Most Recent
AdSurfDaily Agape agent American Integrity Aronson asset sales Attorney av bar reg baker bank bank of america Bankruptcy baumann bermudez black diamond blackwell bridge loan bull cattle CD celebrity cftc charity china China Voice church cityfund claims claims process clawback commission commodities commodity pool computer program congress Crown Forex currency death sentence denver diamond bar disgorgement Distribution Dodd-Frank donnan Dreier dunhill e-bullion elderly E-M Management SEC england Fairfield family FBI FDIC Fees female ponzi scheme financial advisor fine FINRA football forex fraud fufta fugitive Full Tilt gift card guilty plea GunnAllen hawaii Heckscher HSBC india invers forex janvey John Morgan JP Morgan kansas ken bell kenzie las vegas lawsuit lawyer libya Lifland machado Madoff Marian Morgan metro dream homes mets milberg millers a game Morgan European Holdings mortgage multiple schemes NCAA Net Winner new jersey notes objection Oxford Patrick Kiley paul burks PermaPave Pettengill Petters Picard poker Ponzi ponzi scheme ponzi scheme database ponzi scheme list Prime Rate profitable sunrise prosun pta puerto rico Rakoff real estate receiver receivership regulation relief defendants religion remission repeat offender restitution Rothstein RRA sec sentencing simmons sipa sipc snelling standing stanford stettin subpoena td bank telexfree treasury bonds treasury strip Tremont Trevor Cook UBS UFTA uga utah venture advisors Wachovia wilpon wire fraud woman zeek zeek rewards zeekler zeekrewards
Recent SEC Releases

New York Man Receives 8-Year Sentence for Role in $6 Million Ponzi Scheme

A New York man was sentenced to an eight-year prison term for participating in a Ponzi scheme that duped nearly 100 victims out of over $6 million.  Ian Campbell Gent, 70, faced up to 17.5 years under federal sentencing guidelines, but Chief United States District Judge William R. Skretny made a downward departure from those guidelines in handing down his sentence.  In doing so, Judge Skretny also rejected Gent's claims that he was without blame, observing that Gent's action were "motivated by greed, pure and simple."  The mastermind of the scheme, Guy Gane, plead guilty and received a 13-year sentence in September 2011.

According to authorities, Gane hired Gent to work at his firm, Watermark M-One Financial Services ("Watermark"), where he told potential clients he could promise 10% annual returns through investments in waterfront real estate.  Investors were provided with 'debentures' evidencing their investment.  However, Gane made no such investments, and instead used investor funds for a variety of unauthorized uses that included Ponzi-style payments to existing investors, personal and business expenses, and cash advances to his children.  

While Gane pleaded guilty, Gent and another Watermark employee, James Lagona, chose to stand trial. That strategy backfired, as each was convicted by a federal jury on charges of conspiracy and money laundering in February 2011.  Recently, while awaiting sentencing, Lagona was arrested on charges that he sought to influence prosecutor William Hochul by approaching Hochul's wife, a New York Congresswoman who was in the middle of a tight re-election campaign.  Lagona purportedly claimed that he would drum up support for Congresswoman Hochul if her husband would agree to drop the case against him (although Lagona had already been convicted).  FBI agents were notified, and subsequently arrested Lagona.  


Government: Ponzi Defendants Hatched Plot to Kill Co-Conspirator Over Dinner at Perkins Restaurant

In a bizarre turn of events that comes on the eve of the sentencing of several men convicted for their role in Trevor Cook's $194 million Ponzi scheme, prosecutors have revealed that several of the men conspired to have the third killed in order to collect on a life insurance policy.  The three men, Gerald Durand, Christopher Pettengill, and Jason "Bo" Beckman, are scheduled to learn their fate for aiding in Cook's scheme on January 3, 2013.  In a presentencing memorandum filed earlier this week, the government disclosed that, while enjoying dinner at a local Perkins restaurant in December 2009 several months after the scheme collapsed, Durand proposed to Pettengill that they arrange Beckman's death in order to share in the proceeds of a $2.5 million life insurance policy they apparently held. Durand's attorney is now seeking to exclude the incident from the court's consideration.

The three men, along with radio host Patrick Kiley, were portrayed as key players on Cook's Ponzi scheme and accused of soliciting investors for Cook's currency trading program that promised consistent annual returns of 10.5% to 12%.  Investors were assured that they could not lose their investment principal, and were told that Beckman was rated by independent research group Morningstar as among the top money managers worldwide.  Kiley appealed to investors through his position as a Christian radio host, where he warned of a financial armageddon and told investors to protect their money by investing with Cook.  In total, the scheme is said to have defrauded over 700 investors out of nearly $200 million.

Cook, the ringleader of the scheme, received a 25-year sentence in August 2010.  Soon after, Pettengill began to cooperate with the government, later pleading guilty in June 2011 to charges of securities fraud, wire fraud, and money laundering. Pettengill took the witness stand several times at the trial of the three men, which ultimately concluded with a federal jury convicting the men of all charges.  

While Pettengill faces a maximum potential sentence of twenty years, he is likely to receive a drastically reduced sentence owing to his cooperation with authorities.  However, Kiley, Durand, and Beckman each face potential life sentences after being convicted of at least 15 charges, and this has already prompted several of their attorneys to attack Pettengill's credibility in an effort to discredit his statements. Pettengill was attacked at Beckman's trial by Beckman's attorney, who contended that Pettengill, not Cook, deserved the most blame for the scheme, and characterized Pettengill as "the stool pigeon, the fink, the rat."  

Durand's attorney opposed the introduction of Pettengill's revelation in a Thursday filing, and it will fall to United States District Judge Michael Davis to decide whether Pettengill may testify.  

A copy of Pettengill's plea agreement is here.

A copy of Durand, Kiley, and Beckman's indictment is here.


High School Basketball Coach Suspected in Ponzi Scheme

A Florida high school basketball coach who held himself out as an investment advisor to teachers and fellow coaches is now accused of running a Ponzi scheme.  Robert Schnepp, a former basketball coach at Cypress Lake High School in Fort Myers, Florida, was arrested this week on thirty-seven felony counts including grand theft, fraud, passing worthless checks, and the unregistered sale of securities. Schnepp is currently awaiting a transfer to a Lee County jail.

According to the former athletic director at Cypress Lake High School, it was well-known that Schnepp was a financial advisor when he was hired in 2006 as the boy's basketball coach.  Based on this reputation, Schnepp began offering to invest on friends and family's behalf, with several other coaches at the school also choosing to invest with Schnepp.  Investors were provided with regular quarterly statements showing purported rises in their account balances.  In total, at least 10 investors entrusted over $200,000 with Schnepp from 2008 to 2011.

Authorities allege that Schnepp ran the classic Ponzi scheme, using investor funds for personal expenses as well as the payment of fictitious returns to existing investors.  Some became suspicious when, after asking for a return of their investment, Schnepp's check bounced.  After three checks bounced, victims contacted authorities.  

A quick search of the BrokerCheck service provided by the Financial Industry Regulatory Authority (FINRA), which offers information about brokers and firms registered with FINRA, shows that Schnepp was not employed in any securities capacity, and had not been licensed to sell securities since February 2006. 

Schnepp's BrokerCheck is here.


Missouri Priest Facing 40-Year Prison Sentence For $52 Million Ponzi Scheme

A Missouri clergyman who orchestrated a massive Ponzi scheme that duped investors out of over $50 million is set to receive a 40-year prison term at his sentencing later this month.  According to a sentencing memo authored by United States District Judge Linda Reade, Kansas priest and attorney Martin Sigillito will receive the term when he is sentenced December 28th for a scheme that ensnared over 100 victims.  Sigillito had faced as many as 325 years in prison after a federal jury found him guilty earlier this spring of all twenty criminal charges he faced.  When Sigillito was indicated in May 2011, authorities claimed the scheme was the largest in the history of the Eastern District of Missouri.

Sigillito held himself out as an expert in finance and international law, and claimed he was an adjunct lecturer at England's Oxford University.  In addition to running his own law office, Martin T. Sigillito and Associates, he was also an ordained priest and bishop in a church known as the American Anglican Convention.  

According to the indictment, Sigillito, along with co-conspirator James Scott Brown, a Kansas attorney, began marketing the British Lending Program ("BLP") to investors in 2000.  BLP was advertised as a prominent real estate development venture, and investors were told that another co-conspirator, Derek Smith, was a highly successful real estate investor who had a proven track record of identifying undervalued properties that could be quickly purchased, refurbished, and resold for a quick profit.  Investors were promised that, in return for loaning large amounts of money to BLP, they could expect to receive an above-average rate of interest in return.  Over the life of the scheme, which spanned nearly a decade, investors "loaned" BLP over $50 million.  

Yet, the majority of investor funds were used not for legitimate real estate projects, but instead to sustain an elaborate Ponzi scheme.  Besides misapropriating funds to sustain the trio's lavish lifestyles, approximately $27 million was used to make Ponzi-style payments to investors purporting to be interest and principal payments.  When Sigillito's secretary became suspicious and went to authorities in 2010, BLP was nearly insolvent.  Sigillito himself stole more than $6 million from investors, using the funds to live a high life that included the purchase of antique books, papers, rare coins, a $1,200 bottle of cognac, and a lamp from 34 B.C.

Smith and Brown cooperated with authorities and pled guilty to charges of conspiracy to commit mail fraud and conspiracy to commit wire fraud in September 2011.  Brown received a three-year term earlier this summer.

A copy of the Indictment is here.


Madoff's Brother Due To Be Sentenced Thursday

The man whose older brother, Bernard Madoff, orchestrated the largest Ponzi scheme in history is set to learn his own fate for his role in the scheme that bilked thousands of investors out of billions of dollars.  Peter Madoff, the youngest brother of Bernard and Mark Madoff, previously agreed to plead guilty to a single charge of conspiracy to commit securities fraud and a single count of falsifying records of an investment adviser back in June.  As part of his plea agreement, he agreed not to seek less than the 10-year term recommended by prosecutors.  In a letter to the sentencing judge, Madoff kept his word, instead seeking only to report to prison after attending his granddaughter's bat mitzvah in January.  Mr. Madoff has steadfastly maintained that he was unaware of his older brother's massive fraud until it was privately disclosed to him on December 9, 2008.  Authorities arrested Bernard Madoff two days later.  

Mr. Madoff served in various capacities at Bernard L. Madoff Investment Securities ("BLMIS") since 1965, holding the position of head of compliance when the scheme was revealed in December 2008.  While prosecutors have refrained from accusing Mr. Madoff of having direct knowledge of his brother's fraud, they instead argue that he committed other crimes that unwittingly allowed the decades-long Ponzi scheme to continue unnoticed.  These crimes included the filing of false forms drastically underreporting the number of customers with accounts at BLMIS and the total funds under management.

Several of Madoff's immediate and extended family members served in various capacities with their father's firm. His son, Mark, was employed at the firm's proprietary trading unit, and continued to deny any involvement in the scheme until his suicide on December 9, 2010, two years to the date of his father's confession.  Another son, Andrew, served as co-head of trading along with Mark.  While court-appointed bankruptcy trustee Irving Picard has filed suit against the family for $200 million, there have been no other indications of an imminent criminal case against Andrew Madoff or any other family members.  

Along with the prison sentence, Mr. Madoff also agreed to a criminal forfeiture order of $143.1 billion representing the total amount of investor funds that passed through the operation.  This forfeiture will include all of Mr. Madoff's real and personal property, and will also include claims to any income Mr. Madoff earns after he is released. Indeed, according to Mr. Madoff's lawyer, the forfeiture order will ensure that he will "live out his days as a jobless pariah."  

Peter Madoff is due to be sentenced Thursday, December 20.