spent the money on traveling, home remodeling, college tuition, and other personal expenses.

A Texas former financial advisor, Christian radio host, author, and self-identified “Money Doctor” Neil Gallagher has been arrested and charged by the SEC for allegedly running a $19.6 million Ponzi Scheme targeting elderly retirees, according to reports. Between December 2014 and January 2019, Gallagher allegedly used religion to solicit and misappropriate the funds of 60 senior investors. The recently unsealed SEC civil complaint alleges that William Neil “Doc” Gallagher using his companies, Gallagher Financial Group and W. Neil Gallagher, Ph. D Agency, Inc. promised guaranteed-risk free returns in a non-existent investment product titled, “Diversified Growth and Income Strategy Account.” Instead of investing the money as promised, Gallagher allegedly used their money to fund his lifestyle and pay falsified returns to other investors, in a typical Ponzi-Scheme fashion.  Our Ponzi fraud law team finds the details of the egregious allegations in the SEC complaint horrible, but not atypical in affinity frauds.

Securities attorney Jenice Malecki has extensive knowledge on similarly alleged affinity frauds, having provided her insight on a religious-based Ponzi Scheme to CNBC’s white-collar crime show, American Greed. Religious fraud is a type of affinity fraud, in which the perpetrator target members of identifiable groups, with shared commonalities like race, age, and religion. The FBI has been investigating affinity fraud instances amounting to billions of dollars in projected losses. Additionally, the true prevalence of affinity fraud cannot be fully counted as group members tend to not report the activity to authorities for proper legal redress, especially within religious communities. In some states, like Utah, affinity fraud is so common that the legislature has an online white-color crime register. Fraudsters often target religious communities because of the members’ shared trust, even without the relevant facts. Religious investors are at an even higher risk when the fraudster intertwines their religious values with their deceitful sales pitch, as seen in the activity alleged here.

According to the SEC complaint, Gallagher allegedly raised at least $19.6 million from investors while pretending to be a licensed professional, despite that no longer being the truth. Gallagher allegedly offered an investment product that could provide returns that ranged between 5% and 8% each year. The complaint details that the investment product was supposed to be comprised of U.S Treasury Securities, publicly-traded stock, fixed-index annuities, life settlements, and mutual-fund shares, but Gallagher only purchased a single $75,000 annuity. It further alleges that instead of making genuine investments, Gallagher is alleged to have used $5.8 million to repay investors and $3.2 million for his own personal expenses. As of January 31, 2019, Gallagher allegedly depleted nearly all of the millions provided by his elderly victims who ranged in age between 62 and 91 years old. Our investor fraud team finds it to be in particularly devastating that victims of alleged Gallagher’s Ponzi Scheme are unlikely to re-earn their stolen funds.

A Ponzi Scheme is a type of investment fraud that pays purported “returns” to current investors from proceeds received from new investors, rather than through genuine investments. Once the fraudster stops receiving new money or investors request too much of their money back, the Ponzi Scheme falls apart. The term for Ponzi Scheme is from a famous 1920s con man, Charles Ponzi who redistributed investor funds for international reply coupons to himself and other investors. More recently, thousands of investors, many of whom were elderly lost their money in a billion-dollar Ponzi Scheme perpetrated by the Robert Shapiro Woodbridge Group. Not all Ponzi Schemes are as large and notorious as that committed by Bernie Madoff. Many more Ponzi Schemes happen on a much smaller basis and go undetected.

Malecki Law has handled numerous Ponzi cases: McGinn Smith, Robert Van Zandt, Hector May, Illume, and Steven Pagartanis, just to name a few. We are available to review your situation at no cost. Catching these things early inures to your benefit. Investors can fight to recoup their losses from a Ponzi Scheme committed under a FINRA registered firm through arbitration.

Our securities fraud law team aims to equip investors with the knowledge to spot not only Ponzi Schemes but other fraudulent investment opportunities as well. Everyone should be aware of the following signs that could indicate a Ponzi Scheme.

Former President and CEO of a luxury real estate development company in White Plains pled guilty to federal charges after allegedly orchestrating a 58-million-dollar Ponzi Scheme. Last week, Michael D’Alessio pled guilty to one count of wire fraud and one count of concealing assets from a bankruptcy court following his arrest in August. Michael D’Alessio reportedly solicited investor funds for investments in luxury real estate development projects in Westchester, Manhattan and the Hamptons for years. In return for their money, investors were promised monthly interest payments and shares in the properties. Instead, Michael D’Alessio funneled investor money into multiple shell companies to repurpose at his leisure in a Ponzi-like fashion.

Michael D’ Alessio allegedly misappropriated investor funds that should have been used for investments in real estate through his company from 2015 until April 2018. Michael D’Alessio’s former company, Michael Paul Enterprises reportedly specialized in the design, construction, and management of commercial as well as residential real estate. As part of the alleged Ponzi-scheme, investors were offered shares in real estate properties with guaranteed monthly interest payments and profits. Our attorneys specializing in Ponzi Schemes know that any promises of guaranteed returns should usually raise a red flag.

In addition to the suspicious promises, our investment fraud attorneys find that Michael Alessio’s alleged behavior is indicative of your typical Ponzi Scheme perpetrator. In Ponzi schemes, a perpetrator solicits new investor money to pay falsified returns to existing investors. It is alleged that Michael D’Alessio created a limited liability company for each new property to offer shares. Michael D’ Alessio did not keep investor money within the appropriate companies as expected. Rather, Michael D’Alessio reallocated investors’ individual property’s money to cover shortages in separate ones as well as pay his personal expenses. For instance, Michael D’Alessio used investor money to pay off significant gambling debts.

FINRA barred financial advisor Dawn Bennet, from Chevy Chase, Maryland was reportedly convicted for misappropriating client funds in a multimillion-dollar Ponzi Scheme that targeted elderly and financially unsophisticated investors. A Ponzi Scheme is a type of investment fraud that solicits investor money for non-existing investments. Between, December 2014 and July 2017, Ms. Bennett allegedly raised 20 million dollars from 46 investors through the unregistered offer of securities in her retail sports apparel business, DJB Holdings LLC, (“DJ Bennet”).  This past Wednesday, a jury convicted Ms. Bennett on all 17 federal charges including securities fraud, wire fraud, and bank fraud, according to the United States Attorney’s Office, District of Maryland. Ms. Bennet’s alleged Ponzi Scheme received heavy media attention after the FBI found evidence suggesting that she casted “hoodoo” spells intended to silence SEC investigators.

Dawn Bennett (CRD#1567051) worked as a FINRA registered broker and investment adviser before getting barred by the self-regulatory agency, according to her BrokerCheck records. Within her 28 years in the securities industry, Dawn Bennett was registered with Wheat, First Securities, Inc. (03/1987-08/1996), Legg Mason Wood Walker, Inc. (08/1996-02/2006), CitiGroup Global Markets Inc. (02/2006), Royal Alliance Associates, Inc. (02/2006-10/2009), and Western International Securities, Inc. (10/2009-12/2015).  FINRA barred Ms. Bennett from the industry after failing to show up to an administrative hearing.

The Securities and Exchange Commission also charged Dawn Bennett for violating federal securities laws in connection with her alleged Ponzi Scheme. A SEC amended complaint filed last year also lists her business’ CFO, Bradley Mascho, from Frederick, Maryland in addition to Dawn Bennett and her entity DBJ Holdings, LLC. A few months ago, Mr. Mascho pled guilty to charges in a plea bargain that capped his maximum prison term at ten years.

Three men are facings charges by the SEC and federal prosecutors over allegations of running a $364 million in one of the largest Ponzi Schemes found in the Washington D.C region. A federal grand jury indicted the three alleged perpetrators, Kevin Merrill of Maryland, Jay Ledford of Texas and Cameron Jezierski of Texas in a Maryland court. The charges leading to their arrest include wire fraud, identity theft, money laundering, and conspiracy, according to the U.S attorney’s office. They falsely represented themselves as financial professionals selling credit portfolios to unsuspecting investors. Meanwhile, most of the investor money was pocketed or used to pay existing investors. The alleged victims include individuals, family offices, and investment groups across the nation. Investment fraud attorneys see parallels between this case and the textbook example of a Ponzi Scheme.

Alleged Ponzi Schemers Kevin Merrill, Jay Ledford, and Cameron Jezierski allegedly ran a multi-million-dollar scheme to defraud investors using consumer debt portfolios, according to the indictment. Consumer debt portfolios consisted of outstanding debt owed to consumer lenders like banks and student loan lenders. It is alleged that starting in January 2013, the three men collected investor money through offering investments in consumer debt portfolios. The investing victims were allegedly promised profits from successful “flips” or collections from consumer payments.  The indictment further alleges that the men shielded their fraudulent activity from investors through the creation of falsified documents and companies. The investors allegedly received collection reports, consumer debt portfolio overviews and sales agreements, bank wire transfer records and bank statements containing falsified information.

According to the indictment, most of the money was not invested but used to maintain their elaborate Ponzi Scheme, unbeknownst to the victims. A Ponzi Scheme is an investment fraud that solicits people to invest in non-existent investments. New investor money ends up being used to produce “returns” to existing investors to maintain the Ponzi Scheme and fund their lavish lifestyle. The Ponzi Schemer will distribute falsified documents containing inaccurate information about their nonexistent investments. The schemes will spread as investors bring more people on board based on their positive returns in the beginning. As more investors join, Ponzi Schemers, such as the three men receive more money to fund their lavish lifestyle. Notably, according to the indictment in the Baltimore case, $73 million of investor funds went to personal expenses that included high-end cars, expensive homes, and jewelry. Additionally, the accused allegedly spent the money gambling at casinos and other luxuries to sustain their lavish lifestyles.

Investors are encouraged to watch out for “false prophets” that commit affinity fraud by targeting members of religious communities. CNBC posted an article about rampant religious-based fraud with securities attorney Jenice Malecki’s commentary for tonight’s new episode of true crime series American Greed. The episode, entitled “An Ungodly Scammer” will feature the story of convicted multimillion-dollar Ponzi Scheme fraudster Ephren Taylor, who targeted churchgoers. Ephren Taylor pleaded guilty to conspiracy to commit wire fraud and sentenced to 235 months. In an interview for tonight’s premiering American Greed episode, Jenice Malecki comments on Ephren Taylor’s religious fraud with a warning for investors to be on the lookout for affinity fraud.

Ephren Taylor collected millions of dollars by traveling to megachurches in 43 states to solicit investors in his low-risk investments as part of his “Building Wealth” tour. In his visits, Ephren Taylor spoke of his status as a self-made multimillionaire from a young age to represent his credibility. Investors listened and believed as Ephren Taylor used religion to garner their funds through his “prosperity gospel” sales pitches. Ephren Taylor claimed to sell investors high yield promissory notes that would finance socially responsible ventures that included low-income housing projects. Instead, provided funds were being allocated to Ephren Taylor’s personal expenditures and occasional false “returns” to existing investors, as part of a Ponzi Scheme.

Now, victims of Ephren Taylors’ Ponzi Scheme are left distraught and defrauded out of millions of dollars in life savings after falling prey to his affinity fraud. Affinity fraud refers to an investment scam that targets members of identifiable groups based on shared commonalities. The affinity fraud perpetrator will leverage represented membership within the group to exploit trust and sell a fraudulent investment. Jenice Malecki told CNBC that in affinity situations, people would tend to be comfortable enough to blindly trust those that share membership within their church or ethnic communities. A famous example of this is Bernie Madoff’s Ponzi Scheme which raised billions through targeting Jewish communities.

While marijuana-related investments grow in popularity, the SEC has reportedly received more associated complaints from investors. As a result, the Securities and Exchange Commission warns individuals to be mindful of certain risks before investing in marijuana-related companies. The SEC released an investor alert with this warning after medical marijuana company owner, Richard Greenlaw settled charges for allegedly offering and selling unregistered securities to 59 investors.  Signs of fraud reportedly include unlicensed, unregistered sellers; guaranteed returns; and unsolicited offers. Chiefly, Richard Greenlaw was not registered nor licensed to sell his marijuana-related investments with the Securities and Exchange Commission.

The SEC complaint, filed with the United States District Court of Maine charged the owner of NECS, Richard Greenlaw and his 20 cannabis-related entities for violating the registration provisions of federal securities laws. The 20 cannabis-related entities charged in the SEC complaint are NECS LLC, MaineCS LLC, VTCS LLC, MassCS LLC, NHCS LLC, RICS LLC, CTCS LLC, FLCS LLC, ILCS LLC, IACS LLC, LOUCS LLC, MICS LLC, MNCS LLC, NDCS LLC, NJCS LLC, NYCS LLC, OHCS LLC, PennCS LLC, UPCS LLC, and WICS LLC. It is alleged that Richard Greenlaw posted advertisements on Craigslist to offer and sell subscription agreements for securities in his companies. In response to these charges, Mr. Greenlaw agreed to pay $400,000 and accept permanent injunctions from further violations of  Section 5(a) and 5(c) of the Securities Act of 1933.

Federal securities laws mandate that any offer and sale of a security must be registered with the SEC. A company registers a security by filing financial statements, business descriptions and other legally required information with the SEC. Otherwise, the securities offering must be found to be subject to exemption under Securities Act 1933. Offerings of securities that can be exempt include those of limited size, intrastate, private and more. Exemption requirements may also require that securities be only sold to accredited investors. Thus, investment salespersons would be prohibited from selling exempted securities to any investors who do not meet the requirements. In this case, Mr. Greenlaw’s marijuana-related investments were not registered nor qualified for exemption.

Barred FINRA-registered broker Steve Pagartanis, of Suffolk County, N.Y, is facing charges by the SEC and the Suffolk County District Attorney’s Office for allegedly running a multi-million-dollar Ponzi Scheme that bilked long-term investors, many of them seniors, for 18 years. In May 2018, the SEC filed a civil complaint against Steven Pagartanis alleging that he solicited and sold securities using falsified statements; defrauding at minimum nine investors out of $8 million. Mr. Pagartanis allegedly told investors that he would invest their funds in a publicly-traded or private land development company. Steven Pagartanis was arrested on July 25, 2018, with charges related to securities fraud as well as mail and wire conspiracies in connection with this alleged Ponzi scheme. Before being barred from acting as a broker by FINRA, Steve Pagartanis (CRD#1958879) was most recently a registered broker with Lombard Securities Incorporated. Our securities fraud attorneys are currently investigating into Steve Pagartanis’s alleged Ponzi Scheme on behalf of investors who lost their irreplaceable life savings.

Victims claimed to have trusted Mr. Pagartanis after having done business with him for years and entrusted hundreds of thousands of dollars, including retirement and elder care earmarked money.  Mr. Pagartanis reportedly claimed that the money would purchase investments in Genesis Land Development. His victims claim that Mr. Pagartanis promised that their investments in the real estate development company would produce 4.5% in guaranteed interest with annual dividends. On the contrary, Mr. Pagartanis allegedly never invested the money and deposited it into his personal bank accounts, as also alleged in the SEC complaint. Now, victims of Mr. Pagartanis’s alleged Ponzi Scheme are left distraught, with no other choice but to hold the appropriate parties responsible – in particularly his brokerage firm Cadaret Grant & Co.

Our investor fraud attorneys see many parallels between Steve Pagartanis’s alleged fraudulent actions and typical Ponzi Scheme activity. A Ponzi Scheme is a kind of investment fraud in which a perpetrator pays “false returns” to existing investors using new deposits. Ponzi Scheme perpetrators will use some of the money to fund their lavish lifestyles. As is often the case in Ponzi Schemes, Steve Pagartanis relied on built up trust gained over the years from his mostly elderly clients. Eventually, Steve Pagartanis allegedly failed to make an expected payment to a client, which most probably unveiled the fraud. Ponzi schemes are almost always finally revealed when the fraudulent perpetrator could no longer make a payment, according to securities fraud attorneys.

Malecki Law attorney Jenice Malecki was on the set of business news network CNBC’s documentary true crime series American Greed yesterday to speak about affinity fraud for an upcoming episode. American Greed provides in depth-reporting exposing Ponzi Schemes, mortgage fraud, art heists, identity theft, and other shocking things people have done for money. For twelve seasons, American Greed has examined the most extensive corporate and white-collar crimes in American history. The documentary series currently airs new episodes on the CNBC network on Monday nights at 10 PM EST.

In the interview, Jenice Malecki leveraged her knowledge as an experienced securities attorney to answer questions about affinity fraud. Affinity fraud is a type of investment scam that targets members of the same identifiable groups based on religion, ethnicity, age and other commonalities.  Typically, an affinity fraud perpetrator will be or at least pose as a member of the group to exploit trust and relationships. Otherwise, the fraudster might elicit the help of a group member to orchestrate the scam, which is frequently a Ponzi or pyramid scheme.

In this segment, Jenice Malecki describes affinity fraud along with the telltale signs that should induce concern. Notably, Jenice Malecki emphasizes the importance for investors to do their due diligence in gathering information before investing. With this in mind, the seller should be able to provide information regarding the investment’s purpose, objective data, and history. Furthermore, Jenice Malecki offers helpful tips for anyone suspecting affinity fraud to respond appropriately to the situation.