Guilty Plea in $18 Million Pennsylvania Ponzi Scheme

A Pennsylvania man with prior convictions for financial and securities fraud pled guilty to operating a Ponzi scheme that swindled investors out of over $17 million.  Robert Stinson Jr., 56, pled guilty to a 26-count indictment that included charges of wire fraud, mail fraud, money laundering, and bank fraud.  Under federal sentencing guidelines, Stinson faces a recommended sentence of twenty-seven to thirty-three years in prison. 

According to the indictment, Stinson began soliciting investors through several companies he operated, including Life's Good Inc. ("Life's Good") and Keystone State Corporation ("Keystone").  Stinson falsely represented to investors that Life's Good acted as a portfolio manager for several hedge funds that invested in real estate, including: 

• Life's Good S.T.A.B.L. Mortgage Fund, LLC
• Life's Good Capital Growth Fund, LLC
• Life's Good High Yield Mortgage Fund, LLC
• Life's Good I.A. Capital Fund, LLC

In operating the funds, Stinson made numerous misrepresentations and omissions to potential investors, including that Stinson was a graduate of the Massachusetts Institute of Technology and that he had extensive business experience.  Stinson also concealed the fact that he had previously been enjoined by the SEC from committing securities fraud.  Investors were promised annual returns ranging from ten to sixteen percent, and told that their investments were secured by first mortgages in underlying real estate assets.  Additionally, Stinson falsely claimed that the funds could not lose money due to their ability to repossess the underlying collateral and resell at a profit.  Instead of investing the funds, Stinson invested in several unrelated businesses, made lavish gifts to family and friends, and used new investor funds to make interest payments to existing investors.  In total, Stinson stole over $17 million from more than 260 investors.  

Sentencing is currently scheduled for December 13.  Stinson will also likely face an order of restitution from United States District Judge Michael M. Baylson.

Arrest Warrant Issued for Florida man Accused of Ponzi Scheme

Authorities have issued an arrest warrant for a South Florida man they say ran a Ponzi scheme with losses estimated at over $2 million.  Roger A. Miller, 58, is accused of operating a Ponzi scheme through his extensive connections at a local golf course in Margate, Florida.  Margate police have issued an arrest warrant for Miller charging him with grand theft.  According to a Fort Lauderdale newspaper that spoke with him, Miller is currently believed to be in Thailand.

According to authorities, Margate was reputed to be a savvy investor who advertised guaranteed returns to investors 'from his seat at a clubhouse bar' at Oriole Golf Club in Margate.  Since at least 2004, investors were lured by the prospect of returns ranging from sixteen to thirty percent, and Miller would often show up at the clubhouse with envelopes containing interest payments.  At least thirty individuals invested with Miller, with the total amount invested estimated to exceed $5 million.  The scheme was exposed when Miller disappeared in February 2009.

Should Miller return to the United States, the state charges will not be his only problem.  A civil lawsuit was filed earlier this summer seeking class-action status on behalf of 18 investors alleging losses of at least $2.2 million.  

Jamaican Ponzi Schemer Receives Thirty Year Prison Sentence

A Florida federal judge handed down a thirty year prison sentence to the mastermind of an international Ponzi scheme that took in over $200 million dollars from investors.  David Smith, 42, had previously pled guilty to a twenty-three count indictment accusing him of money laundering and wire fraud.  Prosecutors had asked for a minimum sentence of thirty years, which will be served concurrently with an earlier six-year sentence handed down by the Turks and Caicos.  United States District Judge Mary Scriven also ordered Smith to pay $55 million in restitution to defrauded investors, although it remains unclear as to whether Smith has any remaining assets that can be used to satisfy the order.

As covered by Ponzitracker, Smith operated Overseas Locket International Corporation ("OLINT"), which had a presence in the United States and several other countries including Panama and Jamaica.  OLINT promised investors high monthly returns through the purported use of a foreign currency trading strategy.  Investors were told that only a small percentage of their principal was at risk, and were assured of the safety of their investment through the use of fictitious monthly account statements and Smith's assertion that OLINT had never suffered a monthly trading loss. Authorities estimated that over $200 million was collected from approximately 6,000 investors both in the United States and overseas.  

Smith will be transported to the Turks and Caicos to serve out his six-year sentence, after which he will return to the United States to serve the remaining twenty-four years of this conviction.  There is no parole in the federal prison system.

Connecticut Man Charged with Ponzi Scheme

A Connecticut investment adviser was charged with operating a Ponzi scheme that may have cost investors hundreds of thousands of dollars.  Gregory Viola, 59, was arrested on August 11 and charged in a criminal complaint with mail fraud.  Each count of mail fraud is punishable by a maximum of twenty years in federal prison, along with criminal monetary penalties.

As early as 2007, Viola operated an investment business that promised investors fixed rates of returns. According to the criminal complaint filed, several investors were provided with fictitious account statements showing purported performance, with at least one investor receiving an account statement from online brokerage E*Trade that was later revealed to not exist.  Instead, Viola is alleged to have used new investor funds to pay returns to existing investors.

Any individuals who have information on the crime or believe themselves to be a victim are urged to contact FBI Special Agent Wendy Bowersox at(203) 777-6311.  Viola is currently free on $100,000 bail.  

Madoff Trustee Seeks $300 Million From Abu Dhabi Investment Arm

Irving Picard, the court-appointed trustee tasked with recovering assets for defrauded investors of Bernard Madoff's massive Ponzi scheme, filed suit against the entity that acts as an investment arm of the Emirate of Abu Dhabi.  According to the complaint, the Abu Dhabi Investment Authority ("ADAI") withdrew approximately $300 million from investments with a Madoff feeder fund, Fairfield Sentry Limited, that are avoidable under New York and federal bankruptcy law.  

The lawsuit is the latest strategy taken by Picard, who, in his earlier settlement with Fairfield Sentry Limited, had negotiated for the right to 'clawback' profits from investors who had placed funds with Madoff indirectly through Fairfield's family of feeder funds.  At issue are so-called "subsequent transfers" made from Fairfield to ADIA.  Picard alleges that, of the over $3 billon withdrawn from Madoff's broker-dealer by Fairfield, approximately $300 million was subsequently transferred for the benefit of ADIA.  Picard is proceeding under Section 550 of the Bankruptcy Code, which allows a trustee to recover an avoidable transfer from the initial transferee or any immediate transferee of such initial transferee.  

Picard has filed more than 1,000 lawsuits seeking funds for Madoff victims, which have resulted in a recovery of over $10 billion to date.  Investors in Madoff's scheme are estimated to have lost $17.3 billion in principal.

A copy of the ADIA Complaint is here.