North Carolina Man Charged in Commodities Ponzi Scheme

The U.S. Commodity Futures Trading Commission ("CFTC") today announced the filing and resolution of charges against a North Carolina man alleged to have operated a Ponzi scheme involving commodity futures.  Robert S. Moss, of Charlotte, agreed to settle the charges by paying restitution of $1,501,151.29 to defrauded investors and a $500,000 civil monetary penalty.  Moss also agreed to the permanent ban of any future trading or activities involving commodities trading.

From 2001 to 2008, Moss is alleged to have solicited investments exceeding $3 million from twenty-two investors who were told that Moss was a sophisticated commodities trader.  Instead of operating a commodity pool, Moss diverted a majority of investor funds for personal use and to repay other participants.  Moss also sought to disguise his trading losses by providing investors with fictitious account statements.  

According to the CFTC, Moss never registered with the CFTC or as a Commodity Pool Operator.  Moss also failed to provide investors with required disclosure statements.

Mastermind of $20 Million Hawaii Ponzi Scheme Sentenced

A federal judge in Hawaii today sentenced a Maui accountant accused of operating a Ponzi scheme that cost investors at least $8 million in losses was sentenced to a nearly 12-year term in federal prison today. Lloyd Y. Kimura, 61, of Maui, was also ordered by United States District Judge David Ezra to pay restitution of $8 million to defrauded investors.  Kimura's sentence was nearly the maximum under federal sentencing guidelines, which recommended a term of ten to twelve-and-a-half years.

Kimura, who incidentally is the brother of the Hawaii County Prosecutor, was charged with mail fraud, bank fraud, and theft from an employee benefit plan in 2010.  He had faced a maximum of 135 years in federal prison, but pled guilty in January 2011 in which prosecutors agreed not to seek the maximum term.  Along with his twelve-year federal prison sentence, Kimura will also concurrently serve a twenty year sentence for convictions on state charges for the same scheme.  Judge Ezra, in handing down his sentence, noted the fact that the federal sentence may be more harsh due to the fact that the state sentence allowed for parole.

Authorities charged Kimura with operating Maui Industrial Loan & Finance Co. as a massive Ponzi scheme that spanned over a decade.  Starting in 1986, Kimura loaned out money at high interest rates ranging from eighteen to twenty-four percent.  Yet, instead of lending the money out, Kimura used funds from new investors to pay off old investors.  Authorities estimated that at least 50 victims suffered losses exceeding $8 million from Kimura's scheme.  Kimura subsequently filed bankruptcy in 2010 when the operation ran out of funds to sustain itself.

Following his release from prison, Judge Ezra ordered that at least 10% of Kimura's subsequent income be used to repay defrauded victims as part of the restitution order.  

Detroit Ponzi Schemer Sentenced to 10 Years in Prison

A man accused of operating a Ponzi scheme whose victims included a public school district was sentenced to ten years in federal prison today and ordered to pay restitution to defrauded investors.   Dante DeMiro, 44, of Milford, Michigan, pled guilty in April to five charges including bank and wire fraud that carried a maximum sentence of thirty years in prison, as well as admitting that his fraud exceeded $7 million.

DeMiro operated investment firms MuniVest Financial Group and MuniVest Services LLC in Southfield, Michigan.  From 2007 to 2010, DeMiro accepted investor funds falsely representing that low-risk certificates of deposit would be purchased.  Investors were later provided with screenshots purporting to represent their investments.  But instead of purchasing the certificates of deposit, DeMiro instead used investor funds to make payments to other investors, purchase luxury items, and gamble. Notable among the victims were several municipalities, a public school district, and a credit union serving church members.  One source pegged the total losses to victims at nearly $13 million.  

In addition to his prison sentence, DeMiro was also ordered to pay restitution of $12.9 million.  DeMiro's defrauded investors will also be able to share in proceeds of the nearly $1 million of assets seized by authorities following DeMiro's arrest and able to be sold following DeMiro's recent guilty plea.  

Charges Filed in Alleged Multi-Million Dollar Alabama Ponzi Scheme

Alabama authorities today charged two Alabama men for their involvement in a Ponzi scheme that may result in investor losses exceeding $1 million.  Carey Michael Billingsley, 59, of Rockford, Alabama, and Spero X. Vourliotis, of Birmingham, Alabama, were both charged with one count each of Sale of Unregistered Securities and Sale of Securities by an Unregistered Agent.  Vourliotis was also charged with securities fraud.

According to authorities, Billingsley and Vourliotis offered investment opportunities through the use of "investment clubs" known as The Cornerstone Investment Group, The Capstone Group, and the Tri Stone Group.  However, neither the two men nor their companies were registered with the Alabama Securities Commission to offer securities for sale in Alabama.  After the men incurred steep investor losses following bad trades, authorities allege that investor funds were pooled and falsified financial statements were produced to conceal these losses from investors.  The Alabama Securities Commission has identified at least 28 known investors, and believes losses could approach the millions.

One source of investors for the failed scheme may have been through Billingsley's former position as a member of the board of directors of Alabama Trust Bank in Sylacauga.  Both men have been released on $20,000 bond.  

Judge Approves First Interim Distribution to Madoff Investors

Nine hundred and forty-four days after Bernard Madoff was arrested on suspicion of orchestrating the largest Ponzi scheme on record that drastically changed the lives of thousands of loyal investors, a New York Judge approved the first distribution of funds that have been recovered to date.  Following a hearing on the matter this morning, United States Bankruptcy Judge Burton Lifland signed an order this morning approving trustee Irving Picard's motion to make an interim distribution of a portion of funds recovered to date and not encumbered by pending appeals.  Picard, the court-appointed trustee overseeing the liquidation of Madoff's failed brokerage institution, was appointed shortly after the unraveling of Madoff's scheme and has since filed over 1,000 lawsuits in efforts to recover funds.

The motion, filed in May and previously covered in detail by Ponzitracker here, sought to make a first interim distribution of approximately 4.1% of each customer's allowed claim, along with money advanced by the Securities Investor Protection Corporation ("SIPC"). Under SIPC, a customer of a failed brokerage institution is entitled to reimbursement for up to $500,000 of verified losses.  While Picard initially intended to distribute over $7 billion, he was forced to drastically reduce the amount available for payment to investors due to a large amount of the settlements he had reached being under appellate review.  Among these settlements pending appellate review was the $5 billion settlement reached with the estate of Jeffrey Picower.

While Picard noted the receipt of nearly $2 billion in claims from secured creditors, only investors will receive payments under the first interim distribution.  Per the terms of Judge Lifland's order, Picard will begin making payments to the 2,300 investors affected by the scheme based on an initial $272 million available for distribution.  This equates to an average investor distribution of $222,511 each.  According to Picard, investors can expect the distributions to begin arriving in September.