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

California Woman Gets 15-Year Sentence For $2.1 Million Ponzi Scheme

A California woman who operated a Ponzi scheme that bilked friends and family out of more than $2 million has been sentenced to serve 15 years in prison.  Jill Silvey, 51, received the sentence after her conviction earlier this year on at least forty-four fraud related charges.  Silvey was arrested in June 2012 after several investors began raising questions after interest payments were delayed.

According to authorities, Silvey began soliciting family and friends in 2005, telling them they could earn above-average returns by allowing Silvey to lend their money to potential homeowners who could not afford traditional home loans.  Silvey, who obtained her real estate license in 2002, prepared authentic-looking loan documents and deeds designed to give the impression that each investment was secured by real estate.  In total, more than 20 investors entrusted over $2 million to Silvey.

However, Silvey did not use investor funds to make loans to struggling homeowners; rather, she operated the classic Ponzi scheme by using the inflow of new investor funds to make Ponzi-like payments to existing investors.  Silvey is also alleged to have misappropriated investor funds for her own use, including to buy expensive clothes, remodel her home, and purchase luxury automobiles. When Silvey began falling behind on interest payments in 2012, some investors contacted homeowners directly to find out that they were unaware of any such loans.  Silvey was soon thereafter arrested.

Silvey was also ordered to pay restitution to her victims; however, her ability to do so is unknown in light of the fact she recently filed bankruptcy.


Colorado Man Sentenced to 6.5 Years for $16 Million Ponzi Scheme

A Colorado man was sentenced to serve 77 months in prison for his role in a Ponzi scheme that took in more than $16 million and caused losses exceeding $4 million to more than 50 investors.  Michael Turnock, 69, received the sentence from U.S. District Judge Christine Arguello after previously pleading guilty to mail fraud and money laundering.  In addition to the sentence, Judge Arguello also ordered Turnock to pay approximately $4.2 million in restitution to his victims.

Turnock was the principal of Bridge Premium Finance, LLC ("BPF"), which until September 2005 was known as Berjac of Colorado, LLC ("Berjac").  Berjac purported to be in the business of insurance premium funding.  In 1996, Turnock bought a majority interest in Berjac, later purchasing the remaining interest in 2004.  Potential investors were told that their funds would be used to make short-term loans to small businesses in order to enable those businesses to pay up-front commercial insurance premiums, and in return were promised an annual return of 12%.  Investors also received marketing materials from Turnock that touted the investment as "100% safe" and protected by the "Colorado Insurance Guarantee Fund."

Investors were issued promissory notes, known as "Berjac Notes" from 1996 to 2005, and "Bridge Notes" from 2005 thereafter.  These notes, which were open-ended in term, were said to be payable on demand by investors, which was touted to investors as evidence of the liquidity of the investment.  Ultimately, more than 120 investors contributed approximately $15.7 million to the scheme.  BPF's promissory note offerings were never registered with any federal or state securities regulator.

Turnock claimed that BPF could afford to pay such generous returns due to the rate of interest BPF received on the "bridge loans" it was making.  However, according to the Securities and Exchange Commission, which also initiated a parallel civil enforcement proceeding, BPF had not had a profitable year in over a decade and had generated less than $2.5 million in revenue from 1998 to 2012.  Yet, it still managed to make payments consisting of purported interest and principal redemptions to investors totaling $12.3 million.  Indeed, revenues had been negative since at least January 2011.  The company depended on a constant inflow of new investor funds in order to satisfy interest payments and redemption requests - a classic hallmark of a Ponzi scheme.  

After the SEC began investigating in June 2012, Turnock and a co-conspirator refused to answer investigator's questions, citing their Fifth Amendment privileges against self-incrimination due to the possibility of criminal charges.  

A copy of the SEC complaint is here.


Potato Ponzi Scheme Perpetrators Ordered To Issue Refunds Or Face Charges

Continuing a recent trend of fraudulent schemes based on highly-unusual investments (see cows, goats, and even emus), Indian securities regulators have ordered the perpetrators of a potato-trading Ponzi scheme to return funds to investors or risk facing civil and criminal prosecution.  Sumangal Industries Ltd. ("Sumangal"), based in Kolkata, India, was ordered by the Securities and Exchange Board of India ("SEBI"), to wind down the scheme and return investor funds within three months.  The scheme, which had offered over 100% returns to investors, had recently been issued a show-cause notice by SEBI in April 2013.

Sumangal began attracting the attention of SEBI when regulators discovered a newspaper advertisement soliciting the public to invest in Sumangal's 'Flexi Potato Purchase Scheme'.  The company pitched the investment as a lucrative opportunity, promising exorbitant returns ranging from 20% - 100% within a 15-month period.  Investors were told the returns were due to the company's expertise in the potato trade; Sumangal would buy potatoes from the market when prices were low, keeping them in cold storage until the price later rose and the potatoes could be resold at a hefty profit.  It is unknown how many investors were ultimately induced to contribute to the scheme.

After commencing a probe into Sumangal following discovery of the newspaper advertisement, SEBI ordered the company to cease the venture until it had obtained the proper licensure.  Sumangal initially pushed back, claiming that it had a license for its potato trsading, and that it "was dealing in agricultural and non-agricultural products within and outside India."  However, when pressed, Sumangal was unable to provide substantive proof in support of these claims.

Indian securities regulators have significantly increased oversight of the so-called 'collective investment schemes' in light of the recent discovery of a massive Ponzi scheme that is said to have duped investors out of billions of dollars.  In additional to financial ruin for many, the schemes have also left a swath of suicides in their wake.


Madoff Office Artwork, Including Warhol and Matisse Pieces, Set For Auction

Andy Warhol - Chicken and DumplingsA federal judge has cleared the way for the public auction of a vast collection of fine art that once graced the walls of Bernard Madoff's now-defunct brokerage firm.  The collection, which is valued at nearly $600,000 and includes pieces by Henri Matisse, Pablo Picasso, and Andy Warhol (one piece is pictured right), was displayed at Madoff's main office in the famed Lipstick Building in Manhattan or his back-up office in Queens.  Bankruptcy trustee Irving Picard, citing the annual costs of nearly $20,000 to insure and store the pieces, requested approval from U.S. Bankruptcy Judge Burton R. Lifland to offer the artwork for auction during the upcoming fall sales in New York.  Notable auction houses Sotheby's and Stair Galleries will oversee the sales.

After Madoff was arrested in December 2008, Picard secured insurance on the collection, and in June 2009 coordinated the transfer of the artwork to climate-controlled storage.  Picard hired Helen D. Lally, of Helen D. Lally Fine Arts, Ltd., as an art consultant to monitor the fine art market and determine an appropriate time and method for liquidation fo the artwork.  As the general economy has improved since Madoff's arrest, the art market has followed in tandem, and Picard informed the Court that 2013 spring sales for artwork were 'quite strong'.  As such, Picard requested authority to offer the artwork for sale at the upcoming fall auctions, which occur in October and November.

The artwork features over sixty pieces, including single works by Pablo Picasso, Roy Lichtenstein and Henri Matisse, as well as multiple pieces by Andy Warhol.  

Madoff's victims holding approved claims have received more than $5 billion from Picard in several distributions, with the most recent distribution coming back in February.  This amount represents nearly half of the approximately $11 billion in claims approved thus far by Picard.

A copy of the Motion for Authority for Sale is here.

A copy of the Order Approving Sale is here.


Father and Son Convicted in $100 Million Ponzi Scheme

After a two-week trial, a federal jury convicted an Arizona father and son of orchestrating a $100 million Ponzi scheme that targeted members of the Church of Jesus Christ of Latter-day Saints.  Guy Williams, 42, and Brent Williams, 66, were found guilty of thirty-eight felony charges, including conspiracy, wire fraud, mail fraud, and money laundering.  Each could face hundreds of years in prison.  Based on the severity of the scheme and the numerous charges, the duo could potentially face a sentence of hundreds of years in prison.

The Williamses operated a group of investment funds known as the "Mathon" entities, which offered several investment opportunities involving short-term loans to third-party borrowers.  Beginning in November 2002, potential investors were promised high interest rates on the loans of up to 75% annually, and were told that the Williamses and their partners had substantial experience in this business.  Investors were assured that each loan was collateralized with specific assets having a value much higher than the value of the loan, and were also told that many of the loans were also further secured by personal guarantees from the borrowers.  Many of the investors were members of Arizona's Mormon community.  From November 2002 until February 2004, the scheme took in more than $100 million from over 175 investors.  

However, the Mathon entities were nothing more than an elaborate Ponzi scheme, using incoming investor funds to pay returns to existing investors as well as sustaining their lavish lifestyles.  Investor funds were also used to pay over $10 million in salaries and bonuses to the founders, as well as to operate businesses they secretly controlled.  

The Williamses are scheduled to be sentenced September 30.

A copy of the indictment is here.