Virginia Ponzi Scheme Operator Sentenced to Eight Years in Prison

A Virginia man received an eight-year prison sentence for operating a Ponzi scheme that ultimately resulted in losses of almost $9 million to investors.  Julius Everett Johnson, 62, who had pled guilty earlier this year to conspiracy to commit mail, wire and bank fraud, and engaging in unlawful monetary transactions, faced up to a fifteen-year sentence for the charges.  Johnson also must pay a $37 million civil penalty imposed by the Virginia State Corporation Commission

Along with his co-conspirator Walter Reinhart, Johnson operated the scheme using ten area businesses, including Benefit Contract Administrators, MHC Linen Services, River City Cleaners, Roberts Awning, First Fidelity Financial of Richmond, Capital Investor Group, Commonwealth Assurity, Mid Atlantic Insurance Agencies, FIC Financial Group and Livingwell Healthcare of Virginia.  From 2005 until October 2009, Johnson used the entities to sell over $11 million in unregistered securities that promised yearly returns of eight to ten percent.  Instead, most new investor funds were used to pay interest to other investors and create the appearance of a legitimate operation.  

Under the terms of the civil penalty, Johnson can avoid the $37 million penalty if he pays $11 million in restitution to investors by April 2012.

SEC Charges New York Man With Operating Ponzi Scheme

The Securities and Exchange Commission announced that it had filed a settled civil action against a New York man and his investment company that ultimately took in over $15 million from investors.  James M. Peister, of Saint James, New York, and Northstar International Group were charged with intentionally overstating the assets of the North American Globex Fund, LP in an elaborate scheme to defraud investors. As part of their agreement with the SEC, Peister and Northstar consented to a permanent judgment enjoining them future violations of various sections of the Securities Act of 1933 and the Investment Advisors Act of 1940.

According to the complaint filed by the SEC, Northstar was the general partner of the Globex Fund, which was formed in 2000 to solicit investors.  Ultimately, The Globex Fund attracted 72 investors who purchased limited partnership interests in the Globex Fund totaling over $15 million.  Investors were provided with fictitious marketing materials that falsely advertised the Fund's positive monthly returns for eighty out of the eighty-four months from January 2001 to December 2007.  These yearly returns ranged from a low of 9.46% in 2006 to 31.6% in 2001.  Additionally, Peister overstated the assets under management in the Globex Fund, collecting management fees based on these inflated figures.  

The scheme began to unravel in early 2009 when Northstar's auditors resigned due to incomplete information provided concerning Northstar's financial records.  Along with permanent consent judgments, the SEC is also seeking civil penalties and disgorgement of ill-gotten gains.

Colorado Sports Booster Gets Six Years for Ponzi Scheme

A Colorado man was sentenced to six years in prison and ordered to pay restitution to investors following his conviction on charges of securities fraud from what authorities called a Ponzi scheme.  Jerry Brumit, 68, was a well-known real estate agent and sports booster in the Colorado town of Fort Collins, where he was once a broker at Re/Max Alliance of Northern Colorado.  Authorities alleged Brumit solicited investors for his scheme from his previous employment at Re/Max.  

According to the indictment, Brumit operated his scheme from December 2006 to June 2009 and promised investors the chance to double their money through investments in Mexican development plans, among other deals.  Instead, Brumit spent the money on personal expenses and to repay earlier investors.  He pled guilty in May to two counts of securities fraud, and faced up to an eight-year sentence.

Brumit was sentenced to six years in the Department of Corrections, which means that confinement in a halfway house is a possibility.  Along with the sentence, Brumit was ordered to pay more than $600,000 in restitution to investors.  

Man Sentenced to 21 Years for $20 Million Ponzi Scheme

A Chicago man was handed a prison sentence of 21 years and 10 months for his role in orchestrating a Ponzi scheme that resulted in millions of dollars of losses to investors.  Joseph Shereshevsky, 54, was sentenced following a previous guilty plea in February to charges of mail fraud, conspiracy, and securities fraud in connection with the scheme that prosecutors initially valued at over $200 million.  United States District Judge Denny Chin stated in the sentencing hearing today that investor losses may exceed $20 million.

Shereshevsky founded WexTrust Capital LLC along with co-founder Steven Byers.  Byers was sentenced in April to thirteen years in prison for his role in the scheme.  WexTrust advertised itself as being involved in the purchase and of residential and commercial properties in several states, including Illinois, North Carolina, and New York.  According to the SEC, over $250 million was raised from 1,200 investors, many of whom were members of the Orthodox Jewish community.   Investors believed that WexTrust conducted many private placements in association with real-estate interests.  However, in reality, investor funds were used to pay returns to older investors to create the appearance of a successful enterprise.  

Incidentally, the Judge presiding over this case, Judge Chin, was also the judge that sentenced Bernard Madoff to 150 years in federal prison for orchestrating the largest Ponzi scheme to date.  Judge Chin was appointed to the Second Circuit court of appeals last year but continues to preside over the proceedings involving Shereshevsky and a related civil case.

South Florida Woman Accused of $2 Million Ponzi Scheme

A South Florida woman was arrested Monday morning for operating what authorities described as a Ponzi scheme that took in over $2 million from investors.  Ruth Rodriguez Liverpool, of Broward County, Florida, was accused of soliciting victims for the scheme at church services held in a rented hotel ballroom, where she promised annual returns of ten percent from the import and export of materials from the Caribbean.  She is currently facing a charge of organized scheme to defraud. 

Instead, according to Liverpool's bookkeeper, Liverpool never engaged in the import/export business, and investor funds were used to fund the operation.  Authorities have identified 38 known victims of Liverpool's alleged scheme, one of whom invested $200,000.  

A search of the Florida Department of State Division of Corporation yielded at least 20 different business entities with Liverpool as a registered agent or officer, including Apex Global Funding, Inc., Arcc Investments and Trust, Inc., RA Holdings International, LLC, and Rusco Investments LLC.  Along with Ruth Liverpool, an Aldwyn Liverpool is also identified as an officer in most entities.  Internet searches for several of Liverpool's companies yielded a large number of complaints from individuals who had apparently lost money investing with Liverpool.  Interestingly, some of these reports are over a year old. Additionally, a detailed report by an investigative website also provides more information on the scheme.

Liverpool is currently being held on $1,000,000 bond.