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

Lawsuit Accuses Antigua Of Acting As Stanford's 'Blood Brother'

"Stanford received land transfers with government assistance [in return], operated Antigua's airport, built the national library, sponsored the country's cricket tournament, and improperly 'loaned' the government tens of millions of dollars of the CD investors' money for innumerable commercial enterprises..."

The receiver and official creditors committee representing victims of Allen Stanford's $7 billion Ponzi scheme filed a lawsuit accusing the dual-island nation of Antigua and Bermuda of serving as Stanford's 'blood brother' in providing necessary assistance to sustain the massive scheme.  Stanford, who is currently serving (and appealing) a 110-year sentence for masterminding the scheme, was once a 'favorite son' of Antigua where he enjoyed close relationships with various government and regulatory officials. A separate lawsuit also asserted similar charges against eight Caribbean banks.  The lawsuits are seeking over $230 million in damages, as well as an award of punitive damages

As a result of these relationships, investors alleged that Antigua was a prime participant, beneficiary, and co-conspirator in Stanford's fraud, having received nearly $90 million in documented loans from Stanford that were not repaid and instead served as an incentive to overlook Stanford's activities.  Indeed, according to the suit, the Eastern Caribbean Central Bank ("ECCB") nationalized the Bank of Antigua soon after Stanford's fraud was exposed, and in a 'second act of brazen thievery' then distributed ownership in the bank to the Antiguan government and other Caribbean banks.  Further adding to the suspicious nature of these actions, the head of ECCB's monetary council at the time was Errol Court, who was both the Antiguan Minister of Finance and one of Stanford's personal attorneys.  

Another banking regulator, Leroy King, was accused of taking bribes from Stanford in return for falsifying bank audits as well as impeding U.S. regulatory investigations of Stanford's operations.  While King faces criminal charges, Antiguan authorities have thus far refused to participate in his extradition.  

In the separate lawsuit brought by court-appointed receiver Ralph Janvey, twenty-three former directors and officers of Stanford's operations were accused of breaching their fiduciary duties to investors.  Janvey is seeking the return of all compensation paid to those individuals.


Illinois Man Gets 9-Year Prison Term For $4 Million Ponzi Scheme

An Illinois man will spend the next nine years in federal prison for orchestrating a Ponzi scheme that defrauded investors out of more than $4 million.  James Pantazelos, 64, had faced decades in prison after originally being indicted in October 2011 on ten counts of mail and wire fraud.  He later agreed to plead guilty to a single charge of mail fraud, which could have landed him behind bars for twenty years.  In addition to his sentence, Pantazelos will also be required to pay restitution to his victims.

Pantazelos was the owner and CEO of Destiny's Partners, Inc. ("Destiny's Partners"). From May 2007 to December 2010, Pantazelos hosted conferences throughout the United States pitching investment opportunities in Destiny's Partners.  Potential investors were told that Destiny's Partners invested in “Private Investment Trading Platforms” which traded bank notes in foreign markets, and that a substantial portion of profits generated would be donated to charitable and humanitarian causes. Investors were offered a variety of investment options, with terms ranging from 90 days to 365 days and annual returns up to 200%.  To convince investors that their investment would be safe, Pantazelos represented that all funds would be kept in an escrow account.  

However, when the investment terms of various investors expired, investors were not provided with their original principal investment.  As alleged in the indictment, instead of investing in "private investment trading platforms," Pantazelos and Destiny's Partners operated a Ponzi scheme in which funds from newer investors were used to make Ponzi-style payments to existing investors.  Pantazelos also used investor funds to support an extravagant lifestyle that included the purchase of homes, expensive automobiles for himself and family members, and even attempting to open a restaurant known as "Jimmy P's".  

A copy of Pantzelos's plea agreement is here.


Two Former Stanford Execs Get 20-Year Prison Terms 

The last of the executives involved in Allen Stanford's massive Ponzi scheme were each sentenced to a twenty-year prison term for their role in the swindle that bilked investors worldwide out of billions of dollars.  Gilbert Lopez Jr., who once served as Stanford's chief accounting officer, and Mark Kuhrt, a former global comptroller, received their sentence from United States District Judge David Hittner, who also previously sentenced Stanford to a 150-year term.  Defense attorneys had attempted to downplay their clients' role in the scheme, asking for a 3-year and 5-year sentence for Lopez and Kuhrt, respectively.  

Lopez and Kuhrt chose to stand trial on charges that they participated in a series of sham transactions designed to both inflate the amount of capital contributions purportedly made by Stanford and misrepresent the extent of Stanford's repayment of billions of dollars in personal loans made by Stanford International Bank ("SIB").  At trial, prosecutors introduced a series of emails between Lopez and Kuhrt that discussed the sham payments to dispute the men's claims that they were neither aware nor culpable in Stanford's fraud.  A Houston federal jury sided with the government, and convicted the men of nine counts of wire fraud, as well as one count of conspiracy to commit wire fraud.

The men were the last of a lengthy list of Stanford executives accused of wrongdoing, which included:

  • Allen Stanford - sentenced to 150-year term in June 2012;
  • Laura Pendergast-Holt - Chief Investment Officer - sentenced to 3-year prison term for obstructing SEC investigation;
  • Jim Davis - Chief Investment Officer - After entering plea agreement with prosecutors in April 2009, cooperated extensively and served as government's star witness at several trials, and was sentenced to a five-year term earlier this year; and
  • Tom Raffanello and Bruce Perraud - Stanford security team - Acquitted on charges relating to shredding of documents, where judge called evidence "extremely thin."

A former Antiguan banking official was also named in the indictment, and is currently awaiting extradition to face the charges.  


Feds Indict Florida Man For Astrology-Based Ponzi Scheme

A Florida man is facing criminal charges for orchestrating a Ponzi scheme that defrauded investors out of over $1 million by utilizing a trading strategy based on lunar cycles and the gravitational pull of the moon. Gurudeo "Buddy" Persaud, 47, was charged with one count of mail fraud and four counts of wire fraud in connection with the scheme.  Each charge carries a maximum prison term of twenty years as well as criminal monetary penalties.  The charges are the latest in Persaud's legal troubles, who was the target of a civil enforcement action brought by the Securities and Exchange Commission in mid-2012.  

According to the indictment unsealed this past Tuesday, Persaud told potential investors that he was a certified financial planner with extensive experience in the financial services industry.  According to Persaud's Broker Check Report provided by the Financial Industry Regulatory Authority, Persaud was employed at Money Concepts Capital Corp. which is based in Palm Beach Gardens, Florida.  Persaud touted his company, White Elephant Trading Company LLC ("White Elephant"), to investors as a safe investment option that guaranteed annual returns ranging from 6% to 18% through investments in the futures markets and other markets.  Investors were also provided with a personal guarantee from Persaud that their investment would be secure. Based on these representations, Persaud was able to raise over $1 million from 14 investors.

However, many of the statements made by Persaud to investors were false or misleading, including the failure to disclose that Persaud's trading strategy was based on lunar cycles and the gravitational pull of the moon.  Had they been informed, investors might have rightly questioned such a philosophy; Persaud suffered net trading losses in his first month of trading and would ultimately lose over $400,000.  Additionally, Persaud misappropriated over $400,000 in investor funds for a variety of unauthorized purposes that included sustaining he and his family members' lavish lifestyles.  

A copy of the indictment is here.

A copy of the SEC Complaint is here.


Valentine's Day Surprise for Madoff Victims as Trustee Seeks To Make Third Interim Distribution

Just in time for Valentine's Day, the court-appointed bankruptcy trustee overseeing the aftermath of Bernard Madoff's $65 billion Ponzi scheme has sought court approval to make a third distribution to victims.  Irving Picard, the bankruptcy trustee, indicated his intention in today's court filing to make payments totaling over $500 million on 1,103 claims, representing an average distribution of $457,800.  If approved, the distribution would represent approximately 5% of each customer's net equity claim.  Many will be happy to know that the proposed distribution comes ahead of the schedule seen in the previous two distributions, which each came in the latter half of 2011 and 2012, respectively.

Under the scenario envisioned by Picard, a total of 1,103 accounts will each receive 4.703% of their total net equity claim.  Due to each eligible account already having received up to $500,000 as provided by the Securities Investor Protection Act ("SIPA"), each subsequent distribution made by Picard fully satisfies a number of claims.  According to Picard, if the proposed distribution is approved, 31 customer accounts stand to receive 100% of their approved net equity claims, which would bring the total number of fully satisfied account holders to 1,106.  Thus, 1,072 accounts would remain partially satisfied and eligible to participate in future distributions.  

According to Picard, the total amount available for the third distribution is significantly higher than the proposed payout.  Specifically, over $2.6 billion is currently available in the customer account.  However, over $1.6 billion of that amount remains tied up in required reserves due to pending litigation and appeals. Of this amount, the majority is attributable to the current objection by over 1,000 investors concerning Picard's decision not to adjust the value of losses based on the amount of time each investor's funds were invested with Madoff's brokerage ("Time-Based Damages"). As ordered in the previous distribution, Picard is required to maintain 3% reserves of the potential Time-Based Damages until a final ruling is obtained.

If approved, the distribution will bring the total payouts to victims to date to $5.44 billion - nearly half of the $11.05 billion in claims allowed thus far by Picard.  This statistic does not take into account the $500,000 SIPA distribution, which as mentioned has satisfied over 1,000 investor claims.

Remission Process

Picard also references the separate Department of Justice ("DOJ") remission proceeding, which was established to deal with the billions of dollars in forfeited assets seized by the DOJ.  A remission proceeding is very similar to a claims process, and it is expected that many, if not all, of the victims currently participating in the claims process overseen by Picard will also be eligible for remission payments.  Indeed, the DOJ received over $2.2 billion alone as part of Picard's $7.2 billion settlement with Jeffrey Picower, who was Madoff's largest investor.  In connection with the remission proceeding, the DOJ has retained Richard C. Breeden to serve as special master. However, investors should not expect to 'profit' from both distribution processes by receiving more than their initial investment - Picard alludes that no claimant will receive more than his or her net equity claim:

Any determination as to the amounts owed to a claimant—whether a “customer” under SIPA or a “victim” under the forfeiture regulations—will take into account monies received from either fund such that no claimant receives in this SIPA proceeding more than his or her net equity claim under SIPA.

A copy of the Distribution Motion is here.

Previous Ponzitracker coverage of the Madoff scheme is here.

A transcript of a recent CNBC exclusive interview with Picard is here.