Ponzi Scheme Disguised as Cattle Business Results in Guilty Plea

A Missouri man pled guilty Monday to federal charges stemming from his operation of a cattle purchasing business that defrauded investors out of nearly $8 million.  Kevin Ray Asbury, 44, entered guilty pleas to charges including wire fraud, money laundering, and bank fraud.

Asbury operated R&K Angus Ranch in Howard County, Missouri.  Beginning in May 2007, Ashbury promised potential investors that their funds would be used to buy cattle.  Eventually, 28 investors would invest with Ashbury.  Ashbury also applied for a line of credit from the Callaway Bank after falsely representing ownership of 6,000 cattle.  Ashbury had no cattle, and the bank reported a $2.7 million loss resulting from the fraud.

Prosecutors and Ashbury have agreed to a sentence of nine years in federal prison.  The judge overseeing the case must approve the plea agreement.

California Man Charged with $1.75 Million Ponzi Scheme

A Miami man was arraigned Monday on charges that he operated a Ponzi scheme that ultimately cost investors $1.75 million.  Fidel Bermudez, 43, pled not guilty to multiple counts of grand theft and security fraud after being extradited from Miami where he was arrested on June 15, 2011.  

State prosecutors alleged that Bermudez solicited investors from the congregation at the Church of God in Simi Valley, California.  From 2004 until 2007, Bermudez promised high returns while assuring investors that their investments were risk-free.  As later investors placed their money with Bermudez, earlier investors were paid with these proceeds disguised as interest payments.

Bermudez faces up to 17 years in state prison if convicted of the charges.  Bail has been set at $500,000, and a preliminary hearing is scheduled for July 7.  From the charges levied against Bermudez, it appears that only state charges are currently pending.  Federal charges may be forthcoming depending on the nature of the scheme.

Colorado Man Pleads Guilty to $1.7 Million Ponzi Scheme

A Colorado man has pled guilty to defrauding at least 79 investors as part of a Ponzi scheme that netted at least $1.7 million.  Frederick H.K. Baker, 46, pled guilty Tuesday to one count of wire fraud and one count of conspiracy to commit wire fraud in connection with a purported sophisticated currency trading operation that was ultimately revealed to be a Ponzi scheme.

Baker admitted that he began soliciting investors in 2006 and 2007 from Colorado and several other states.  Promising investors a monthly return of at least 8 percent, Baker also guaranteed investors that the principal would remain safe.  Yet, instead of using actual profits, Baker used funds from incoming investors to pay older investors.  Prosecutors alleged that investor funds were used to pay for off-road vehicles, a down payment on a Durango, CO house, and work done on personal automobiles.  

As part of Baker's sentence, he was also ordered to pay $820,000 in restitution to the victims defrauded by the scheme.  He is currently scheduled to be sentenced on October 7th in a Denver federal court. Under current federal sentencing guidelines, Baker faces a sentence between 41 and 51 months in prison.  Another individual charged in the scheme, Mark Akins, is still awaiting trial after pleading not guilty earlier this year.  

Philadelphia Ex-Lawyer Faces Federal Charges Relating to Ponzi Scheme

Federal prosecutors have unveiled charges against a Philadelphia man alleging that he ran a Ponzi Scheme that defrauded investors out of more than $6 million.  Ira Pressman, 64, is already facing charges of theft and corrupt organizations filed by the state of Pennsylvania in March.  While the state charges allege a total loss of $3 million from 8 victims, the federal charges allege that a total of $6 million was lost from 20 investors.

Authorities allege that Pressman operated his scheme through his company PJI Distribution Corporation in Bryn Mawr.  Similar to the much larger scheme run by Thomas Petters, Pressman represented to investors that he was buying closeout merchandise and reselling that inventory to buyers.  Pressman even forged invoices and purchase orders to create the appearance that he was engaged in legitimate business dealings.  Yet, rather than purchase these goods, Pressman instead kept the money, and used money from new investors to pay off older investors.  

Pressman has been charged with one count of wire fraud, mail fraud, and money laundering.  A former lawyer, he was convicted of several fraud-related offenses in the early-1990s and eventually disbarred as a result.  

Pair Sentenced to Prison in $78 Million Ponzi Scheme

Two individuals were sentenced Monday for their role in a Ponzi Scheme promising to help homeowners pay off their mortgages.  Isaac Jerome Smith, 48, and Alvita Karen Gunn, 33, received sentences of six years and five years, respectively, along with orders to pay restitution to the nearly 1,000 investors that were defrauded.  The two were convicted earlier this year, along with a third co-defendant, Michael Anthony Hickson, who is due to be sentenced on July 1st.  Hickson was convicted of the same charges as Smith and Gunn, and was also convicted of perjury, which adds a potential five years to his sentencing recommendation.

The three operated Metro Dream Homes, which promised investors with a minimum $50,000 investment that the company would invest in ATMs, phone card kiosks, and flat-screen televisions displaying advertising at businesses.  These ventures would supposedly pay off the investors' mortgages in a short period of five to seven years.  

Unlike the typical Ponzi Scheme, in which investors received periodic interest payments, Metro Dream Homes promised to take over homeowners' monthly mortgage payments and pay off the mortgage within five to seven years.  The company went to great lengths to attract investors, including conducting elaborate presentations at luxury hotels in Washington, D.C., New York, and Beverly Hills.  More than 1,000 investors were found to have invested approximately $78 million in the scheme.  Thus far, two other individuals have been convicted of crimes relating to their role in the scheme, and currently await sentencing.